Chorus slows connection defection as it defends fixed lines

Wellington-based Chorus lost 20,000 fixed-line connections in the three months ended September 30.

Chorus says it's slowing the loss of connections to other fibre providers and Spark New Zealand's fixed wireless hybrid after it beefed up effort extolling the benefits of fixed-line telecommunication service.

Wellington-based Chorus lost 20,000 fixed-line connections in the three months ended September 30, slowing the quarterly loss of between 30,000 and 40,000 in the three prior periods. Chief executive Kate McKenzie told today's annual meeting in Wellington that loss of connections was one of the biggest challenges facing the network operator and prompted much more active engagement in promoting fixed-line services.

"We aren't looking to become a retailer but we do think we have an important role to play in helping to ensure customers have accurate information about their broadband options," McKenzie said in speech notes published on the NZX. "The decline in connections has slowed progressively in the last few months and broadband connections through the first quarter were almost flat. But there's still plenty more we can do."

Chorus was drawn into defending its patch when its biggest customer – Spark – launched its fixed wireless broadband service as a viable alternative to a copper-based connection to sidestep the input cost it would have to pay the wholesaler. Spark's aggressive marketing pitted the product squarely against copper, which the retailer accused of being unreliable.

Ms McKenzie today lauded the work of consumer lobby Consumer New Zealand, which recently published a report that "some of the claims being made about wireless performance don't stack up relative to fixed-line options given speed, data and congestion limitations," she said.

Chairman Patrick Strange told shareholders the new regulatory framework dictating Chorus's wholesale pricing isn't expected to change with the new government, given the leading Labour Party had supported the regulatory direction.

However, Mr Strange said the new framework "has not dealt with the rural parts of New Zealand where the costs are highest" and it "will be something that needs to be looked at if New Zealand wants to incentivise investment and enable better broadband for people in non-fibre areas."

Chorus missed out on the second round of the government's rural broadband initiative because it's not a mobile operator but did participate in the expansion of ultra-fast broadband. Mr Strange said that will lead to the company taking on an extra $100 million of peak debt funding and the extra capital spending was behind the underwrite for the dividend reinvestment programme.

The shares rose 0.4% to $4.03, having increased 1.1% this year.


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