Commerce Commission final UBA Pricing

Forums › New Zealand Broadband › Commerce Commission final UBA Pricing

1 | 2 | 3 | 4 | 5 | 6

4089 posts

Uber Geek
+1 received by user: 1684

ID Verified

Trusted

#927589 5-Nov-2013 13:02

Woah, you should see the rage and fury from the share traders. Besides the "the government better step in and fix this", there's a couple of mentions that considering Chorus specifically said to NZX and ASX that they were in no danger of insolvency, and they're now threatening a default on their financing, it seems they may have violated securities laws and are up for potentially a few shareholder lawsuits!

old3eyes

9158 posts

Uber Geek
+1 received by user: 1364

Subscriber

#927591 5-Nov-2013 13:09

That's the stock market for you. The shares go down and the stock holders threaten to sue..

Regards,

Old3eyes

mattwnz

20515 posts

Uber Geek
+1 received by user: 4795

#927596 5-Nov-2013 13:18

Someone is going to have to pay the 1 billion shortfall though, and the pricing was just a method of spreading out the payment of it. Also there is no guarantee that the price decrease will find it's way to consumers, it may just increase the margins for the telco.

Kyanar

4089 posts

Uber Geek
+1 received by user: 1684

ID Verified

Trusted

#927598 5-Nov-2013 13:21

old3eyes: That's the stock market for you. The shares go down and the stock holders threaten to sue..

In all fairness though, Chorus did outright say "we are not in any financial danger, John Key is incorrect" and as soon as an unfavourable decision was released it's turned into "this decision is so adverse, we may default on all our loans, pushing us into severe financial difficulties". You can't tell me that they only just realised this after the decision was announced. I can almost guarantee that a copy of the ComCom decision has been on the desk of someone at Chorus for the past few days (they would have been forewarned, certainly) and they should have, right then if not since the first time the draft was released, disclosed to NZX and ASX that they're up a creek without a paddle. The fact that they didn't, and sprung the "whoops, we're broke!" on shareholders is, last I checked, a serious breach.

Perhaps what Chorus meant was "we are in no danger of financial difficulty, because we are absolutely certain that the National government will overrule the Commerce Commission if it does not release a favourable outcome".

mattwnz

20515 posts

Uber Geek
+1 received by user: 4795

#927602 5-Nov-2013 13:29

Kyanar: I can almost guarantee that a copy of the ComCom decision has been on the desk of someone at Chorus for the past few days (they would have been forewarned, certainly) and they should have, right then if not since the first time the draft was released, disclosed to NZX and ASX that they're up a creek without a paddle. The fact that they didn't, and sprung the "whoops, we're broke!" on shareholders is, last I checked, a serious breach.

How do you know that they had a copy prior or even pre warned? Even if they were prewarned, it wouldn't have been official, and they can't inform the nzx based on rumour and speculation. From what I understand after listening on radio NZ, is the government can still overrule the decision.
Personally I don't think a publically listed company on the NZX should be subject to this level of regulation. If they want this level of regulation, the government should just buy it back and nationalize it, and then they can run it at a loss. A publicly listed company needs to make a decent return for shareholders, which is very difficult when it is heavily regulated.

ajw

1968 posts

Uber Geek
+1 received by user: 369

#927603 5-Nov-2013 13:32

mattwnz: Someone is going to have to pay the 1 billion shortfall though, and the pricing was just a method of spreading out the payment of it. Also there is no guarantee that the price decrease will find it's way to consumers, it may just increase the margins for the telco.

According to the CEO of Slingshot.

“Kiwis will benefit from these savings, Slingshot has already made a commitment that it will pass through savings to consumers.”

[Mod update: this was posted in page 1]

Dell

Shop now for Dell laptops and other devices (affiliate link).

Kyanar

4089 posts

Uber Geek
+1 received by user: 1684

ID Verified

Trusted

#927604 5-Nov-2013 13:33

mattwnz:
Kyanar: I can almost guarantee that a copy of the ComCom decision has been on the desk of someone at Chorus for the past few days (they would have been forewarned, certainly) and they should have, right then if not since the first time the draft was released, disclosed to NZX and ASX that they're up a creek without a paddle. The fact that they didn't, and sprung the "whoops, we're broke!" on shareholders is, last I checked, a serious breach.

How do you know that they had a copy prior or even pre warned? Even if they were prewarned, it wouldn't have been official, and they can't inform the nzx based on rumour and speculation.

It's an absolute certainty, since the ComCom would know that Chorus would need to have their press team make a statement very shortly after their own release. And considering the massive impact on Chorus, the ComCom would know that Chorus would need to make a disclosure to the Exchanges.

Government agencies tend to keep lines of communication open with affected entities when they're about to make a big statement.

mattwnz

20515 posts

Uber Geek
+1 received by user: 4795

#927606 5-Nov-2013 13:34

ajw:
mattwnz: Someone is going to have to pay the 1 billion shortfall though, and the pricing was just a method of spreading out the payment of it. Also there is no guarantee that the price decrease will find it's way to consumers, it may just increase the margins for the telco.

According to the CEO of Slingshot.

“Kiwis will benefit from these savings, Slingshot has already made a commitment that it will pass through savings to consumers.”

It doesn't say though that it will pass on 100% of the savings. You have to watch the wording on PR statements.

Kyanar

4089 posts

Uber Geek
+1 received by user: 1684

ID Verified

Trusted

#927607 5-Nov-2013 13:36

Interesting... John Key says that one of the options being considered is to, rather than overrule the ComCom, subsidise Chorus in exchange for taking a state in it (i.e. partial nationalisation... wait, what?)

mattwnz

20515 posts

Uber Geek
+1 received by user: 4795

#927611 5-Nov-2013 13:40

Kyanar: Interesting... John Key says that one of the options being considered is to, rather than overrule the ComCom, subsidise Chorus in exchange for taking a state in it (i.e. partial nationalisation... wait, what?)

That would be very un National like, to do that. I think shareholders would prefer them to overrule the the decision. It sounds like they are going to do something though, so watch this space.

ubergeeknz

3344 posts

Uber Geek
+1 received by user: 1041

Trusted

Vocus

#927616 5-Nov-2013 13:45

Gosh, watch Chorus playing the pauper card. Whatever will they do to make money now? They might have to restructure or run like any other competitive business! I mean, they only have an almost total monopoly on Copper and Fibre in the country.

(My personal opinion; not necessarily that of my employer)

Dell

Shop now for Dell laptops and other devices (affiliate link).

mattwnz

20515 posts

Uber Geek
+1 received by user: 4795

#927619 5-Nov-2013 13:52

ubergeeknz: Gosh, watch Chorus playing the pauper card. Whatever will they do to make money now? They might have to restructure or run like any other competitive business! I mean, they only have an almost total monopoly on Copper and Fibre in the country.

(My personal opinion; not necessarily that of my employer)

They have to make a profit and a reasonable return for their shareholders though, just like any company. From what I have read, NZ is getting UFB at a very low price compared to the rest of the world, and I presume that the figures chorus used, where based on higher income per connection. So if the amount they are getting is going to be less, they have to find the money from somewhere to make up the shortfall. It sounds like you are suggesting that they lay off staff to save money, as that would be a major cost? But they need a lot of staff / contractors to do the roll out, and it is not as though they can really subcontract out to offshore call centres.

eXDee

4033 posts

Uber Geek
+1 received by user: 1070

Trusted

#927623 5-Nov-2013 13:56

I feel like this is going to be overruled. The govt has taken a strong position from the start, i can't see it going below $37.

Nebbie: Just to give you an Idea my other half uses up to 10gb per day of YouTube traffic, I have had to start caching my YouTube videos locally just to help save on a bit of bandwidth.

Sounds like you should take that 17/2 Annex M connection and upgrade it to ~30/10 VDSL2 on Snap with their unlimited youtube addon.

mattwnz

20515 posts

Uber Geek
+1 received by user: 4795

#927657 5-Nov-2013 14:26

My understanding of the situation is , that the argument for high copper prices, was that todays copper users would be paying for tomorrows UFB fibre users. So we are paying a higher price now to pay for future infrastructure. However the comcoms ruling shows that this isn't the model they should now be using, but it sounds like it was the model that chorus used for submitting their tender. Hence the shortfall of a billion. Maybe the government then should be using the proceeds of the electricty company sales to make up the shortfall, as it is for reinvesting back into NZs infrastructure.

hellonearthisman

1819 posts

Uber Geek
+1 received by user: 52

Trusted

#927661 5-Nov-2013 14:34

It's still a win for Chorus, they will be getting more than what was originally where told before the ministers intervention. Chorus needs to stop moaning about the short term costs and look at their long term win that the UFB will give them.

1 | 2 | 3 | 4 | 5 | 6