Why Chorus shares climbed amid exploitation claims

As the NZX50 fell 0.7 per cent on Monday, Chorus shares rose 1.03 per cent to $4.90 — close to the lines company’s all-time high of $5.

Why did Chorus buck the market trend, despite claims from the Labour Inspectorate (part of MBIE) that 73 of its 75 subcontractors are exploiting their workers?

In part, because Chorus’ subcontractor arrangement keeps it at arm’s length from the problem.

Labour Inspectorate national manager Stu Lumsden had harsh words for Chorus, but also confirmed the company is not on the hook.

“The Labour Inspectorate has no current evidence of Chorus itself breaching Employment Standard,” he told the Herald.

“However it’s very disappointing that a national infrastructure project of this scale which is well resourced, has failed to monitor compliance with basic employment standards. The Labour Inspectorate is analysing records received to prove any breaches, and will then take enforcement action.”

Chorus said it had commissioned a review to be carried out by former deputy State Services Commissioner Doug Martin. The company also said most of its build and provisioning work goes to primary contractors Vision Stream, Downer, Broadspectrum and UCG who, in turn, “often sub-contract that work to smaller businesses”.

Chorus shares were also boosted by new Government data showing boom in broadband use and also now has its future more clearly mapped out with the Telecommunications (New Regulatory Framework) Amendment Bill which came out of select committee in May.

Chorus has also developed a service for streaming live broadcasts over UFB fibre, and is angling for Spark to be a foundation customer as the telco looks for ways to ensure its Rugby World Cup 2019 coverage goes smoothly.

But Chorus still faces potential complications from the subcontractor controversy.

“The Labour Inspectorate is currently analysing records received to prove any breaches, and will then take enforcement action [against subcontractors],” Lumsden says.