Government eyes Chorus debt sale, ending its UFB role

In this edition:

• Chorus debt sale
• Eon Fibre addresses data centre connectivity
• ComCom ticks mobile progress

Government plans to cash Chorus debt cheque

Finance Minister Nicola Willis says the government is looking at selling over a billion dollars of its Chorus debt and equity instruments in a bid to free up money for other purposes.

She says the completion of the ultra-fast broadband fibre initiative means there is no longer a policy reason for the Crown to own Chorus.

The project was completed nearly three years ago in December 2022. At the time there was talk of extending the network further into rural areas: there still is.

Funding origins and next steps

NIFFCo, the government’s National Infrastructure Funding and Financing operation provided the debt and equity funding needed to build the fibre network. The securities were due to expire in five to ten years.

The agency is now investigating selling its Chorus securities and will provide advice to the minister by the year end. It should not be a difficult sale.

Political reaction and market impact

Labour leader Chris Hipkins has been critical of the move. He accused Willis of moving to sell off assets in an attempt to prop up the finances.

When the National party was in opposition, it promised not to sell state assets. There’s a technical argument about whether debt securities and equities can be considered assets, they’d generally be recognised as such.

Politics aside, the move is unlikely to materially affect Chorus. The company has said it does not expect that any sale would materially change the terms or conditions under which those securities were issued.

Sometimes markets interpret a sale as a risk signal, but the government has made it clear it is selling to raise funds, which should neutralise any side effects.

If you are interested in the financial aspects of the deal, there’s good coverage from Paul McBeth at The Bottom Line. The site usually requires a subscription.

He writes:

“It’s a bit of a nonsense to say there’s no policy reason to keep the various securities. The fact that the taxpayer can benefit in the value created through the sweetheart loans to Chorus are a perfectly good rationale to keep them.

“In saying that, these securities were never the family silver, which was sold many moons ago when Telecom was first privatised in 1990, and we don’t really have the balance sheet to sweat the decade or so needed to extract the maximum value from the Chorus assets”.

Eon Fibre launches DC Direct for data centres

EonFibre’s DC Direct promises to provide high-performance connectivity for data centre operators. It is the latest offering from One New Zealand’s specialist bandwidth operation and aims to tap into growing traffic between data centres with demand being driven by AI and cloud computing.

Richard Mooney, EonFibre CEO, says the purpose-built fibre network has “extensive reach covering over 30 major data centres and LFC exchanges across the country, as well as 3,500 business premises."

Flexible options for enterprise demand

Customers can choose from a range of technologies including dark fibre, wavelength and Ethernet.

Mooney says: “A key benefit of our network topology is that we aren’t constrained by the design needs of a mass-market access fibre network and can instead centre our attention directly on digital enterprise customers and their growing bandwidth requirements."

ComCom praises carriers for clearer maps, exit rights

The Commerce Commission says mobile service providers have made welcome steps to improve their network coverage maps and give customers clear “exit rights” if they find a company’s coverage doesn’t meet their expectations.

Last year the Commerce Commission issued a series of guidelines. ComCom retail service quality manager Andrew Young says the industry responded positively to these. Providers now standardise coverage maps and offer customers stronger protections.

Improving retail service quality

This is part of the Commission’s retail service quality work as laid down by the Telecommunications Act.

Young says: “Consumers told us they wanted to use coverage maps to compare providers but found this difficult because the maps weren’t consistent. We’re working with industry and have fixed that problem.

“All providers now use the same coverage descriptors and thresholds, which makes comparisons easier and more reliable. On top of that, consumers are backed up by a clear exit right across all providers if real-world coverage doesn’t match what was promised.”

Mobile coverage maps are now easier for consumers to find. The data is standardised which makes direct comparison much easier.

All service providers now allow customers to leave without penalty if there is a gap between the coverage shown on a map and the real-world experience.

In other news...

• The 3G shutdown is unlikely to be trouble-free — NZ Herald.
• Inside Kordia’s business transformation — Reseller News.
• Satellites are leaking important unencrypted secrets — Wired.

Kiwibank’s Paul Littlefair named new Tuanz chair

Kiwibank chief digital and technology officer Paul Littlefair will replace Tristan Ilich as the chair of the Tuanz board. Littlefair has a long history of senior technology roles in the financial services sector and was the New Zealand CIO of the year in 2019.

WiFi 8 development underway at TP-Link

WiFi 7 isn’t mainstream yet, but network technology company TP-Link says it recently demonstrated a WiFi 8 prototype.

There are few details about the demonstration of 802.11bn technology. TP-Link says WiFi 8 is focused on Ultra High Reliability: “Instead of chasing peak speeds, it prioritises steady connections, stronger coverage and smoother roaming even in busy networks.”

In practice this should mean better wireless performance in places where the signal is low or there is a lot going on with other devices.

iPad Pro and MacBook Pro first to get M5 chip

Apple announced its M5 processor. The new chip will appear in the company’s newest 14-inch MacBook Pro, iPad Pro models and the Vision Pro virtual reality headset. All of these devices will go on sale next week.

The M5 processor uses 3-nanometre technology. It has a 10-core GPU with Neural Accelerators integrated into each core. Apple says this gives a peak performance that is four times that of the M4 processor.

Apple only released the base M5 model, with no Pro or Max variants announced.

Goldsmith to lift Sunday ad restrictions

Legislation put in place by media and communications minister Paul Goldsmith will lift restrictions that stop media companies broadcasting advertisements on Sundays and public holidays.

The argument for doing so is strong. As Goldsmith notes: “These restrictions have become increasingly redundant as a growing share of audiences turn to streaming services for their news and entertainment. New Zealand on Air data shows YouTube was the most popular platform in the country last year, reaching 43 per cent of the population daily.”

Industry estimates show the move could be worth $6 million a year, although it is just as possible that the small proportion of total ad spend that now goes to broadcasts will be spread out over more days.

This time last year: A positive result for marketing guidelines

In an echo of the Commerce Commission story posted at the top of this newsletter, Telecommunications Commissioner, Tristan Gilbertson praised the industry for responding positively to the recently updated Broadband Marketing Guidelines.

Five years ago Spark fired up its 5G network in parts of Auckland.