MARKET CLOSE: NZ shares rise on Chorus rally; Spark, Xero, Intueri fall

New Zealand shares rose as Chorus hit a record high today while Spark New Zealand, Xero and Intueri Education Group dropped.

The S&P/NZX 50 Index rose 5.3 points, or 0.09 percent, to 6040.55. Within the index, 17 stocks rose, 25 fell and eight were unchanged. Turnover was $200 million, of which $43 million related to Chorus.

The benchmark was led up by Chorus, which climbed 23.9 percent to $3.84, an all-time record. The Commerce Commission today released its final determination for what Chorus can charge on its regulated copper lines after a more rigorous process to find the price than the initial pricing principle review, which relied on international benchmarks. Today's announcement and share activity has delivered a $290 million bump to the company's value.

The price companies such as Spark New Zealand and Vodafone New Zealand will pay for wholesale access broadband service has been set at an average $41.69 a month over the next five years, up from the $38.43 price signalled in its previous determination.

The $3 increase was unexpected, and drove today's huge rally in Chorus shares, Grant Williamson, director at Hamilton Hindin Greene, said.

"It's certainly higher pricing than what most expected," Williamson said. "It gives investors some certainty, and investors will be hoping for a reinstatement of dividends after this boost."

Chorus suspended dividends in 2014 when it renegotiated the terms of Crown funding for the ultra-fast broadband fibre network.

In August, the telecommunications network operator reported a 39 percent decline in annual profit due to the lower regulated price for its copper-based services, and said it anticipated weaker earnings in the 2016 financial year. Today, Chorus substantially increased its earnings guidance to a positive range of between $580 million and $600 million.

On the flipside, Spark fell 2.4 percent to $3.08, a two-month low. Spark, which uses Chorus' copper lines at the price agreed by the Commerce Commission, reacted angrily to today's announcement, calling it the "worst possible Christmas present for New Zealand consumers and businesses" and "a slap in the face" for retail customers.

"Spark is the other side of the story," Williamson said. "Their fall today was not too bad, but today's announcement will be disappointing for telcos."

Xero dropped 3.5 percent to $17.13.

"It's a very volatile stock," Williamson said. "It shot up big time in mid-November, and now it's coming off just as fast."

Australia and New Zealand Banking Group fell 2.3 percent to $27.25, and Ebos Group dropped 2 percent to $13.89.

Intueri dropped 7 percent to 53 cents. New Zealand's largest private training company said it hasn't been approached or had discussions with any parties in relation to a takeover, after the Australian newspaper reported that private equity firms were eyeing it following a slump in its market value.

The stock has dropped 78 percent this year, hitting a record low of 33 cents in late November amid concerns about the sector.

(BusinessDesk)