Select Committee Report on the Telco Amendment Bill

Chorus Limited
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New Zealand
Email: company.secretary@chorus.co.nz







STOCK EXCHANGE ANNOUNCEMENT

4 May 2018


Select Committee Report on the Telco Amendment Bill

The Economic Development Science and Innovation Committee has today released its
report on the Telecommunications (New Regulatory Framework) Amendment Bill.

“We welcome the Committee’s report which represents the next step toward a new
regulatory framework for New Zealand’s key communications infrastructure. We will
review it with interest” said Kate McKenzie, Chorus Chief Executive.

The report recommends a number of detailed changes which we will be reviewing
carefully including:

 The treatment of Crown financing arrangements which form part of our
agreement to build the UFB network. The Bill directs the Commerce
Commission to consider actual financing costs incurred when considering the
value of our assets. The principal amount of the debt/equity investment would
remain reflected in the value of assets in the asset base. We will be reviewing
the detail of the provisions carefully to ensure they reflect the intent of our
infrastructure partnership with the Crown.

 A two year extension opportunity remains for the Commission’s
implementation. We encourage the Commission to deliver well ahead of this
timeframe and are pleased they have started work.

 An exemption power in relation to legacy business line restrictions is welcome
to support changes in the market. However, this does not go far enough and
could delay wholesale innovation.

 The report signals an intention to set anchor service pricing based on a price
path signalled in 2014 for Chorus’ commercial 100/20 Mbps fibre product. This
unfairly restricts our ability to recover costs and would require us to price below
Local Fibre Companies.

The Committee has endorsed key parts of the policy announcements made in June
2017, including:
 A new utility regulation framework for fibre fixed line access services from 2020.

 Deregulation of copper fixed line access services from 2020 in areas where fibre
services are available to consumers, while retaining regulation in areas where fibre
is not available.
 Consumer safeguards when copper services are to be withdrawn.
“The ability to innovate is vital if we are to close the digital divide and meet the work
and productivity challenges of the digital age. So we’ll work with the Government
during the remaining stages of the Bill’s passage to help ensure the final framework
doesn’t stifle innovation and reflects our partnership with the Government” she said.

A copy of the Committee’s report can be found here
https://www.parliament.nz/resource/en-
NZ/SCR_78114/27b1a2785779f4b615698ec423e89d260de14f1b

Chorus looks forward to considering the changes the Committee has proposed in more
detail, and completion of legislation as soon as possible.

ENDS
For further information:

Nathan Beaumont
Stakeholder Communications Manager
Mobile: 021 243 8412
Email: nathan.beaumont@chorus.co.nz

Brett Jackson
Investor Relations Manager
Mobile: 027 4887808
Email: brett.jackson@chorus.co.nz