Commerce Commission releases consultation

Chorus Limited
Level 10, 1 Willis Street
P O Box 632
Wellington
New Zealand

Email: company.secretary@chorus.co.nz

STOCK EXCHANGE ANNOUNCEMENT

13 August 20 20
Commerce Commission releases consultation on determining financial
loss asset
The Commerce Commission has released a further consultation paper on the
fibre input methodologies. The consultation seeks feedback on the methodology
for calculating Chorus’ financial loss asset.

As signalled by the Commission on 10 July 2020, it has proposed to adopt a
discounted cash flow approach to valuation, rather than a building blocks
approach as proposed in its November 2019 draft decisions. The Commission
notes that a “discounted cash flow approach on its own delivers broadly similar
outcomes to the building blocks approach”.

The Commission has proposed a new approach to determining the cost of capital
and risk free rate to apply to the loss period, which represents an improvement
on the Commission’s previous views.

The Commission has re-confirmed its earlier view that pre-UFB assets are
included when calculating the losses and responded to a range of submissions
made on this topic to date.

We appreciate the Commission’s acknowledgement of the importance of getting
the design of the new regulatory regime right. The outcomes from this
regulatory process set the ongoing incentives to drive fibre uptake and
innovation so consumers benefit.

Investors need to be sufficiently compensated for the start-up risks faced when
funding and building new technology infrastructure ahead of demand. We are
continuing to review the detail of today’s announcement and will be making
submissions accordingly.

The final decision on Input Methodologies (excluding financial loss asset) is due
on 13 October 2020. The final decision on Input Methodologies on financial losses
is due on 3 November 2020.

Authorised by:

David Collins
Chief Financial Officer

ENDS

For further information:

Steve Pettigrew
Head of External Communications
Mobile +64 (27) 258 6257
Email: Steve.Pettigrew@chorus.co.nz

Brett Jackson
Investor Relations Manager
Phone: +64 4 896 4039
Mobile: +64 (27) 488 7808
Email: Brett.Jackson@chorus.co.nz