Communications and Information Technology Minister Amy Adams says she has instructed government officials to commission an independent assessment of Chorus' financial position and its capability to meet its contractual commitments under the Ultra-Fast Broadband and Rural Broadband Initiatives.
Her announcement comes after Prime Minister John Key said on Tuesday his government was considering all its options in response to Chorus' warning it may default on its debt and restrict its rollout of the Government's broadband network after the Commerce Commission ruled Chorus should cut its wholesale copper broadband price by 23%.
“In recent weeks, I have had the Ministry of Business Innovation and Employment (MBIE) work with external consultants to carry out an independent analysis of Chorus’ financial position across a range of pricing options, based on publicly-available information," Adams said.
“To complement this work, I have decided to seek an independent assessment at arm’s length from the Government. In order to properly assess the range of options before the Government, I have directed MBIE to work with Crown Fibre Holdings to commission independent advice to the Government of Chorus’ financial position and capability to deliver on its contractual obligations with the Government," Adams added.
She said the review will assess the impact of the Commerce Commission’s decisions on both the Unbundled Copper Local Loop and the Unbundled Bitstream Access prices on Chorus’ ability to deliver on its contractual commitments under the Ultra-Fast Broadband and Rural Broadband Initiatives.
"As part of the review, the consulting firm would be asked to assess the scope for Chorus to manage the impact within the constraints of the reduced revenue, and if required, a range of alternative options."
Once the review's completed a report will be provided directly to Adams, and a copy released publicly. The Government will then consider its next steps, said Adams. Asked which external consulting firm would be doing the review a spokesman for Adams said: "Work will take place over the next few days to appoint independent advisors to carry out the assessment."
The Bank of Tokyo Mitsubishi, which is taking legal action to try and block a rescue deal for Solid Energy that would effectively see it take a 20% haircut on its $80 million loan to the SOE, is also one of four banks with more than $1 billion worth of unsecured loans to Chorus.