Chorus signs $1b UFB build contracts

Chorus, the telecommunications network operator spun out of Telecom, has signed contracts with Visionstream and Downer worth some $1 billion for those firms to build the nation's ultrafast broadband network, and is still in talks with Transfield Services.

The Wellington-based company inked two contracts each worth some $500 million over the next six years and include extra amounts for Downer and Visionstream to deliver part of the rural broadband initiative, Chorus says in a statement.

The contracts are effective immediately and apply to UFB deployment slated for a July start.

Chorus is still negotiating with Transfield, which is responsible for about 10 percent of the UFB programme.

"One of the key changes is a shift to targeted cost incentives and shared risks that will introduce a sharper focus on financial management and increase coordination of deployment operations in the field," general manage infrastructure build Ed Beattie says.

Chorus lifted its estimates for the total UFB build in February to between $1.7 billion and $1.9 billion, from a range of $1.4 billion to $1.6 billion previously flagged after unexpected differences in costs across the country.

It is trying to rein in those ballooning costs and is looking at using alternative methods, such as overhead lines, to do so.

Chorus has completed construction work to take fibre past about 116,000 premises by the end of March, having passed 88,590 premises as at December 31. It is aiming to pass 149,000 by July.

The company won a $929 million subsidy from the government to build the UFB network after Telecom agreed to structurally carve out the network operator.

The shares were unchanged at $2.65 yesterday.

(BusinessDesk)