Here's our summary of the key news overnight in 90 seconds at 9 am, including positive news from the United States economy as speculation continues over when the Federal Reserve may begin tapering off its monthly US$85 billion quantitative easing, or money printing, programme.
US manufacturing unexpectedly accelerated in November at the fastest rate in more than two years. The Institute for Supply Management’s index rose to 57.3, its highest level since April 2011. Readings above 50 indicate growth. The median forecast in a Bloomberg survey of economists was 55.1.
Meanwhile Chorus, the Government’s partner in its ultra fast broadband rollout, is filing a High Court appeal against the Commerce Commission decision that would cut its wholesale copper broadband price by 23%. The company has also applied to the Commerce Commission for a final pricing principle review of its decision, which involves economic cost modelling rather than benchmarking against other countries.
CEO Mark Ratcliffe says Chorus has a duty to its shareholders to explore every option. Chorus earlier warned it may default on its debt with the ruling creating a $1 billion funding shortfall by 2020. A government commissioned review from Ernst & Young Australia into Chorus’ capability to deliver on its contractual commitments with the Government is expected to be completed this month.
Back in the US Amazon CEO Jeff Bezos has unveiled plans for the internet retailer to use drones to deliver packages to customers.
The idea is for drones to fly packages directly to doorsteps in 30 minutes. Bezos acknowledges the plan needs more safety testing and US Federal Aviation Administration approvals. But he estimates delivery-by-drone, called Amazon “Prime Air,” will be available to customers in four to five years.
Those following the legal action taken by the Fair Play on Fees group against ANZ NZ and Kiwibank on behalf of some customers over exception fees will be watching the equivalent Australian case closely. It kicked off in court yesterday with a lawyer for 43,500 ANZ customers reading sections of high-level internal ANZ documents detailing the bank's plans to change the name of its exception fees to a ''fee for service'' and referring to strategies to fill the ''revenue gap'' left if they needed to be capped.
Fair Play on Fees is also pledging action against ASB, BNZ and Westpac.
The Trade Weighted Index (TWI) was at 77 this morning, with the New Zealand dollar at US81.72 cents, and A89.89c having briefly touched A90c overnight. The Reserve Bank of Australia will issue its latest review of the country's Cash Rate, currently at 2.50%, this afternoon.
You can follow our Economic Calendar here »
No chart with that title exists.
4 Comments
Chorus has a duty to its shareholders to explore every option.......
Its sounds as if there was/is no Plan B. It’s a year to yesterday when news of a price drop broke. (Burning the furniture and trashing the joint is not normally regarded as a plan).
NZ regulator eyes cuts to broadband network prices, Chorus falls
WELLINGTON Sun Dec 2, 2012 5:38pm EST
Dec 3 (Reuters) - New Zealand's competition regulator reduced the size of a cut to the price telecommunication companies pay to access the country's main copper wire network run by Chorus Ltd, but suggested a sharp reduction in future pricing for access to its broadband network, sending the firm's shares sharply lower.
http://www.reuters.com/article/2012/12/02/chorus-regulation-idUSL4N09C0CK20121202
With the share price halved since September, https://www.nzx.com/markets/NZSX/securities/CNU?icharts=true
some would say they have already done enough.
Henry you talk about duty to shareholders. I would further suggest that this notion is out of date.
Telecom/Chorus have had over $17bn of profits since deregulation. In my opinion they had more than just a duty to deliver profits to shareholders - they also had a duty to the country to pay for new indrastructure out of their massive revenues because of the captive monopoly they were gifted, and they also had a duty to their shareholders to forsee their obligation to UFB and not be caught out in the way that they have.
The past and present executives of Telecom/Chorus ought to be punished for this. I include Rod Deane and Theresa Gattung here. They failed to do the right thing over a decade or two, and they are still failing to acknowledge their responsibilities. it is a classic failing of the privatisation model.
Agreed in the sense that an element of running long term infrastructure assets is the accumulation of a sinking fund (being the funds for capital replacement). Its like placing what the accountatnts marke as amortisation/depn and setting tht amount aside as cash in the bond market.
We see infratstructure asssets have had all financial efforts directed to clear cash flow, that can be used to attract debt, with then assets claimed to be worth every greater. (whereas a slice of cashflow directed to sinking fund/money for future capex is much less fun for insiders).
With higher marked assets the insiders go to the regulator and say look at all these assets, and our funding spreadsheet, see we need a return of x%, therefore the tarriff we need charge mug punter needs be y. (both x and y just make up).
When assets need replacing, they add that new capex as extra punters need pay going forward - y becomes z, (whereas the sinking fund should have already been there).
For example power stations should be large scale bond investors, given their long term large costs assets.
What makes it more marked for Chorus is that its a massive "development project" to boot, think Euro Tunnel.
http://www.stuff.co.nz/business/opinion-analysis/9472236/Debt-at-core-o…
So, if things are looking a little tight for Chorus it could well be at least partly because the company just has too much debt. That would not be the fault of the regulator or the Government.
While the events so far have been a rocky road for investors and don't reflect well on the Government's planning, Chalkie reckons Chorus's problem is that the financial community chose to luxuriate in misconception rather than confront the real issues. Not that the financial community would ever admit it.
Here's Bloomberg with more on Amazon's drones;
Book and food deliveries by drones, such as those unveiled by Amazon Chief Executive Officer Jeff Bezos, may be grounded under rules U.S. regulators are writing.
The Federal Aviation Administration plans to bar operation of unmanned aircraft flying a computerized flight path instead of being controlled by a person, according to an agency document released Nov. 7 outlining plans for integrating the vehicles into the nation’s airways.
http://www.bloomberg.com/news/2013-12-02/amazon-drone-flights-seen-grou…
We welcome your comments below. If you are not already registered, please register to comment.
Remember we welcome robust, respectful and insightful debate. We don't welcome abusive or defamatory comments and will de-register those repeatedly making such comments. Our current comment policy is here.