Published 15/12/2015

In keeping with the previous draft determinations, the Commission has proposed a glide path for all monthly rental prices. The final prices, which apply from 16 December 2015, are:

• A final UCLLprice of $29.75 in year one, reaching $31.68 in year five (compared to $23.52 currently).
• A final UBAprice of $11.44 in year one, reaching $10.67 in year five (compared to $10.92 currently).
The Commission has also confirmed that it will not backdate the revised changes.

Chorus CEO Mark Ratcliffe welcomed today's decision.

'We have consistently said that the previous draft prices significantly underestimated the true value of Chorus' network, so it is pleasing that the Commission has taken on board the industry's repeated requests and used some of the real world costs of building a network.

'The entire debate over the last three years has been about how much prices should reduce, and prices are still below the prices at demerger.

'It is disappointing to note the Commissioners' split decision on backdating is not in our favour, despite the strong precedent that backdating should apply.

'This lengthy, volatile process highlights the importance of the post-2020 regulatory review to ensure a more stable and predictable framework to deliver better broadbandfor New Zealand.'

In aggregate, across both monthly and transaction changes, the annualised increase in Chorus' EBITDAis around $120 million relative to benchmark pricing, based on September 2015 volumes. This is made up of:

• An increase of about $130 million, reflecting the annualised impact of the first year final monthly pricing on Chorus' EBITDA.
• A reduction of about 25% on transaction charges, or about $11million annually.
In aggregate, this is still around $50 million per annum below equivalent demergerpricing.

Asa result of today's decisions, Chorus is issuing updated FY16 EBITDAguidance of $580 - $600 million. This is consistent with guidance provided in August, adjusted for final FPP pricing and transaction charges and including the additional cost of activityChorus is undertaking to improve the end-to-end fibre connection process for customers.

Chorus will review the Commission's decision in full and the implications for matters such asdividend payments and the cost-saving initiatives the company put in place following the benchmarking decision. Chorus expects to provide a capital management update aspart of its interim results in February.

The Commission's decision is available on its website at www.comcom.govt.nz.

ENDS
For further information:

Nathan Beaumont
Stakeholder Communications Manager
Mobile: +64 (21) 243 8412
Email: Nathan.beaumont@chorus.co.nz

Brett Jackson
Investor Relations Manager
Mobile: +64 (27) 488 7808
Email: brett.jackson@chorus.co.nz

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