Shares in infrastructure company Chorus fell sharply in late
morning trade on the NZX after the Commerce Commission said
it had scaled back cuts to wholesale broadband prices.
The regulator released its final decision today for what
Chorus charges internet retailers such as Vodafone or Orcon
for services over its copper-line phone network.
The monthly wholesale price per line the commission decided
was $34.44, a cut of 23 per cent - slightly less than the
$32.45 per month price the commission announced in a draft
decision last December.
By late morning, Chorus shares were down by 22c or 8.37 per
cent, at $2.41, compared with Monday's close.
"The Commerce Commission has had some very narrow legislation
to work with and it has taken a very narrow interpretation of
that," Matthew Goodson, managing director at Salt Funds
Goodson said there was now a strong case for government
intervention in the market.
Chorus said the internet price cut from the Commerce
Commission meant it would not be able to borrow what it needs
to invest $3 billion in building the ultra-fast broadband
The company, which was once part of Telecom, said as a
consequence of the Commission's decision it would need to
discuss with the Crown whether the company was still a
"credible UFB partner".
Chorus is building the majority of the Government's
ultra-fast broadband network, which will deliver much quicker
internet to 75 per cent of New Zealand by 2020.
The company still gets most of its revenue from the old
copper-line network which it charges internet retailers like
Vodafone and Orcon to access.