New Zealand's Chorus H1 year profit falls, no dividend

WELLINGTON Sun Feb 23, 2014 2:45pm EST

WELLINGTON Feb 24 (Reuters) - New Zealand telecommunications network operator Chorus Ltd first half profit fell 7 percent, the company said on Monday, as it suspended its dividend payout as it moved to bolster itself ahead of regulator imposed controls on broadband prices.

The company posted a net profit for the six months to Dec 31 profit of NZ$78 million ($64.55 million) compared with last year's NZ$84 million figure.

It said it would not pay a dividend against last year's 10 cents.

It said it expected revenue to be hit by NZ$142 million from December when the price controls come into effect and this was why it was speeding up its restructuring.

The company said it now expected full year earnings before interest, tax, depreciation, and amortisation (EBITDA) to be at the top end of its guidance to be flat or fall slightly on the previous year's NZ$654 million.

Chorus was split from the former Telecom Ltd in 2011, taking that group's fixed line network and exchanges as it was awarded contracts to build about 75 percent of the government sponsored ultrafast broadband network.

However, the sector regulator has ruled that it must cut broadband prices from the end of the year, which Chorus has said it will cost it as much as NZ$1 billion in lost revenue over the next six years.

The price cuts have seen Chorus's share price fall by 53 percent in the past six months, and led to its credit rating being slashed.

The company has said the price cut might jeopardise its ability to complete the ultrafast broadband rollout, prompting a government ordered independent review of Chorus's finances. ($1 = 1.2084 New Zealand dollars) (Reporting by Gyles Beckford; Editing by Pravin Char)