Information and Communications Technology Minister Amy Adams has welcomed the agreement by Crown Fibre Holdings and Chorus on the first tranche of amendments to the companies’ Ultra-Fast Broadband contract.
The changes agreed by Crown Fibre Holdings and Chorus are intended to close some of the funding gap that was identified in the Government-commissioned independent report by Ernst & Young Australia (EY).
The EY report investigated Chorus’ capability to deliver on its contractual commitments with the Government, in light of the Commerce Commission’s decisions on final wholesale prices for copper-based broadband services.
The report identified a gap of $1 billion and indicated that a significant portion of this could be met from Chorus undertaking cost savings measures and changes to its dividend and debt policies – leaving a residual gap of $200 million to $250 million.
“The Government has been very clear that Chorus is expected to meet the major part of the funding shortfall identified in the EY report,” Adams says.
“Our priority is to ensure the rollout of UFB to New Zealanders is not put at risk. For this reason, the Government supported Crown Fibre Holdings beginning discussions with Chorus about possible adjustments to the companies’ UFB contracts to help reduce the residual gap.
“The Government’s UFB initiative has a budget of $1.35 billion and Crown Fibre Holdings is required to act within this fiscal envelope. The changes announced today are within this budget.
“The high level framework for the UFB programme is not affected as a result of today’s announcement. Most of the changes are about giving Chorus greater flexibility to manage the roll out in the most efficient way to reduce cost.
“Importantly for customers, these changes will make no difference to UFB service levels and speeds. The overall timeframe for the roll out, the start and completion dates for each candidate area, the coverage area, and the completion date for priority users are all unchanged.
“I am advised that talks between Crown Fibre Holdings and Chorus are on-going in respect to possible further adjustments to the companies’ contract.
“The next steps and timing are a matter for Crown Fibre Holdings and Chorus to determine.”