In the financial results for the year ended June, Chorus chief executive Mark Ratcliffe said the average cost of completing the 2013 ultrafast broadband (UFB) installation was $2935 per premises passed.
Chorus provided guidance it expected to spend $660 million to $690 million on capital expenditure in the 2014 financial year and was again targeting an average cost per premises passed of $2900-$3200 for the year.
Mr Timms said the higher cost reflected the size of the UFB project and the difficulty of installing fibre in some areas.
Also, the project was taking longer than expected.
''It comes back to further agreement around regulation. How can you expect Chorus to fund this if you set a far reduced price around access to the copper network?'' he said.
Chorus, in its first full year after separation from Telecom, reported operating earnings of $633 million for the period, up slightly on Craigs' forecasts. Reported profit was $171 million, as opposed to the $166 million forecast by Craigs.
The final dividend of 15.5 cents per share took the total dividend to 25 cps and Chorus indicated the dividend policy would remain for this financial year.
Mr Timms said there were no surprises in the result, except the higher capital expenditure.
Usually, that would mean a lower dividend, but Chorus had indicated its dividend policy remained intact.
Mr Ratcliffe said investment in the fibre network, primarily the UFB and rural broadband initiative programmes, accounted for $579 million, or 85% of the company's $681 million gross capital expenditure in the year.
''We are making rapid progress in building a fibre future for New Zealand with more than 3000km of fibre cabling deployed in just 12 months, taking our total fibre network beyond 30,000km.''
At June 30, the UFB network encompassed 205,500 end users, or 153,000 premises, and 51,200 rural end users were within reach of better broadband.
''Spending almost two-thirds of our revenue on capital investment is an extraordinary amount for any company,'' Mr Ratcliffe said.
Chorus reported growth of 8000 fixed-line connections for the year, to a total of $1.8 million, including 90% growth in fibre connections to 19,000.
Demand for fixed broadband connections continued to grow steadily, about 64,000 copper broadband connections having been added in the period.
The company also faced ongoing challenges with the current regulatory environment.
A Commerce Commission decision on copper-line pricing in December had already reduced operating earnings by $20 million on an annualised basis and a recent government discussion paper proposed a review of the telecommunications regulatory framework with an immediate focus on copper pricing.
''While the outcome of the Government's regulatory review is uncertain, all potential options contained within the discussion paper imply reduced future earnings for Chorus.''
Mr Ratcliffe said.
However, Telecommunications Users Association chief executive Paul Brislen questioned what problem the copper tax was solving if Chorus was able to post a profit, meet all its targets and pay a dividend to shareholders.
''Surely at this point in its investment cycle - the first two years of a once-in-a-lifetime investment - it should be ploughing money into the deployment of the network rather than giving money back to shareholders.
''Chorus is clearly profitable, even with its massive cost blowout in terms of connecting properties to the network. The customers should not be paying an extra $100 million a year to Chorus shareholders in addition to the $1.5 billion in public money we're already giving them,'' he said.
