New Zealand operator Chorus has reported a steep 38.5% slump in net profit for the year ended in June, blaming regulatory rulings related to its mandated wholesale pricing for copper services.
Net profit fell to NZ$91 million ($59.2 million), with revenue down 4.9% to NZ$1 billion despite solid progress with the national Ultrafast Broadband (UFB) project.
In its annual report, the company said its results for the year were substantially impacted by the need to tweak its retail pricing based on international benchmarking to comply with regulator the Commerce Commission's demands.
“This regulatory pricing remains under review and the ongoing uncertainty has overshadowed positive increases in fixed line and broadband connections, as well as Chorus’ work on the Ultrafast and rural broadband rollouts that continue to deliver better broadband ahead of schedule.”
The Commerce Commission has also provisionally ruled not to backdate an increase in broadband prices, which would have required operators using the Chorus network to reimburse the operator the difference between the old and new regulated wholesale prices.
Stuff.co.nz reports that Chorus has not ruled out taking the regulator to court to appeal the change.
Chorus had almost 1.8 million wholesale fixed line connections as of the end of June, and was 44% complete with the UFB rollout.
Chorus is the former access network arm of Telecom New Zealand (now named Spark). Telecom New Zealand agreed to split its wholesale and retail arms as a condition of it taking a leading role in deploying the UFB, which aims to deliver high-speed fiber broadband to 75% of the nation's population, as well as the Rural Broadband Initiative to improve speeds for the remainder.