The 'BBB' rating on Chorus Ltd. reflects our view of the company's "strong" business risk profile, underpinned by its ownership of the dominant fixed-line telecommunications access network in New Zealand, high capital barriers to competition, and strong operating cash flow generation. Tempering these strengths are the regulatory risks associated with the pricing of Chorus' network services; the company's "significant" financial risk profile; network volume risks associated with fixed-to-mobile network substitution, and the execution and cost risks associated with the rollout of the proposed Ultra-Fast Broadband (UFB) fibre-to-the-home network (FTTH) network. Chorus' revenues are subject to regulatory determinations by the New Zealand Commerce Commission (NZCC) for its copper and fibre network access pricing. In May 2012, the NZCC issued a draft
