Chorus Limited’s 2024 fibre regulatory report reveals a stable $5.9 billion asset base and revenue close to the maximum allowed, with a $153.5 million wash-up balance carried forward.
- Regulated Asset Base steady at approximately NZD 5.9 billion
- Core RAB increased to NZD 4.9 billion; Financial Loss Asset reduced to under NZD 1 billion
- Revenue nearly reached maximum allowable NZD 809 million for 2024
- Wash-up balance of NZD 153.5 million to be carried forward into 2025
- Detailed capital and operating expenditure data disclosed, subject to Commerce Commission review
Stable Asset Base Amid Regulatory Oversight
Chorus Limited has submitted its 2024 fibre regulatory Information Disclosure report, confirming a steady regulated asset base (RAB) of approximately NZD 5.9 billion. This figure reflects a slight growth in the core RAB to NZD 4.9 billion, while the Financial Loss Asset (FLA) declined to just under NZD 1 billion. These numbers underscore Chorus’s continued investment and asset management within New Zealand’s fibre infrastructure landscape.
Revenue Performance and Regulatory Constraints
In 2024, Chorus came very close to earning its maximum allowable revenue (MAR) of NZD 809 million, a regulatory cap designed to balance fair returns with consumer protections. The company’s reported revenue of NZD 807.8 million indicates tight alignment with regulatory expectations, reflecting disciplined financial management under the Commerce Commission’s oversight.
Wash-Up Balance and Financial Implications
A notable feature of the report is the wash-up balance of NZD 153.5 million, which results from adjustments across the three-year regulatory period and will be carried forward into 2025. This balance accounts for variances in revenue and costs compared to forecasts, including factors such as inflation, capital expenditure, and pass-through costs. The wash-up mechanism ensures that Chorus’s earnings remain neutral over time, preserving net present value for both the company and consumers.
Capital and Operating Expenditure Insights
Chorus’s capital expenditure in 2024 included NZD 306 million of commissioned assets, slightly down from the previous year, alongside a reduction in revaluations due to lower inflation rates. Operating expenditure remained consistent, with detailed breakdowns across customer operations, network maintenance, and corporate functions. The report also highlights a split in EBITDA and capex between regulated price-quality fibre fixed line access services and other activities, providing transparency on the company’s financial structure.
Regulatory Review and Forward Outlook
All figures disclosed are subject to review by the Commerce Commission, which may lead to adjustments. Chorus’s ongoing compliance with regulatory requirements and its ability to manage asset values and revenue within prescribed limits will be critical as the company navigates future regulatory periods. Investors and analysts will be watching closely for the Commission’s feedback and any implications for Chorus’s financial performance and strategic investments.
Bottom Line?
Chorus’s steady asset base and near-cap revenue signal regulatory alignment, but the sizeable wash-up balance hints at nuanced financial dynamics ahead.
Questions in the middle?
- How will the Commerce Commission’s review impact the reported RAB and wash-up balance?
- What are the implications of the wash-up balance for Chorus’s cash flow and dividend policy in 2025?
- How might changes in inflation and capital expenditure forecasts affect Chorus’s future regulatory earnings?