ComCom sees lower risk for regulated fibre
Fibre companies challenge lower risk assessment
In its preliminary analysis for the 2027 Fibre Input Methodologies review, the Commerce Commission says it has found a marked reduction in the systematic risk of fibre businesses.
This is important because the regulator uses the risk assessment to calculate the weighted average cost of capital (WACC) for regulated fibre companies.
The WACC, in turn, helps determine the return those companies are allowed to earn on their regulated assets, with implications for both customer prices and investment incentives.
Last week’s newsletter looked at another part of the same calculation. There Chorus and other infrastructure companies challenged the Commission’s approach to measuring the market risk premium. This week the focus is on a different input: how risky the fibre businesses themselves are.
Three of New Zealand’s four fibre companies made submissions on the review. Chorus, Enable and Tuatahi First Fibre all dispute whether the evidence supports the Commission’s conclusion.
The question here is: has running a fibre network actually become less risky, or is it just that the Commission’s methodology makes it look that way?
Asset beta
A key number in the review is the asset beta. This measures how sensitive a business is to movements in the wider market. The Commission uses beta estimates from comparable listed companies to help assess the systematic risk of regulated fibre networks.
In the 2020 Fibre IM review, the Commission set the asset beta at 0.50. The updated estimate is 0.39. It’s not as simple as saying the risk of running a fibre company has fallen by 20 percent. Asset beta is only one component of the WACC calculation.
One difficulty with calculating the asset beta is finding enough comparable listed companies to benchmark the fibre companies against. There are few pure fibre companies. Each of the three fibre companies that made submissions has independently asked the regulator for more transparency on how the number is calculated.
Is fibre less risky?
Chorus says that it accepts that the calculated beta has fallen but says that doesn’t necessarily demonstrate that fibre itself has become less risky.
The fibre company argues that the decline shown in the Commerce Commission’s figures is concentrated in US and European companies. It says that changes in stock-market composition can affect measured telecom betas without necessarily reflecting a change in underlying telecom risk.
This is particularly relevant as technology companies have become a much larger part of stock-market indices.
Another Chorus argument is that in the recent five years used for the calculation, the market has gone through pre-Covid, Covid and post-Covid conditions. It wants a much longer period: either 17 years or three consecutive five-year periods.
Smaller fibre companies are different
Tuatahi argues that smaller, regional, wholesale-only LFCs have different risks from the large international telecom companies used as comparators. The argument might equally apply to Chorus. Compared with overseas markets, New Zealand’s largest fibre wholesale company is still relatively small.
Enable also calls for care in interpreting the beta figures, particularly the effects of the different pre-Covid, Covid and post-Covid periods. It says it continues to believe systematic risks are higher for LFCs other than Chorus.
The three companies also raise questions about the Commission’s decision to retain the midpoint WACC. Chorus and Enable argue that a higher percentile may be justified for price-quality regulated fibre, given the cost of under-investment.
The Commission is now considering the submissions as it works towards the 2027 Fibre Input Methodologies. Its final decisions will determine how the risk of regulated fibre is reflected in the cost of capital and, ultimately, the returns allowed to the companies.
One NZ bets on connectivity-as-a-service model
One NZ told Infratil investors that its network software has been licensed to an offshore telco. The deal positions the firm as an API-driven platform rather than a traditional operator.
The system exposes network connectivity through APIs and now runs both wholesale and retail operations. One NZ describes its technology as "world leading" and built in-house, reducing reliance on global SaaS providers.
Elsewhere in the presentation the company highlighted momentum in its wholesale business. One NZ says it captured more than 60 percent of MVNO (Mobile Virtual Network Operator) port switching over the past year.
One NZ’s presentation also pointed to its partnership with livestock technology firm Halter as a model for future growth. Halter owns the end-customer relationship while One NZ supplies connectivity, embedded across mobile and satellite networks, inside a higher-value product rather than sold standalone.
On infrastructure, One NZ and 2degrees are progressing their proposed RAN-sharing joint venture, RANCo. The story was covered in our August 28 edition. The deal combines radio access network assets under a 50/50 structure. Spectrum, core networks and satellite remain separate. Completion is targeted for the first half of 2027, subject to Commerce Commission clearance.
Mobile market performance
Commercially, One NZ says it captured around 58 percent of total New Zealand mobile market revenue growth over the past two years, with consumer Pay Monthly ARPU (average revenue per user) above $50, the highest in the market.
Enterprise remains a weak spot, with the company citing "elevated competitor activity" pressuring margins and prompting a re-segmentation of its business customer base. FY27 guidance is unchanged, with operating earnings forecast at $600 million to $640 million.
EonFibre lands major submarine cable deal
EonFibre also featured in the investor presentation. One NZ's separated fibre infrastructure business signed a "material" hyperscaler submarine contract, going live in the fourth quarter of FY27 with full-year benefit landing in FY28.
The company posted FY26 underlying earnings of $64 million and is guiding to double-digit earnings growth. It says the AI-driven demand for high-capacity fibre and data centre connections is behind the growth.
In other news...
- Time to check your streaming purchases — RNZ
Westpac says 7 percent of customers spend at least $100 a month. - NZ digital advertising $1.6 billion in first half — StopPress
Revenue up 14 percent year on year.
Jilyut Wong joins Fortysouth as chief commercial officer
Former Spark general manager of wholesale and international Jilyut Wong has joined Fortysouth as chief commercial officer. Wong replaces former Vodafone NZ wholesale director Steve Rieger.
Source: Jilyut Wong Linkedin Post.
Spark, 2degrees join CRL advertising launch
Spark and 2degrees are among six foundation partners on QMS NZ's new Auckland City Rail Link digital advertising network that was launched this week as the rail line went live. The other partners are ANZ, BNZ, The Warehouse Group and Tower.
Digital screens will show advertising at the three new underground stations: Te Waihorotiu, Karanga-a-Hape and Maungawhau. QMS runs the network under its long-term Auckland Transport partnership.
Source: QMS press release.
This time last year NGCC got visibility tool
A joint venture between Spark and One NZ developed the Hourua tool for NGCC. It consolidates network information from Spark and One NZ into one centralised digital system view. Emergency services use the tool to plan effective and safe operations.
Five years ago the ComCom had pain points in its sights
As part of the regulatory regime introduced in 2018, the Commerce Commission was given the job of finding and fixing the pain points people have when dealing with telcos. Top of the list is dealing with a service provider through help desks and other customer service tools.
Ten years ago gigabit fibre went nationwide
All four fibre companies Chorus, Enable, Ultrafast Fibre (now Tuatahi First Fibre) and Northpower announced gigabit plans with download speeds of 1 Gbps and uploads running at 500 Mbps. Later the Commerce Commission stepped in and asked the companies not to use the term ‘gigabit’ because while that is the nominal line speed, actual download speeds are slower. Today they are described as ‘Fibre Max’.
The Download Weekly is a New Zealand telecommunications industry newsletter written by Bill Bennett. You are welcome to pass it on to your friends and colleagues. While the newsletter is free, reader support helps enormously. If you are reading this for work, donations are tax-free. A banner at the top of the page will take you to the support site.
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Bill Bennett has covered New Zealand telecommunications for nearly 40 years and was named Tuanz Journalist of the Year 2025.
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