WELLINGTON, New Zealand--Ernst & Young Australia will assess Chorus' (CNU.NZ) financial position and its ability to roll out a fiber network across New Zealand, Communications and Information Technology Minister Amy Adams said on Friday.

This comes after a local competition watchdog ruling that may see a cut in the prices Chorus can charge for some of its copper services.

"The immediate concern to the government is if its ultrafast broadband and rural broadband initiative contracts are at risk," Ms. Adams said in a statement.

Chorus was spun off from Telecom Corp. of New Zealand (TEL.NZ) in December 2011 and now owns most of the country's copper and broadband network. Chorus is also building most of a nationwide broadband network.

If the regulator's pricing ruling is imposed the company faces a funding shortfall of about NZ$1 billion by 2020, Chorus said.

Ernst & Young Australia must deliver a draft report by Dec. 6 and a final report by Dec. 12, the government said in the terms of reference.

The government may commission an analysis from an investment bank on the chances of a successful capital raising by Chorus.

"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," Ms. Adams says.

Write to Rebecca Howard at rebecca.howard@wsj.com

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