Chorus and Crown Fibre Holdings have reached an agreement in which residential installations of UFB will continue through to the 31st of December 2019.
Since 2012 Chorus has been providing funding for non-standard residential installations, with an initial fund of $20 million – increased to $28 million in 2014.
However, earlier this year Chorus announced that funding would be extended until the end of 2016 following a further agreement with CFH.
Andrew Carroll, chief financial officer for Chorus, says the new agreement recognises that the Government’s pending regulatory review has proposed building block model regulation.
With this in mind, Carroll says its finalisation and implementation should ultimately provide a long term sustainable solution for funding these costs, but this is not yet currently certain.
“We’ve therefore taken the pragmatic approach that a building block model is likely to include the cost of residential non-standard installations in a regulated asset base, thereby allowing a regulated return on this investment,” he explains.
Caroll adds that in the event that this hasn’t occurred by 31 December 2020, or not all of Chorus’ actual UFB non-standard installation costs are included in the asset base, the dates that Chorus must redeem or provide dividends on the CFH debt and equity securities will be postponed.
“The CFH security postponement dates would effectively range from a few months in the event that 80% of non-standard installation costs are included in an asset base, through to about two years in the event that no costs are included,” he says.
“The agreement, therefore, does not require any additional funding from CFH, change the underlying contractual obligations to pass all premises in Chorus’ coverage area before December 2019, or change the network requirements.”
Today’s announcement will see Chorus continuing to offer free residential installations up to 200 metres in single dwelling units and free residential installations in multi-dwelling units with no more than three residential tenanted stories.
“New Zealand is leading the world on its fibre roll out and fibre growth, and today’s announcement represents another step towards enabling better broadband for more New Zealanders.”