Communications and Information Technology Minister Amy Adams has released the initial details of a verbal briefing from Ernst and Young (EY) on Chorus' financial position, saying Chorus faces a shortfall on its Ultra Fast Broadband (UFB) rollout plans.
Adams said she had referred Chorus to Crown Fibre Holdings (CFH) to "discuss provisions" in their contract for the UFB rollout. Adams said she expected Chorus would have to make up a "significant portion" of the shortfall.
“The preliminary conclusion from Ernst & Young is that copper price changes will have a significant impact on Chorus’ financial position and that absent further action, Chorus is at risk of not meeting its UFB and RBI (Rural Broadband Initiative) contractual commitments, after taking into account a wide range of actions Chorus can take itself,” Adams said, adding that a full report due from Ernst and Young next Thursday was unlikely to alter that finding.
Adams said the Government’s UFB rollout had a budget of NZ$1.35 billion and CFH was required to act within that "fiscal envelope."
At a later news conference she said the Government was hopeful that changing some of the terms of the rollout would mean the Government did not have to top up the NZ$1.35 billion cost. She said the government was committed to the current agreed levels of service and timing of the rollout, but that other conditions could be tweaked, including perhaps the make up and timing of debt and equity payments within that NZ$1.35 billion cost.
“The Government expects Chorus to meet a significant part of the shortfall," Adams said, adding the Government expected to know the outcome of the discussions between Chorus and CFH "in a few months time."
The Coalition for Fair Internet Pricing, which includes consumer groups and retail telecommunications groups and has run an 'Axe the Copper Tax' campaign, said it wanted to discuss the rollout with the minister.
(Updated with more comments from Adams news conferece, Axe the copper Tax statement)