The roll-out of the Government's highly promoted ultra-fast broadband (UFB) network received a major setback yesterday which could put the $1.5 billion project in jeopardy.
The Government's political partners - Act New Zealand, United Future and the Maori Party - joined Opposition parties to oppose overruling the Commerce Commission's decision to cut the access price to the Chorus copper line network.
Chorus shares have fallen 43% this year and closed last night at $1.80.
The commission ruled earlier this month it was halving the cost for access to Chorus' copper wire network.
Chorus estimated the loss of revenue would wipe about $142 million from its 2015 profit and cost it about $1 billion of funding over the next few years.
The company said the loss of profit could threaten the company's agreement with the Government to install the UFB broadband network.
The company also received notices from rating agencies placing it on review.
The Government had proposed overruling the commission decision but support for that proposal evaporated yesterday.
Forsyth Barr broker Suzanne Kinnaird said the lack of support did not mean there were no options for the Government.
''They have legislative and non-legislative options available to them that could involve support for Chorus through this process.
"But it does reduce the number of options and make those remaining less palatable, such as increasing loans to Chorus.''
What would become critical for Chorus was how the debt holders worked though the process, in particular the low access price from December 1, 2014.
Options for Chorus included declaring no dividend until the cost-based review was completed in about two years and no equity rasing until the review was complete.
Chorus had a lengthy discussion ahead with debt holders, Ms Kinnaird said.
Communications and Information Technology Minister Amy Adams said the public comments from parliamentary parties came as no surprise.
''The Government has always said there are a number of options on the table so it is important we have some factual information before further decisions are made.''
Labour leader David Cunliffe said National was now isolated as the only party in Parliament supporting a crony deal for Chorus.
Labour supported the proper independent regulatory process undertaken by the commission and the decision to reduce copper broadband prices for all New Zealand families, Mr Cunliffe said.
''Labour believes the Government should uphold the commission's decision and enforce the broadband roll-out with Chorus.''
Green Party information technology spokesman Gareth Hughes said the commission decision to cut monthly wholesale access to the copper wire network by 23% resulted in a $100 million yearly windfall to New Zealand consumers and businesses.
''Cheaper internet is good for New Zealand households and businesses and will not unduly impact on the uptake of fibre which competes more on performance, less on price.''
