UPDATE 1.35pm: Shares in iiNet slid after the internet services provider expressed disappointment with a draft determination from the nation's competition watchdog on access and pricing of ADSL (broadband) services.
iiNet said it was disappointed with the Australian Competition and Consumer Commission's (ACCC) draft determination on a number of fronts, especially given the time taken to arrive at it.
"The wording of the draft is not altogether clear and the wholesale pricing suggests less than efficient costs when compared to iiNet's own cost for the provision of DSL ports," the company said in a statement.
Broker Patersons said the draft pricing determination appeared to require Telstra to reduce the price it charged wholesale customers (such as iiNet) to access its regional infrastructure by 3.4 per cent.
"However, this cost reduction is largely offset by an increase in other charges Telstra imposes for regional infrastructure access, meaning there is negligible net benefit to wholesale customers as a result of the determination," the broker said in a research note.
"iiNet had not expected this benefit to be offset by the increase in other access charges, which underpins this morning's share price weakness."
iiNet said it would review the draft and provide the ACC with its comments.
"The draft determination would not have a material impact on iiNet's financial results going forward if it becomes the final determination," the company said.
Patersons has retained its "buy" recommendation on the stock.iiNet shares closed down 13 cents, or 2.64 per cent, at $4.79 after sinking to a low of $4.16 in early trade.
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