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Farming Dairy Focus
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Legacy investors a motley bunch?
GROW YOUR INVESTMENT PORTFOLIO CONFIDENCE John Moore of WITH Hamilton Hindin Greene is running a
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Phone 307 7127, www.hhg.co.nz email:john@hhg.co.nz Telephone: 0800 10 40 50 Email: gdavies@hhg.co.nz 214 Burnett Street, Ashburton
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seminar fixed interest returns high yielding shares. Hamiltonon Hindin Greene has a proud historyand of providing quality investment 10am tuesday August 24, 2010 at the hotel Ashburton advice to Kiwis for over 100 years. As one of the few remaining wholly NZ ownedby andMonday operated broking firms,23, HHG2010. is committed to providing their RSVP August Phone 307 7127. best investment advice. Bookclients nowwith tothe avoid disappointment!
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Written by Grant Davies, Authorised Financial Advisor at Hamilton Hindin Greene Limited. This article represents general information provided by Hamilton Hindin Greene, who may hold an interest in the security. It SAUCERS
on revenue generated from the old copper network to support the building of the new fibre network. This decision, along with some shrewd cost management from Chorus, as well as co-operation from Chorus’ bankers (who relaxed banking covenants), Crown Fibre Holdings (who have allowed Chorus more flexibility of funding) and shareholders (who have accepted a halt in dividend payments), has allowed the company to survive this period of great uncertainty. Although Chorus appears to be through the worst of it, uncertainty still persists. The ComCom, having only released a draft determination, will now conduct industry consultation
does not constitute investment advice. Disclosure documents are available by request and free of charge through www.hhg.co.nz.
KILPTANKS
A BROKER’S VIEW
investors need to pay close attention to the costs of building the Ultra Fast Fibre network. Cost over-runs have been curtailed somewhat, but execution risk still remains. The company is still not quite at the “safe enough for Grandma” point, but those prepared to back the status quo from the draft FPP determination could see good returns once dividend return and earnings stabilise. The regulatory environment will change again after 2020, but Communications Ministry documents suggest the environment may be more conducive infrastructure investors such as Chorus.
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and come back with a final determination in April next year. This final price could be subject to further change as the Government conducts a review of the telecommunication regulation. There is also uncertainty as to whether backdating will be enforced. As of December 1, retail service providers (Spark, Vodafone etc) are only charged $34.44 for each connection. This price will stand until the final FPP determination is made in April. The retail service providers have also enjoyed a lower price on the Unbundled Copper Local Loop (UCLL) for the past 12 months. This could also be backdated, depending on which legal opinion or Court of Appeal ruling you listen to. Backdating will result in a rather large one-off payment from RSP’s to Chorus. The ComCom forced Chorus to back pay the RSP’s earlier this year, so recent ComCom decisions appear to support backdating. Along with the palaver around copper prices, Chorus
WEDGES
The Chorus share register must be a motley bunch. It is likely full of legacy Spark investors from the presplit stage, with a sprinkling of income investors who purchased shares for their apparently good yield in the pre-benchmark phase and will now also include some fairly pleased speculative investors who purchased shares this year in expectation of a more favourable copper broadband Final Pricing Principle (FFP) determination from the Commerce Commission (ComCom). This more favourable decision was released earlier this week, with the ComCom releasing their draft FPP determination. This decision essentially sees the average wholesale cost of a broadband connection reduced from $44.98 to $38.39, as opposed to an earlier decision which would have seen the price slashed to $34.44. This earlier decision cast major doubt over Chorus’ ability to fund the roll-out of the Ultra Fast Fibre network, as the company was relying
M 027 281 2089 P: 307 2124 www.mattlovett.co.nz
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