John Key caught out on Chorus

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Source: Labour Party – Press Release/Statement:

Headline: John Key caught out on Chorus

John Key has been caught out  today in making misleading statements on the Chorus debacle, Labour’s associate ICT spokesperson Clare Curran said today.

“A Goldman Sachs report from November 2011 reveals that at least one financial analyst predicted the wholesale price of copper would fall and provided an estimate for smaller Telcos of $8.47 per month which was significantly less than the final price of $10.92 a month announced by the Commerce Commission.

“John Key and his Communications Minister have been saying for weeks that no financial analysts had predicted the extent of the fall in the copper price.

“Yesterday he was reported in NBR as saying “No one anticipated the magnitude of the fall.

“On 6 November he said: ‘There were many, many analysts who looked at the situation as a result of the legislation that was brought in, and in fact, at the contract that Chorus signed, and not one analyst actually noted that there was a significant likelihood that there would be such a dramatic decrease in the copper price.’

“On the 4 November his own Communications Minister Amy Adams said the commission’s rulings had come as a surprise to everyone involved. ‘No analysts or companies saw that coming, no one priced it in.’

“The Goldman Sachs forecast implied that Goldman Sachs’ expectation was for a significant reduction in pricing – certainly lower than the Commerce Commissions determined price.

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Chorus’s own first prospectus released in September 2011 said there is a risk that the regulator will set prices that do not provide New Chorus with an adequate return on its assets.

“For the Government to now claim ‘no-one knew it was going to be that low’ is simply wrong.

“John Key’s disastrous handling of this issue has created false expectations for Chorus that he would inappropriately overrule the Commerce Commission, his public comments that there is a chance that Chorus will go broke are all responsible for the deep uncertainty around Chorus and the UFB rollout.

“This is a mess of the government’s own making. John Key, the former and current ICT Ministers Steven Joyce and Amy Adams are all accountable for a monumental stuff up.”

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