Chorus said this afternoon that the annualised impact of the final UCLL decision would be an EBITDA (earnings before interests, tax, depreciation and amortization) drop of around $20 million a year.
Because the decision applies from today, the impact for the 2012/13 financial year is an EBITDA reduction of $11-12 million, Chorus indicated.
But a second announcement from the commission this morning could strike a harder blow to Chorus.
In this move, the commission has proposed to slash what Chorus charges internet provides to access unbundled bitstream access (UBA) services.
The full UBA service enables retail telecommunications companies - like Telecom or Vodafone - to supply broadband services to households and businesses without the need to replicate Chorus' local copper lines, electronics and software.
The proposed UBA price is $32.45 per month per line - down $12.53 from the current price of $44.98 and would come into effect from December 2014.
If the UBA decision was finalised, Chorus it could reduce annual EBITDA by a further $150-160 million from December 2014 (based on connection numbers as at 30 June 2012).
"Chorus has very serious concerns about the potential impact of these decisions. While noting that the UBA decision is a draft, and there is a process to run, management expects that the collective impact of these two changes (if the draft
UBA decision were to become final) could require Chorus to fundamentally rethink its business model, capital structure and approach to dividends," the company said in a statement to the exchange.
Deutsche Bank analyst Arie Dekker said the UBA draft determination created more uncertainty for Chorus.
"The cut's quite significant... having got the clarity Chorus was looking for on UCLL, it's ended up with a whole lot of uncertainty on UBA," Dekker said.
Telecommunications Minister Amy Adams signalled immediate disquiet, saying the government is reviewing the draft UBA determination, which is "potentially significant for the industry and end users."
"New Zealand is one of the few countries in the world to have structurally separated its main telecommunications company, while at the same time rolling out a fibre network," Adams said. "This potentially highlights the need for a pricing methodology appropriate for the New Zealand context."
Additional reporting: BusinessDesk
