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ComCom issues final decision on Chorus Regulatory Asset Base
Thu, 6th Oct 2022
FYI, this story is more than a year old

The Commerce Commission has issued its final decision on Chrous's Regulatory Asset Base (RAB).

A company's RAB amounts to the value of the assets the company has used for delivering regulated fibre services to New Zealand consumers. 

The Commission valued Chorus's initial RAB at NZD$5.413 billion as of 1 January 2022, which is $12 million lower than the transitional value given in the Commission's decisions when implementing the new regime in December 2021.

Telecommunications Commissioner Tristan Gilbertson says this decision completes the initial settings of the new regulatory regime for fibre services. This process began in 2018 with the passing of the new legislation.

"With today's decision, we're locking-down the final initial RAB values for the new fibre regime, and in turn providing the certainty the new regime is designed to give Chorus as a long-term infrastructure investor."

As part of the process, the Commission has updated the RAB value used on a transitional basis in December 2021 primarily to reflect actual figures for the last financial year now that these are available from Chorus. Actual figures have replaced forecast figures where they had been used in December 2021.  

With the initial RAB value now set, it cannot be changed and will be a crucial factor in the Commission's process for determining the maximum revenue Chorus can earn from providing regulated fibre services.  

"We now have in place an interlocking series of measures designed to incentivise Chorus to keep investing in world class fibre services while constraining its ability to reduce quality or make excessive returns to the detriment of consumers," says Gilbertson.

The Commission says it will wash up the difference between the transitional and final RAB values when it sets Chorus's price-quality pathway for the next regulatory period in 2025. This process is expected to commence later next year.

Chorus has seen significant change and expansion in recent times, with the company reporting revenue growth totalling $959 million, up by $4 million year-over-year from 2021. Net profit after tax was $64 million compared to a restated total of $51 million.

The company also announced that it was putting its support behind Aotearoa's Esports community with a newly announced three-year Hyperfibre sponsorship deal with NZ Esports.

It has also appointed a new operations and maintenance caretaker for its 2,600 sites across NZ and announced a widespread switch-off of copper cabinets in mid-March.

"FY22 was a crossroads year for Chorus with the core elements of our utility-style regulatory framework now settled and the finish line in sight for our 11-year fibre rollout," Chorus CEO JB Rousselot said in an earlier release.