Chorus has today said that the findings of the Ernst and Young (EY) 'Independent Assessment of Chorus' Financial Position' confirm Chorus' own assessment of a $1bn 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, meaning that Chorus would be unlikely to be able to meet all of its forward commitments without external support. 

Asrequested by the Minister, Chorus has engaged with CrownFibre Holdings, which has been nominated asthe Crown's agent, to discuss options.

"The report aligns with our market disclosure of 5 November and the information provided to shareholders in the letter from the Chairman earlier this week," said Chorus CEO Mark Ratcliffe. 

"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. 

"These initiatives must be weighed very carefully, aswhile they may save money that can then be invested into UFB, they also have the potential to negatively impact service levels and broadbandservices for consumers across New Zealand on the current network.  The right balance must be struck to ensure New Zealand consumers continue to benefit from high quality infrastructure today and into the future."

Chorus also noted that in addition to the original terms of reference for the report, EY has also proposed some potential capital management options.

"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. Asstated in Chorus' letter to shareholders this week, discussions with CrownFibre Holdings need to be completed before we finalise our medium term strategy, which will include future capital management settings."

ENDS

Ian Bonnar
Corporate Affairs Manager
Chorus
ian.bonnar@chorus.co.nz
+64 27 2157 564

Brett Jackson
Investor Relations Manager
Chorus
Brett.jackson@chorus.co.nz
+64 27 488 7808

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