Chorus gives more fibre work to Visionstream, warns build cost will be at top end of guidance

Friday 7th October 2016

Chorus has handed more of its New Zealand ultrafast broadband network building work to Australia's Visionstream, while warning the cost of the project will be at the top end of its projected range.

The Wellington-based company appointed ASX-listed Cimic Group subsidiary Visionstream to take over work that had previously been done by engineering firm Downer, which elected not to retender for the contract, it said in a statement. That means Visionstream will cover 80 percent of Chorus's UFB areas, with the rest done by Broadspectrum and UCG.

Chorus also said it expected the cost the project to be at the top end of its guidance of $900-to-$1,100 per standard residential premise passed, in 2011 dollars. It's also weighing up its future capitalisation policies over next generation access costs that weren't in scope when Chorus was carved out of Telecom, and will update guidance later in the current financial year.

"Fibre uptake is significantly ahead of expectations and given related mobilisation costs in a time of relatively full employment, Chorus expects to be able to hold average connection costs per unit flat in nominal terms across the term of this contract rather than secure further economies in connection costs," it said.

In August, Downer said it wouldn't retender for the fibre installation work, preferring to concentrate on the copper network and communal UFB build, and had already been dropped from fibre work in Wellington, Kapiti and Manawatu earlier this year.

When reporting its annual result in August, Chorus still estimated the cost of the UFB communal network to be between $1.75 billion and $1.8 billion. As at June 30, it was 57 percent of the way through with almost 831,000 premises passed at an average cost of $1,118, or $1,078 in 2011 prices.

The shares last traded at $3.85 and have declined 1.5 percent this year.

BusinessDesk.co.nz

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