Crown Fibre Holdings misses cabinet deadline

Crown Fibre Holdings (CFH), the state-owned company charged with selecting partners for the government's $1.35 billion ultrafast broadband (UFB project), has missed a milestone deadline.

CFH was due to deliver recommendations to cabinet by the end of October following "priority negotiations" with its first brace of bidders: Whangarei lines company Northpower, The Central North Island Fibre Consortium; and Timaru lines company Alpine Energy.

Yesterday (November 2), a CHF spokesman sent NBR the statement that "'CFH will be making recommendations to Ministers shortly and arrangements will be finalised after that."

Despite earlier media reports indicating the deadline would be met, it has whistled by.

One industry insider told NBR that CFH has two main issues: "under-resourcing and an unclear mandate."

Expanding on resourcing, he said, "If they go down the thirty Local Fibre Companies path, they'll need at least thirty capable account/relationship managers [double CFH's current total staff] but those people dont exist".

The original target date for sending contracts to cabinet had already been pushed from September to October, then refined again to include only negotiations in three regions.

So what? So everything
Some would argue that a few weeks' delay is neither here nor there in a project with a 10-year timeframe.

But for Telecom - which has placed a (on the face-of-it) all-or-nothing national bid, every delayed CFH deadline gives more precious moments to reach its desired "heads of agreement" with the government, going over Crown Fibre Holdings' head to reach a broad-ranging deal that also takes in structural separation, tax breaks, regulatory breaks and other elements outside CFH's mandate.

According to the tender's fine print, even if CFH delivers its recommendations on the first three (of 30) Local Fibre Company regions today, Telecom can still buy more time - for cabinet can leave CFH's report on the table for an undefined period  (or, indeed, choose to ignore it altogether and go its own way with some kind of compromise deal).

Yet in reality, political pressure is mounting. If Telecom is to reach some kind of accommodation with the government, it must do it soon. Now, it has a touch more time.

READ ALSO: Telecom softens up shareholders with presentation on possible split

Telecom shares (NZX: TEL) have suffered during the UFB process over the past 12 months, but since July have lifted from their 52-week low. Yesterday they closed down 1 cent to $2.04 (chart below courtesy NZX):