New Zealand shares rose led by Chorus as investors mull the impact of the proposed regulated price on the network operator's copper lines, while Spark New Zealand extended its decline on the prospect higher costs. Fonterra Shareholders' Fund gained on falling global dairy prices.
The NZX 50 Index rose 73.031 points, or 1.3 percent, to 5503.066. Within the index, 40 stocks rose, seven fell and three were unchanged. Turnover was $174 million.
Chorus, which suspended dividends to mitigate against a cut to its copper line pricing and the funding of the country's ultrafast broadband roll out, climbed 9.2 percent to a 14-month high of $2.74, adding to a 17 percent jump yesterday after the Commerce Commission's draft ruling for regulated pricing on the company's copper network won't impose as steep a cut as previously indicated. Chorus said the new pricing would slash annual earnings by $80 million, less than half of the $170 million hit it had projected until current pricing.
"Chorus is clearly firmer on the back of the expectation they get a big benefit from the final draft pricing principle, clearly they still are gaining support," said Rickey Ward, NZ equity manager at JB Were New Zealand Equities. "You almost get the feeling the local market didn't own a lot of them, so now there's been an element of confirmation around it, they're investing into it, or foreign investors coming into a company which could likely pay a dividend now."
Spark, formerly Telecom Corp, was one of the day's few decliners dropping 1.8 percent to $2.97, adding to yesterday's 3 percent drop. The telecommunications provider is the biggest customer for Chorus and said yesterday that the draft determination could drive up its costs by $60 million a year and hurt earnings, although it was too soon to revise guidance for low single digit growth in adjusted earnings before interest tax, depreciation and amortisation from 2014's $936 million.
