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 $5.00 (in late-morning trading today the stock had dipped 1.02%.)

LATEST: Chorus subbie tells of tough life on the front line

Why did the network operator buck the market trend, despite facing 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.

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Late yesterday, 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 currently analysing records received to prove any breaches, and will then take enforcement action."

Chorus said this morning it had commissioned a review that will be carried out by former deputy State Services Commissioner Doug Martin.

The company also put itself at a further remove from the problem by saying most of its build and provisioning work goes to primary contractors VisionStream, Downer, Broadspectrum and UCG who, in turn, "often sub-contract that work to smaller businesses." (A rep for Downer says, "Downer is not involved with fibre provisioning work for Chorus, and we haven't been part of that work for over two years.")

Chorus shares were also boosted by new government data showing a boom in broadband use - a broadly positive trend for the company as the dominant force in the wholesale market.

Chorus shares are trading near an all-time high since the company listed in 2011 after being carved out of Telecom.
Chorus shares are trading near an all-time high since the company listed in 2011 after being carved out of Telecom.

After a long period of uncertainty, Chorus also now has its future more clearly mapped out thanks to the Telecommunications (New Regulatory Framework) Amendment Bill which came out of select committee in May - and which will come into force at the start of 2020. Then-Communications Minister Clare Curran left the legislation introduced by Simon Bridges largely untouched; a development that most analysts saw as a positive for Chorus.

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 (Spark has yet to finalise its streaming solution, or solutions for the event).

On the negative side, Chorus still faces potential political or business 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.

That action could bring political pressure on Chorus. Last night Workplace Relations and Safety Minister Iain Lees-Galloway indicated he could be watching the subcontractor investigation closely.

Forsyth Barr has an out-perform rating on Chorus, with analyst Matt Henry noting strong broadband uptake, a diminishing threat from Spark's fixed wireless service (which is nearing saturation) and the expectation of attractive cashflow once the UFB build is completed in 2022.

However, after it's recent bull run, Chorus is already ahead of ForBarr's 12-month target price of $2.80, set on August 28 when the stock was at $4.41.