ComCom cap Chorus revenue at $4.1 billion, claims move will help consumers save $250m

Chorus chief executive Mark Aue. The former 2degrees boss took the reins from JP Rousselot in April.

The Commerce Commission has capped the amount of revenue Chorus can earn at a total of $4.1 billion over the next four years — constraining the UFB network operator to flat revenue of around $1b a year over the period.

The amount was a little above the $3.9b in the regulator’s draft decision, released in July.

It follows an earlier-announced cap on Chorus’s expenditure.

Telecommunications Commissioner Tristan Gilbertson said the moves should help keep a lid on monthly bills for fibre broadband.

“The revenue cap we’ve set today is another protection for consumers because it helps to constrain prices at an absolute level and phases the recovery of revenue in a way that eases the cost burden by around $250 million over this regulatory period,” Telecommunications Commissioner Tristan Gilbertson said.

Investors were less enthusiastic. Chorus shares were down 1% to $9 in midday trading following the announcement, while the NZX50 was up 0.1%.

In today’s dollars the revenue cap breaks down as:

• 2025: $956.9m
• 2026: $1b
• 2027: $1.04b
• 2028: $1.08b

Chorus’ revenue increased by 3% to $1.01b in FY24.

At a December 2 investor day — that is, under the draft spending cap of $3.9b, eased slightly today — Chorus told investors it was on track to meet its full-year FY25 guidance of $700-720m Ebitda and an unimputed dividend of 57.5 cents a share.

If the forecast is met, the dividend will be a big jump on FY24’s 35cps.

The Commerce Commission reset the rules for Chorus once the big-spending years of the UFB fibre rollout were behind it.

The company now has a smaller workforce and slimmed-down executive team as it switches its focus from building to operating.

Next year through to 2028 will be the Second Regulatory Period.

During the First Regulatory Period 2022-2024, Chorus’ maximum allowable revenue was capped at between $689m and $786m.

The wild card is a Chorus plan to reanimate the UFB (Ultrafast Broadband) public-private partnership with a new build phase covering rural New Zealand — which it sees as a 10-year, $2.5 billion project that would expand fibre from 87% to 95% of the population, with the costs shared between the company and the Crown.

Chorus said its plan was delivered too late to be included in this year’s Budget, but is lobbying for it next year.

Telecommunications Minister Paul Goldsmith told the recent Tuanz Rural Broadband constraints that the Government is still accessing various options for rural broadband, in the context of fiscal constraints. A DIY broadband boom in rural New Zealand that saw Starlink boost its customer base from 12,000 to 27,000 in a year, earning $78m in the process)

Chris Keall is an Auckland-based member of the Herald’s business team. He joined the Herald in 2018 and is the technology editor and a senior business writer.