Broadband customers reap benefits ahead of price cut: Spark 22 Aug 2014
Related articles
- NZ consumers grow more upbeat, may resume spending Business
- Knowles quits as CEO of KiwiBank Business
- NZ migration bolstered by British invasion Migration
- NZ manufacturing activity reaches highest since 04 Business
- NZ dollar hits 22-month high vs euro Business
- Budget provides $321m for RS&T activities News
- OceanaGold finds new gold deposits at Fraser mine Business
- Transpower gets go-ahead for $170m SI upgrade Business
- NZ home sales creep up in March, still subdued Property
- NZ economy expands at fastest pace in two years Business
Broadband customers reap benefits ahead of regulated copper prices, Spark says
By Paul McBeth
Aug. 22 (BusinessDesk) - New Zealand broadband users are already reaping the benefits of cheaper internet access with retail service providers slashing prices in preparation for cheaper regulated prices over the copper network, Spark New Zealand says.
The telecommunications company formerly known as Telecom Corp has been forgoing margin as it looks to grab broadband market share, with its annual revenue down 9.8 percent at $284 million in the year ended June 30 from two years ago, even as connections are up 8.4 percent to 648,000 over the same period.
Head of Spark home mobile and business, formerly Telecom retail, Chris Quin told an analysts' briefing the market is extremely competitive, and any reductions in regulated wholesale prices on Chorus's copper network have already been passed on to customers in anticipation of the cut.
"The market is very competitive, broadband in particular, and has been for the last couple of years," Quin said. "What's happened with the unlimited plans and new services being available, people are paying $75 (a month) and they would have been $105 over two years ago."
Chorus, which counts Spark as its biggest customer, is fighting a Commerce Commission decision in November last year setting the unbundled bitstream access monthly price at $34.44 per line, up from the $32.35 price initially mulled in its draft decision, with the additional UBA component accounting for $10.92 and the unbundled copper local loop for $23.52.
The network operator, which was carved out of Spark in 2011, has warned it will lose about a quarter of its revenue if the price cuts go through as planned, and has asked the regulator to undertake a more fulsome review, known as a final pricing principle.
Chorus was the target of consumer and telecommunications lobby groups last year, which successfully closed off the government's ability to legislate to over-rule the regulator's decision. The lobbyists claimed end-users would be better off with the cut to the regulated price.
Spark today announced a near doubling of annual net profit to $460 million in the year ended June 30 as it booked a gain from the sale of its Australian AAPT unit, and as restructuring costs from a year earlier washed through. Earnings before interest, tax, depreciation and amortisation gained 7.1 percent to $936 million and revenue slipped 2.6 percent to $3.64 billion, largely in line with a forecast from Forsyth Barr.
The telecommunications company forecasts low single digit growth in adjusted Ebitda for the 2015 year, even as revenue is forecast to decline by a low single digit. That forecast assumes Chorus’s regulated price on the fixed copper line network is in line with the Commerce Commission’s disputed decision, and excludes rebranding costs.
Quin told the briefing there was no disincentive to migrate customers to fibre if the cut to the cost of copper-based services is upheld, with both types of customers offering Spark opportunities.
Chief executive Simon Moutter said he didn't think Spark would need to use Chorus's proposed Boost variant services, which the network company claims would increase the reliability of high-definition video, ahead of its planned launch of internet-TV service, Lightbox.
"We've just been beta-testing Lightbox at the moment, and we're not having any trouble getting HD through the current network," he said.
Shares of Spark fell 0.3 percent to $2.90, and have gained 26 percent this year. Chorus shares fell 0.6 percent to $1.74, having gained 22 percent this year after being punished in 2013.
(BusinessDesk)
News
Hilary Timmins' Award-Winning UK Documentary Series To Inspire NZ Students
29 Jun 2020 Education
Dream Catchers, produced and directed by Hilary Timmins, celebrates the success stories of more than thirty inspirational New... more
New Zealand reaffirms support for Flight MH17 judicial process
7 Mar 2020 News
Ahead of the start of the criminal trial in the Netherlands on 9 March, Foreign Minister Winston Peters has reaffirmed the need to... more
Business
NZ Government's Economic package to fight COVID-19
17 Mar 2020 Business News
The Coalition Government has launched the most significant peace-time economic plan in modern New Zealand history to cushion the... more
NZ Government announces aviation relief package
19 Mar 2020 Business News
Transport Minister Phil Twyford today outlined the first tranche of the $600 million aviation sector relief package announced earlier... more
Living
Diversity was Key at New Zealand Trade Tasting in London
6 Jun 2022 Food & Wine
New Zealand Winegrowers Annual Trade Tasting was recently held in London, on Wednesday 4 May, in Lindley Hall.
It was the first... more
Kiwi author stuns Behind the Butterfly Gate
12 Jan 2022 Arts
Hidden behind the Butterfly Gate is where the secret has been kept for 76 years...
New Zealand writer Merryn Corcoran’s... more
Property
Fairer rules for tenants and landlords
17 Nov 2019 Property
17 NOVEMBER 2019
The Government has delivered on its promise to the over one million New Zealanders who now rent to make it fairer... more
New Zealand Government will not implement a Capital Gains Tax
17 Apr 2019 Property
The Coalition Government will not proceed with the Tax Working Group’s recommendation for a capital gains tax, Jacinda Ardern... more
Migration
Boosting border security with electronic travel authority – now over 500,000 issued
19 Nov 2019 Migration
19 NOVEMBER 2019
We’ve improved border security with the NZeTA, New Zealand Electronic Travel Authority, which helps us to... more
Christchurch reinstated as refugee settlement location
18 Aug 2018 Migration
18 AUGUST 2018
HON IAIN LEES-GALLOWAY
The announcement that Christchurch can once again be a settlement location for refugees... more
Travel
Gallipoli Anzac Day services cancelled
19 Mar 2020 Travel & Tourism
The New Zealand and Australian Governments have announced this year’s joint Anzac Day services at Gallipoli will be cancelled... more
New Zealanders advised not to travel overseas
19 Mar 2020 Travel & Tourism
New Zealanders advised not to travel overseas
more
Sport
The Skipper's Diary: Sir Richard Hadlee honouring his father and NZ's Forty-Niners
27 Oct 2019 Cricket
NZNewsUK London Editor Charlotte Everett spoke to Sir Richard Hadlee about why he’s chosen to publish his father’s... more
PREVIEW: All Blacks v England semi-final
26 Oct 2019 Rugby
The two most convincing quarterfinals winners are set to square off in a semifinal showdown for the ages when the All Blacks meet old... more
Columns
Gordon Campbell on the Gareth Morgan crusade
11 Nov 2016 Opinion
Gordon Campbell on the Gareth Morgan crusade
First published on Werewolf
The ghastly likes of Marine Le Pen in France and Geert ... more
Gordon Campbell on the US election outcome
10 Nov 2016 Opinion
Column - Gordon Campbell
Gordon Campbell on the US election outcome
Well um.. on the bright side, there (probably)... more
Kiwi Success
Congratulations to Loder Cup winner
26 Sep 2018 People
25 SEPTEMBER 2018
The Loder Cup, one of New Zealand’s oldest conservation awards, has been awarded to Robert McGowan for 2018... more
Appointments to New Zealand National Commission for UNESCO
16 Aug 2018 Appointments
16 AUGUST 2018Appointments to New Zealand National Commission for UNESCO
HON JENNY SALESA
Associate Education Minister Jenny Salesa is... more
Recruitment
Historic pay equity settlement for education support workers
14 Aug 2018 Recruitment
14 AUGUST 2018Historic pay equity settlement for education support workers
RT HON JACINDA ARDERN
HON CHRIS HIPKINS
Prime Minister
The... more
Historic pay equity settlement for education support workers
22 Aug 2018 Recruitment
14 AUGUST 2018Historic pay equity settlement for education support workers
RT HON JACINDA ARDERN
HON CHRIS HIPKINS
Prime Minister
The... more