CNU - Chorus

[Muppett]

No longer holding.

Whatever..........
A consortium of businesses, including UFB and content providers backed by foreign capital, will offer Chorus shareholders $3.00 per share and complete the UFB rollout by 2018. Structured not to exceed the 10% threshold for a single shareholder, the consortium will include world class project managers and content rights holders.
http://www.nbr.co.nz/article/chorus-...comment-640218


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The time to buy is on 15 August when the CC announce their final UBA price. Watch the share price plummet.

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Don't work for CNU
Hold a truck load of them. Wish I had sold at $3.70 ages ago.

[Merc]

The copper system uses a fibre backbone
...

So if the copper system connects to a fibre backbone - was the fibre backbone installed as part of the fibre rollout?

If so, then this separation of fibre from copper pricing is so, so wrong.

[clip]

fibre backbone was installed some time ago during the local loop unbundling - when they installed roadside cabinets all around the place, they are fibre to the exchange from there. Standard copper in the streets from residential properties to the newer roadside cabinets

[Jay]

We have a cabinet just around the corner from us, about 150 -200m I suppose, I knew it was for Fibre but did not realise that all connections would go thru there now and therefore were Fibre to that point. The exchange is about 3 k's away. Might explain why I get better speed than some others I know (only normal ADSL).

[Merc]

fibre backbone was installed some time ago during the local loop unbundling - when they installed roadside cabinets all around the place, they are fibre to the exchange from there. Standard copper in the streets from residential properties to the newer roadside cabinets

Ah, OK. Thought that might have been a bit of the ammunition that could be used.

The "debate" so far has been completely one-sided in the media. The vocal ones are screaming that fibre should be treated like a stand alone Government essential service project that no one should dare to make a profit on.

Where is the other side? Businesses use a combination of existing income, equity and debt to fund new projects and are actually in business to make a profit for their investors.

The vocal ones are also screaming "down with wealthy capitalist shareholders" completely forgetting that the Government (i.e. the taxpayers) are shareholders, and with a company in the top 15 then many passive funds, Kiwisaver schemes, Super schemes, ACC etc are highly likely to be shareholders too. In other words the vocal ones are shooting themselves in the foot.

DISC: Hold a few shares; unlikely to ever get the option of fibre due to location - but rather hoping that somewhere in the upgrades our existing low broadband speeds will increase.

[couta1]

Latest article in Herald ,Adams states Govt expects CNU to meet significant part of pricing shortfall and we all know what that means bye bye dividends,good luck to holders are there any many left on this site?

[Merc]

We have a cabinet just around the corner from us, about 150 -200m I suppose, I knew it was for Fibre but did not realise that all connections would go thru there now and therefore were Fibre to that point. The exchange is about 3 k's away. Might explain why I get better speed than some others I know (only normal ADSL).

The cabinet 1km away from us is one of the old ones - last upgraded 30 years ago when we came off party lines. Even the Chorus technicians would breathe a sigh of relief if it was replaced with a new one with fibre to it. Unfortunately some of the lines to it have "loading coils" on them to amplify voice and broadband comes to a crashing halt when a house gets switched onto one of these lines.

How do I know this? Personal experience and long chats with the technicians.

[BlackCross]

MorningStar - reduced from $3.60 to $1.60

"....Our fair value estimate declines to NZD 1.60 from NZD 3.60. We apply ComCom's final wholesale equipment for broadband price of NZD 10.92 per month, compared to our previous assumption of NZD 16 under the government's discussion paper. This represents a 50% decline to existing equipment pricing of NZD 21.46. Our fiscal 2015 and fiscal 2016 earnings forecasts decline 9% and 34%, respectively. The larger impact in fiscal 2016 reflects the first full year of lower prices, which will be applied on 1 December 2014. Our base case assumes the Chorus appeal will deliver a higher price on wholesale equipment, to NZD 13.50, the mid-point between ComCom pricing and those suggested by the government discussion paper. We also expect retail service providers to pass lower wholesale prices on to consumers, delaying the adoption of fibre technology. With wholesale broadband prices for copper at a discount to fibre, we now assume the fibre penetration rate will remain flat from fiscal 2015 to fiscal 2018. While equity shareholders may find a convertible preference share more palatable, the government may balk at injecting additional capital into Chorus. Our fair value estimate also factors in a fiscal 2014 equity raise of NZD 400 million at NZD 1.00 per share, a 30% discount to its current share price. We don’t expect Chorus to pay a dividend in the near term, and we think its shares are fairly valued.

We also downgrade Chorus' economic moat rating to none from narrow. While Chorus' monopoly infrastructure assets are difficult to replicate, we believe an adverse regulatory regime and long-term regulatory uncertainty will preclude Chorus from earning excess returns on its cost of capital for the foreseeable future."

What more can you say? "...we believe an adverse regulatory regime and long-term regulatory uncertainty will preclude Chorus from earning excess returns on its cost of capital for the foreseeable future." No wonder overseas investors are seen to be pulling out of the NZ market.

[bull....]

no more divs and maybe a cap raising to dilute everyone who doesnt participate

[BlackCross]

And just in:

Update on independent assessment of Chorus’ financial
position
Communications and Information Technology Minister Amy Adams says the Government
has today received a verbal briefing from Ernst & Young Australia on its high level findings
on whether Chorus can deliver on its broadband contracts.
The Ministry of Business, Innovation and Employment commissioned Ernst & Young
Australia to investigate Chorus’ capability to deliver on its Ultra-fast Broadband (UFB) and
Rural Broadband Initiative (RBI) contractual commitments with the Government, in light of
the Commerce Commission’s decisions on final wholesale prices for copper-based broadband
services.
“The preliminary conclusion from Ernst & Young is that copper price changes will have a
significant impact on Chorus’ financial position and that absent further action, Chorus is at
risk of not meeting its UFB and RBI contractual commitments, after taking into account a
wide range of actions Chorus can take itself,” Ms Adams says.
“While the quantum of the shortfall is still being finalised and will be outlined in its final
report, Ernst & Young has indicated it is unlikely to alter the high-level findings, and that the
Government can act with confidence on the information Ernst & Young has supplied.
“As a result of this information, and because the Government remains strongly committed to
the UFB roll-out, the Government expects that the next step will be for Chorus to approach
Crown Fibre Holdings (CFH) to discuss specific provisions within the UFB contract.
“The Government supports CFH entering into discussions with Chorus to help manage this
issue.
“The Government’s UFB initiative has a budget of $1.35 billion and CFH is required to act
within this fiscal envelope.
“The Government expects Chorus to meet a significant part of the shortfall