NZ regulator eyes cuts to broadband network prices, Chorus falls

WELLINGTON Sun Dec 2, 2012 5:38pm EST

WELLINGTON Dec 3 (Reuters) - New Zealand's competition regulator reduced the size of a cut to the price telecommunication companies pay to access the country's main copper wire network run by Chorus Ltd, but suggested a sharp reduction in future pricing for access to its broadband network, sending the firm's shares sharply lower.

The Telecommunications Commissioner said the wholesale price for telecoms companies to connect to Chorus's established copper lines would fall 3.9 percent to an average of NZ$23.52 ($19.30), starting on Dec. 1, 2014.

In a draft decision issued in May, the regulator had proposed cutting the price to NZ$19.75.

The regulator also issued a separate draft decision for the price for unbundled bitstream access (UBA) - the cost of access to broadband network - to be cut by nearly 28 percent to NZ$32.45 a month in two years' time, from NZ$44.98 at the moment.

"The potential of revenue loss from NZ$12 per line for 1.1 million lines is quite a lot of money," said Glen Saunders, senior telecommunications analyst at IDC.

"There's some uncertainty, and it's more on the downside for Chorus."

Chorus shares fell as much as 12.7 percent to a near six-month low of NZ$2.97 in reaction to the two releases before trimming losses to last trade down 10 percent at NZ$3.06.

In a statement, the telecom network operator said it had "very serious concerns" about the UBA decision, arguing that it could lead to a big reduction in the company's revenue, while lower copper prices compared with fibre prices could slow migration to the country's planned ultra-fast broadband network.

Chorus was created in December 2011 from the splitting of dominant telco Telecom Corp to run the network infrastructure and bid for the government-sponsored ultra-fast broadband network.

It earns around three quarters of its revenue from selling access to the unbundled copper local loop - the traditional network connecting consumers to telephone exchanges, through which telecommunications companies offer phone and Internet services. ($1 = 1.2185 New Zealand dollars) (Gyles Beckford and Naomi Tajitsu; Editing by Dale Hudson)

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