Government Weighs Sale of Chorus Securities to Boost Connectivity

The Government of New Zealand is considering the sale of its remaining interest in broadband company Chorus, a move that follows the completion of the ultrafast broadband (UFB) network in 2022. This decision stems from the government’s previous financial support for the initiative, which aimed to enhance internet connectivity across the country.

Nicola Willis, the Minister of Finance, indicated that the Crown’s ownership of these securities no longer aligns with policy objectives, stating, “Most New Zealanders were probably not aware the Government owns this investment in Chorus, nor feels any particular benefit from it.” The securities in question are not standard shares and do not provide voting rights; rather, they are described as more complex financial instruments.

Willis did not disclose potential valuations of these securities, which have been largely passive and have not granted the government control over Chorus’s operations. Instead, the pricing and availability of UFB products are regulated by the Commerce Commission, ensuring that Chorus operates as a commercial entity within regulatory confines.

Craig Young, chief executive of the Technology Users Association (Tuanz), expressed no concerns regarding the planned sale. However, he emphasized that any proceeds from the sale should be reinvested into enhancing national connectivity. “If they do go down this path of bringing the capital back, it’s always been our position that money should be reinvested in improving connectivity elsewhere — whether that’s expanding fibre or improving rural connectivity,” Young stated.

The proposed sale has drawn comparisons to discovering “some cash hidden in the sofa,” suggesting that this financial move may not significantly impact the company’s operations. Young noted that the government’s ownership of Chorus “doesn’t really have a huge impact,” and questioned the extent of guidance the government could provide to the company.

Following the announcement, Chorus shares saw a 1.4% increase, trading at $9.30 on the New Zealand Exchange, which values the company at over $4 billion. This uptick reflects market confidence, even as Chorus advocates for changes to existing regulations that limit individual investor shareholdings to no more than 10%.

Communications Minister Paul Goldsmith acknowledged that the cap on shareholdings could be revisited as part of a broader regulatory review initiated by the Ministry of Regulation. Currently, Chorus is not permitted to sell UFB connections directly to the public, and telecommunications companies purchasing services from it have not indicated strong opinions on potential changes to this structure.

As the government deliberates on this sale, the focus remains on how the proceeds will be utilized. There is a strong call from industry advocates to ensure that any funds generated are directed towards improving and expanding broadband connectivity throughout New Zealand.