New Zealand Communications Minister Amy Adams has hired Ernst & Young Australia to investigate Chorus's financial position after the Commerce Commission ordered price cuts to the network operator's copper lines.
Adams has tasked the accounting firm with assessing the impact of the final regulator's decision on Chorus's financial indicators now and over the build period for the taxpayer-sponsored ultrafast broadband network (UFB) and rural broadband initiative (RBI).
Ernst & Young (EY) will also have to identify the financial capability of Chorus against regulator obligations and contractual obligations, while accounting for any adjustments Chorus could undertake to strengthen its books — including tweaks to operational costs, capital cost structures, debt facilities and its dividend policy.
"The immediate concern to the government is if its UFB and RBI contracts are at risk," Adams said in a statement.
"The findings of the independent assessment will help to inform any decisions the government needs to make to ensure the successful delivery of the UFB and RBI projects."
EY has until December 6 to provide a draft report, with the final report due by December 12.
The government may also commission work from an investment bank on the likelihood of a successful capital raise by Chorus to meets its obligations.
Chorus shares rose 2.5 per cent to $NZ2.02 on Friday, having shed a third of their value this year.
Adams is considering how to respond to Telecommunications Commissioner Stephen Gale's planned 23 per cent price cut for access to Chorus's regulated copper lines, which the network company says will force an overhaul of its capital structure, and may threaten to derail the build of national fibre cable infrastructure.
Adams has said the government was concerned the economics of the fibre network Chorus is building could be undermined if the cuts were too steep.