Chorus withdraws dividend guidance
UPDATE: Chorus shares [NZX:CNU] fell 5.74% to $1.89 in early trading. The stock, which traded at $3.02 on August 8, has already been hit hard by the latest round of regulatory controversy.
EARLIER: Chorus has withdrawn its dividend guidance of 25.5c per share for the 2014 financial year, blaming regulatory uncertainty and the outcome of the government’s independent review.
“At this time of unprecedented levels of investment by Chorus, withdrawing dividend guidance is a regrettable but necessary step in light of the ongoing uncertainty Chorus faces,” says Chorus chief executive Mark Ratcliffe.
Chorus’ earnings path hangs on the government's response to plans by the commerce commission to cut its prices.
In a statement to the NZX, Chorus says it is investing roughly three dollars in the Ultra-fast Broadband initiative for every dollar of financing provided by the Crown to support the delivery of the upgraded infrastructure.
“We are proud of our role as the cornerstone partner in the Ultra-fast Broadband initiative, which is being delivered like clockwork.”
“We remain hopeful that as the major partner in New Zealand’s largest public private partnership we can work with the Government to find a timely solution to the current issues that works for all parties and provides Chorus and its investors with the certainty we need to get on with delivering this once in many generations infrastructure upgrade.”
Last week Communications Minister Amy Adams announced plans for an independent appraisal of Chorus' books. Since the Commerce Commission decision the previous Tuesday, Chorus’ share price has plunged 25%, wiping $270 million from the company’s market capitalisation.