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Report confirms Chorus’ $1bn funding gap

Report confirms Chorus’ $1bn funding gap

While Ernst and Young has recommended cost-saving options, Chorus claims these are incomplete

Broadband infrastructure company, Chorus, said the Ernst and Young (EY) ‘Independent Assessment of Chorus’ Financial Position’ confirms its own assessment of a $1 billion funding gap by 2020.

The report also states that EY’s view is that following the initiatives Chorus could undertake alone, a significant funding gap would still remain. This indicates Chorus would be unlikely to be able to able to meet all of its forward commitments without external support.

“The report aligns with our market disclosure of November 5 and the information provided to shareholders in the letter from the chairman,” Chorus chief executive officer Mark Ratcliffe said.

“EY has also identified a range of potential revenue, cost and investment-related initiatives that Chorus could undertake in order to partially address the funding gap, and they correctly identify that those initiatives come with substantial trade-offs.”

Ratcliffe said the initiatives must be carefully weighed as they have the potential to negatively impact service levels and broadband services for consumers on the current network despite saving money which can be invested into the Ultra-Fast Broadband (UFB).

“While EY has provided a high level view on some potential capital management scenarios, our view is that the true cost and viability of those options is incomplete,” Ratcliffe said.

As requested by Communications and IT Minister, Amy Adams, Chorus has engaged with Crown Fibre Holdings (CFH), which has been nominated as the Crown’s agent, to discuss options.

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