Commerce Commission releases final IM decision

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

Email: company.secretary@chorus.co.nz

STOCK EXCHANGE ANNOUNCEMENT

13 October 2020
Commerce Commission releases final IM decisions reasons paper and
final determination (excluding financial loss asset)
The Commerce Commission has released its final IM decisions reasons paper and
final determination (excluding financial loss asset).

These decisions establish the rules that will apply for the price quality and
information disclosure regulation that will apply to Chorus from 1 January 2022.

Today’s decisions reflect some improvements to the Commission’s last draft
decisions in key areas of WACC and the treatment of Crown Financing and
maintain its principled approach to key issues such as cost allocation. The
decisions are large and complex and we will be reviewing them in detail over the
coming days.

The decisions set the parameters for establishing Chorus’ WACC from 1 January
2022 and compensation for any potential asset stranding risk. Decisions on key
parameters from 1 January 2022 include:
• asset beta at 0.50
• credit rating at BBB
• leverage at 29 percent
• uplift remains at the 50
th
percentile
• compensation for Type II Asymmetric risk remains at 10 bps.

We note that the Commission has revised its previous view that Crown Financing
was essentially costless and will be reviewing the impact of this revised decision.

A second, and significant, set of decisions relating to the calculation of Chorus’
financial losses from 2011 to 2022 is expected to be released on 3 November
2020. These decisions present the Commission with an opportunity to ensure
that investors get a return reflecting the risk they took to build a fibre network in
partnership with government, as well as incentivising ongoing investment in
critical infrastructure benefiting retail and business customers throughout New
Zealand.


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