Chorus Roadshow Presentation - October 2017 - AWS
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Chorus Roadshow Presentation October 2017
TABLE OF CONTENTS
1. Introducing Chorus 3-7
2. A fibre future 8-13
3. New Zealand’s Broadband Market 14-23
4. FY18: What we’re focused on 24-28
5. Financial Highlights 29-34
6. Appendices 35-41
Chorus Investor Roadshow - October 2017
2
NEW ZEALAND
> Land mass of 268,000 square kilometres
1,600 kilometres long; 400 kilometres wide
> NZ population approximately 4.79 million
~87% live in urban areas
100,000 record population growth in FY17
half of population growth in 15-39 age group
> Market orientated economy
real economic growth, as measured by changes in
Gross Domestic Product, has increased annually
between 2% to 4% since 1993.
official cash rate 1.75%
1Euro = 1.66NZD
1GBP =1.86NZD
Chorus Investor Roadshow - October 2017 3
KEY CHORUS HIGHLIGHTS
Leading provider of fixed line communications infrastructure in N.Z. with significant network build experience
Cornerstone partner in the Government’s Ultra-Fast Broadband initiative, with UFB capex supported by
Government financing
Broadband emerging as 4th utility, supported by growing bandwidth demand and streaming video trends
Majority of revenues regulated or contracted to the Crown to 2020, with an expected shift to a building
block regulatory framework thereafter
Highly competitive retail broadband market driving fibre uptake, supported by population/premises growth
Commitment to maintaining a BBB credit rating (S&P, or equivalent)
Experienced management team with proven ability in rolling out and operating fixed line communications
networks
Chorus Investor Roadshow - October 2017 4
AN OVERVIEW OF CHORUS
> New Zealand’s largest fixed line communications infrastructure
business
established in Dec 2011 following demerger from Telecom NZ
listed on NZX and ASX: CNU
~NZ$1.6 billion market capitalisation (at 30 Sept 2017)
S&P “BBB” stable; Moody’s “Baa2” stable
> A nationwide copper and growing fibre network
~1.58m connections, including ~1.18m broadband
halfway through 11-year fibre to the premises rollout
streaming video services driving significant data consumption
average NZ household consumed 162GB in Sept 2017
> ~1,000 employees, 80%+ engagement since 2012
supported by ~4,000 contractors and subcontractors
first NZ employer to win supreme award in Aon Hewitt Best
Employers awards
Chorus Investor Roadshow October 2017 5
Chorus-owned
THE CHORUS NETWORK
> We operate a nationwide wholesale
access network of fibre optic and
copper cables connecting homes and
businesses
cables typically connect back to our
local telephone exchanges, often via
broadband cabinets
our fibre also provides backhaul to
many mobile network sites/towers and
retail service provider networks
Common network assets Our copper network Our fibre network
~600 local exchanges ~130,000km copper ~46,000km fibre
~11,000 cabinets FTTN broadband footprint to ~90% of lines FTTP available to ~1.36m customers by Dec 22
~280,000 poles VDSL broadband to ~80% of lines point-to-point fibre in CBD areas
~30,000km duct network Vectoring upgrade outside Chorus UFB areas fibre to multiple mobile provider cellsites
Chorus Investor Roadshow - October 2017 6
TRANSITION TO A REGULATED UTILITY MODEL
> Existing copper regulatory framework uses benchmarking and Total Service Long Run Incremental Cost
> Government policy preference to introduce a utility-style building block methodology for fibre networks
> Draft legislation introduced to Parliament in August suggests the following regulatory framework from
2020:
87% of population where fibre will be available by end of 2022 Remaining 13% of population
Fibre – post 2020 utility framework
Note: Legislative process subject to new
Government, followed by the Commerce
Commission process to set input
methodologies
Chorus Investor Roadshow - October 2017 7
A Fibre Future
Our public private partnership to deploy ultra-fast broadband
8
NEW ZEALAND IS TAKING FIBRE FURTHER…
> Ultra-fast broadband (UFB): a Government objective
▪ original objective (UFB1): fibre to premises covering 75% of population by 2020
▪ subsequent agreements have extended coverage goal to 87% of population by the end of 2022
> From Auckland, New Zealand’s largest city > To Ahaura, in the South Island’s West Coast
▪ population: 1.495m (2016) ▪ population: 370 (2013)
Chorus Investor Roadshow - October 2017 9
A PUBLIC PRIVATE PARTNERSHIP
> Chorus is a cornerstone partner in the UFB rollout
▪ requirement that Chorus split from Telecom NZ to participate: demerger in December 2011
▪ Crown partnerships with four fibre companies: Chorus, Enable, Northpower, Ultrafast Fibre
UFB1: to be completed by Dec 2019
Crown investment: $1.345b Chorus’ UFB1 role
Premises* covered: ~1.174m ~830,900 premises to pass
Homes and businesses covered: ~1.526m (includes ~44k greenfields)
Population covered: 75% estimated communal capex of
$1.75b to $1.8b
Crown funding of up to $929m
(50:50 equity/debt)
connection capex subject to
demand: ~1.1m homes and
businesses
FY18 average cost to connect:
$1,050 - $1,200 (excluding layer 2
and including standard installations and
some non-standard single dwellings and
service desk costs)
10
Chorus Investor Roadshow - October 2017FIBRE EXTENDED TO 87% OF POPULATION
> The Government announced extensions to the UFB1 rollout in January and September 2017
▪ fibre to reach another ~12% of population across ~370 towns and rural communities
▪ Chorus has increased its share of these additional UFB phases
Premises to be passed by ~1,054,000*
Chorus rollout schedule – indicative only*
Chorus by Dec 2022
140,000
Customers able to connect by ~1.36 million
120,000 rollout end
Premises 100,000
passed Estimated communal capex to $2.26 to 2.37 billion
80,000 pass premises
60,000 Crown funding Up to 1.33 billion
40,000 (57:43 equity/debt)
20,000 * Includes estimated 43k greenfields premises for UFB1
-
FY12 FY13 FY14 FY15 FY16 FY17 FY18 FY19 FY20 FY21 FY22 FY23
UFB1 UFB2 & UFB2+
* UFB1 build ends Dec 2019 and UFB2 build ends Dec 2022. Detailed scheduling for UFB2 & UFB2+ to be completed by end 2017.
Chorus Investor Roadshow - October 2017 11UFB ROLLOUT STAGES
> The fibre rollout currently occurs in two stages
▪ Stage 1: communal network deployment
• the fibre network is built along the street to
enable future connections from each property
boundary
• the cost of this work is reported as cost per
premises* passed (CPPP)
• Government funding is received for
premises passed
Stage 2: Connection
▪ Stage 2: connection from boundary to Stage 1: 2 fibre pairs fully ducted
premises Communal from the street to an
• the connection to the home is built from the Optical Network Terminal
inside the home
street to the premises when a request is
received from the customer, via their retailer
• this is fully funded by Chorus and is reported as
cost per premises connected (CPPC)
* A “premises” for the purposes of UFB contracts includes office buildings or multi-dwelling units that may have multiple tenants
Chorus Investor Roadshow - October 2017
12UFB COSTS
Fibre: average cost per premises Total fibre capex: communal vs connections
$NZ 5000
4000 500 Fibre connections + layer 2 UFB communal UFB communal - Crown financing
450
3000 400
$NZm 350
2000 300
1000 250
200
0 150
FY13 FY14 FY15 FY16 FY17 100
50
Cost per premises connected 0
FY12 FY13 FY14 FY15 FY16 FY17
Cost per premises passed
> FY17 cost per premises passed (CPPP): $1,651 > $640m received as Crown financing to 30 June 2017
vs $1,550 - $1,650 guidance ($41m W.I.P) ($1,118 per premises passed x 572,000 premises)
> FY17 cost per premises connected (CPPC) of > Communal capex has reduced as build transitioned to less
$1,122* vs $1,100 - $1,250 guidance costly suburban areas
*excludes layer 2; includes standard installations and some
non-standard single dwellings and service desk costs
> Connection capex subject to demand and connection type
Includes capitalised service desk costs
Chorus Investor Roadshow - October 2017 13New Zealand’s
broadband market
14BROADBAND MARKET OVERVIEW
> Demand for broadband continues to grow, helped by continued premises/population growth
> The fibre rollout is a churn event with smaller retailers growing their share of overall market
IDC – Broadband market share by technology IDC - Broadband market share by retailer
1,600,000 1,600,000
1,400,000 1,400,000
1,200,000 1,200,000
1,000,000 1,000,000
800,000 800,000
600,000 600,000
400,000 400,000
200,000 200,000
- -
Chorus xDSL Chorus mass market fibre
Chorus premium fibre Local fibre companies (UFB)
Source: IDC
Other fibre networks Other xDSL
Vodafone cable Fixed (mobile) wireless 15
Spark Vodafone Orcon Vocus 2degrees Trustpower ROM
Legacy fixed wireless, satellite
Source: IDC Chorus Investor Roadshow - October 2017MARKET DYNAMICS
> Strong retail competition
▪ 100Mbps fibre as entry level plan
▪ bundled content (e.g. Netflix, Sky TV) and/or
Vocus electricity (e.g. Trustpower, Vocus, Contact)
▪ differentiation based on unlimited data and
product giveaways (e.g. smart TV, Netflix)
> Our network competes with:
Vodafone’s HFC network in Christchurch,
Wellington and Kapiti
local fibre companies
other fibre networks typically focused on the
backhaul and business markets
mobile and fixed wireless networks
Chorus Investor Roadshow - October 2017 16CHORUS CONNECTION TRENDS
> Total connections 1,582,000 at 30 September
copper lines with no broadband declining (baseband copper and unbundled copper)
Q1 slowdown in decline of broadband connections to 1,184,000
30 Sept 31 Dec 31 March 30 June 30 Sept
2016 2016 2017 2017 2017 1800000
Unbundled 105,000 99,000 90,000 82,000 76,000 1600000
copper Baseband copper
Baseband copper 354,000 343,000 328,000 313,000 302,000
1400000
(no broadband) UCLL
1200000
Fibre broadband 203,000 231,000 259,000 292,000 328,000
(GPON)
1000000
VDSL 179,000 199,000 224,000 244,000 294,000 Copper ADSL
(includes naked) 800000
Copper ADSL 847,000 784,000 716,000 650,000 562,000 600000
(includes naked)
Data services 10,000 9,000 9,000 8,000 7,000 400000 VDSL
(copper)
200000 Fibre (GPON)
Fibre premium 13,000 13,000 13,000 13,000 13,000
(P2P)
0
Total fixed line 1,711,000 1,678,000 1,639,000 1,602,000 1,582,000 30-Jun-16 30-Sep-16 31-Dec-16 31-Mar-17 30-Jun-17 30-Sep-17
connections
Data services (copper) Fibre premium (P2P)
Fibre broadband (GPON) VDSL
Copper ADSL Unbundled copper (no broadband)
Baseband copper (no broadband)CONNECTIONS DRIVERS
INDICATIVE CONNECTIONS BY ZONE AT 30 SEPT Chorus Non-UFB1 & 2 areas Local Fibre Company TOTAL
(note: zones not yet defined to reflect UFB2+ areas) UFB1 & 2 areas UFB 1 & 2 areas
Copper connections – no broadband 241,000 62,000 75,000 378,000
Broadband – copper and fibre 866,000 170,000 148,000 1,184,000
TOTAL 1,107,000 232,000 223,000 1,562,000*
*Excludes the 20k business fibre/copper data connections
Growing connections Reducing connections
Broadband penetration at an estimated 85% and continues to Growing network competition as local fibre companies (LFCs)
grow. Fibre established as the premium product and our expand their fibre footprint: ~140k connections at 30 June 2017
expanding fibre footprint is expected to help win customers from (~85k FY16) out of planned footprint of ~450k customers.
wireless and HFC networks.
Intense retail competition is helping broaden the market by Fixed wireless (mobile) retailers actively encouraged their
providing customers with attractive plans and pricing (e.g. free existing low data customers onto their own networks in FY17.
smart TV; free Netflix). Government funded Rural Broadband Initiative will extend
wireless coverage to a further ~70k rural addresses.
Population and premises growth is providing underlying market Continued migration of voice only lines to mobile/wireless and
growth: Auckland city is projected to account for over half of consolidation of multiple voice lines as technology options
NZ’s expected population growth to 2040 with 400,000 new become more mainstream and population ages.
homes.
Chorus Investor Roadshow - October 2017
18FIBRE UPTAKE HAS EXCEEDED EXPECTATIONS
39% uptake with 309,000 connections within UFB deployed footprint at 30 September
73% of mass market fibre plans now 100Mbpsor higher (FY16:54%)
Total mass market fibre uptake by plan type
UFB uptake FY13-FY17 100
35% % of
300000 35% plans 90
80
250000 30% 70
24%
25% 60
200000
20% 50 100/20Mbps
150000 14% 40 $43/month
15%
30
100000 8%
10% 20 50/10Mbps
50000 3%
5% 10 $40.50/month
0
0 0%
Jun-16 Sep-16 Dec-16 Mar-17 Jun-17 Sep-17
Jun-13 Jun-14 Jun-15 Jun-16 Jun-17DEMAND HAS INCREASED EACH YEAR
> 40,000 new fibre connections built in Q1, our highest
First time fibre orders received ever quarter for build
as a % of fibre capable addresses Chorus fibre connection activity - all NZ
% (by rollout year) 25000
60
20000
50
40 15000
30
20 10000
10
0 5000
0
FY12 FY13 FY14 FY15 FY16 Connections built and activated Additional connections completed
Orders (net of cancellations and rejections in the month)
20
Chorus Investor Roadshow - October 2017UFB1 UPTAKE BY REGION
ROLLOUT COMPLETED IN THESE AREAS
50.00%
45.00%
40.00% 39%
AVERAGE
35.00% UPTAKE
30.00%
% uptake relative
to capable
addresses
25.00%
20.00%
15.00%
10.00%
5.00%
0.00%
Sep-16 Dec-16 Mar-17 Jun-17 Sep-17
21
Chorus Investor Roadshow - October 2017DATA DEMAND IS GROWING RAPIDLY
> Streaming video is becoming mainstream > Monthly average data usage per
▪ 1 in 4 NZers using a streaming service in 2016 connection on our network grew 52% in
▪ ~50% of Sky TV set-top boxes are now FY17 to 162GB
internet capable ▪ we’re forecasting ~680GB monthly average
▪ 4K TVs use 7GB per hour by 2020
▪ ~62% households on unlimited data plans 300
GB Copper Fibre Average
250
Share of residential connections by data cap
100% 6% 5% 200
8% Unlimited
33%
80% 100GB or 150
51%
62% more
60% 50GB to 100
100GB
20GB to
40% 50
50GB
5GB to 20GB
20% 0
Under 5GB
0%
2012 2013 2014 2015 2016 2017
Source: Statistics NZ ISP Survey June 2017
Chorus Investor Roadshow - October 2017 22FIXED LINE NETWORKS DELIVER LOWEST COST PER GB
> 51% increase in Chorus network traffic at ~9pm between June 2016 and June 2017
Chorus network traffic by time of day
Chorus Investor Roadshow - October 2017 23FY18: What we’re focused on
24BETTER BROADBAND
> Driving broadband uptake and retention
▪ Ask for better campaign continues to raise
awareness of VDSL and fibre availability
▪ targeted incentives for retailers to migrate
ADSL/UCLL connections to better broadband
and win back off-net connections
> Providing customers with a network that is
fast, reliable and congestion free
▪ ~$20m investment in vectored VDSL in FY18 in
areas outside our planned UFB footprint
▪ will significantly improve VDSL speed (e.g.
~100Mbps at 600m; 50Mbps at 1km)
▪ indicative footprint (outside UFB1 & 2 areas) is:
• ~40% would get >30Mbps
• ~30% would get >50Mbps
• ~20% would get >100Mbps
Chorus Investor Roadshow - October 2017 25TRANSFORMING CUSTOMER EXPERIENCE & COST
> We’re reshaping Chorus to lift customer
experience and reduce cost
▪ new executive structure
▪ emphasis on end-to-end customer experience
to simplify systems and processes
▪ trialling new fibre migration methods with the
aim of reducing customer effort toDELIVERING THE FUTURE BROADBAND NETWORK
> Ongoing operational focus on delivering our contracted UFB rollout on time and on budget
> Continue to work towards a new regulatory framework that supports efficient private sector investment to
meet network upgrades and increasing consumer demands
Opex
Initial RAB ANNUAL MAXIMUM
value ALLOWABLE
Regulatory Return on REVENUE
WACC capital
RAB Anchor and price
capped products:
Depreciation Return of voice
capital 100/20Mbps fibre
Capex direct fibre
NB. Symmetrical wash-
Regulatory
up for unders or overs
Asset lives tax allowance
Building block 27
cost stackCREATING OPPORTUNITIES TO GROW
> Identifying new open access
business opportunities
▪ fixed line and 5G: we see a
complementary future
▪ strong demand for trial data
centre; more sites planned
▪ national backhaul contract with
2degrees
▪ emerging demand for smart
locations (non-broadband access
points)
Chorus Investor Roadshow - October 2017 28Financial Highlights
Financial overview and capital management
29FINANCIAL SNAPSHOT
Revenue ($m) EBITDA ($m)# Senior ND/EBITDA
1,073 1,067
669 653
3.1x 3.1x 3.0x
2.9x
2.7x 2.7x
1,050 1,057 1,058 1,006 1,008 1,040 662 663 649 602 652
594
FY12 FY13 FY14 FY15* FY16* FY17 FY12 FY13 FY14 FY15* FY16* FY17 FY12 FY13 FY14 FY15* FY16* FY17
> Build of UFB network will increase leverage metrics through to completion of UFB1 in 2019
> FY12 results pro-forma post demerger
*FY15 and FY16 earnings impacted by benchmarked pricing (effective 1 Dec. 2014 to 15 Dec. 2015). ‘Dotted’ bars reflect the FY revenue / EBITDA
that would have been recorded if the FPP pricing was applied to these financial reporting periods.
# EBITDA is a non-GAAP financial measure
Chorus Investor Roadshow - October 2017 30FY18 GUIDANCE SUMMARY
FY18 guidance FY17 result
UFB1 Cost Per Premises $1,500 - $1,600 $1,651
Passed (CPPP)
UFB2 communal capex $50m - $70m
(based on estimated starting premises of 30,000 to 40,000 and premises
handed over of 5,000 to 15,000)
UFB1 Cost Per Premises $1,050 - $1,200 $1,122
Connected (excluding layer 2 and including standard installations and some non-
(CPPC) standard single dwellings and service desk costs)
Fibre connections & $260 – $290m (based on mass market 152,000 fibre connections, 12,000 $258m
layer 2 capex backbone builds and 2,500 premium business fibre connections and
including service desk costs)
FY18 Gross capex $780 – $820m $639m
FY18 EBITDA $625 – 650m $652m
UFB programme guidance
UFB1 Communal Tracking toward the top half of this programme guidance, excluding additional splitter investment. As a
guidance: $1.75 - $1.8 result of higher than anticipated fibre uptake, Chorus is bringing forward the investment of additional
billion splitters prior to 2020, and expects to spend up to $30 million on this capability by 2020. This additional
expenditure is growth related.
Chorus Investor Roadshow - October 2017
31CAPEX SUMMARY
> FY18 GUIDANCE: $ 780m - $820m Historical gross capex and illustrative FY18 profile
Fibre $590m-$625m Common Copper Fibre $780 - $820m
~$10m capitalisation (IFRS 15)
~$10m pole replacement programme in Chorus $679m
$639m
UFB areas $597m $593m
$50-70m spend forecast for UFB2 communal
Growth in forecast fibre connections 590-625
566 503
Copper $125m-$145m 504 486
~$50m capitalisation of items previously
expensed (IFRS 15)
~$20m VDSL vectoring investment
79 125-145
~$10m pole replacement programme across the 61 60 67
balance of the network 52 33 40 57 50-65
FY14 FY15 FY16 FY17 FY18
Common: $50m-$65m GUIDANCE
Chorus Investor Roadshow - October 2017 32CAPITAL MANAGEMENT
Chorus dividend profile > The Chorus Board considers that a ‘BBB’ credit rating or
equivalent credit rating is appropriate for a company
30 such as Chorus. It intends to maintain capital
25 management and financial policies consistent with these
cps credit ratings.
20 ▪ FY18 dividend guidance of 22cps, subject to no material
adverse changes in circumstances or outlook.
15 A Dividend Reinvestment Plan has been available to NZ
Dividend and Australian resident shareholders with a 3% discount
10 to prevailing market price.
suspended
5 during copper The FY17 final dividend was underwritten with 54% DRP
pricing review uptake.
0
FY12* FY13 FY14 FY15 FY16 FY17 FY18
FY12*: prorated for the post During the UFB build programme to 2020, the Board
demerger period of seven months expects to be able to provide shareholders with
modest dividend growth from a base of 20cps per
annum, subject to no material adverse changes in
circumstances or outlook.
Chorus Investor Roadshow - October 2017 33DEBT PROFILE
As at $m
30 June 2017 Term debt profile at 30 June 2017 (NZ$m)
800
CFH debt securities available
Borrowings 1,862 Face value of CFH debt securities issued
600
NZ
+ PV of CFH debt 99 EUR EMTN
$M
securities (senior) NZ Bond
+ Net Finance leases 154 400 785 GBP EMTN
677
Sub total 2,115
200 96
- Cash (170) 400 78
27 46
Total net debt 1,945 113
59 59 89
Net debt/EBITDA 2.98 times 0
2025
2026
2027
2018
2019
2020
2021
2022
2023
2024
2028
2029
2030
2031
2032
2033
2034
2035
2036
Financial covenants require senior debt ratio
to be no greater than 4.75 times
> At 30 June, debt of $1,862m comprised:
▪ Long term bank facilities $350m undrawn
▪ NZ bond $400m
▪ Euro Medium Term Notes $1,462m (NZ$ equivalent at hedged rates)
Chorus Investor Roadshow - October 2017 34Appendices
35UFB2 & UFB2+ DETAILS
> The Government announced extensions to the UFB1 rollout in 2017
▪ UFB2 announced January 2017
▪ UFB2+ announced September 2017
Government UFB rollout
UFB2: to be completed by Dec 2022 Chorus’ UFB2 role
to pass ~168,000 premises = estimated communal capex of $370m to
$410m*
Crown investment: $307m
Premises* covered: ~200k Crown funding of up to $298m (65:35 equity/debt)
Homes and businesses covered: ~216k connection capex subject to demand: ~203,000 homes and businesses
Population covered: 9% estimated cost of $1,500-$1,700 per connection (in 2017 dollars and including
layer 2, backbone costs for MDUs and rights of way with 10 or fewer premises)
UFB2+: to be completed by Dec 2022 Chorus’ UFB2+ role
to pass 54,500 premises = estimated communal capex of $135m to
$155m*
Crown investment: $130m Crown funding of up to $109m (100% equity)
Premises* covered: ~60k connection capex subject to demand: ~60,000 homes and businesses
Homes and businesses covered: ~60k estimated cost of $1,500-$1,700 per connection (in 2017 dollars and including
Population covered 2% layer 2, backbone costs for MDUs and rights of way with 10 or fewer premises)
*includes rights of way with more than 10 premises 36
Chorus Investor Roadshow - October 2017INCOME STATEMENT
FY17 FY16
$m $m
Operating revenue 1,040 1,008
Operating expenses (388) (414)
Earnings before interest, tax, 652 594 > FY16 EBITDA was impacted by five and a
depreciation and amortisation (EBITDA) half months of benchmark copper pricing
Depreciation and amortisation (339) (327)
Earnings before interest and income tax 313 267
Net interest expense (154) (140)
Net earnings before income tax 159 127
Income tax expense (46) (36)
Net earnings for the year 113 91
Chorus Investor Roadshow - October 2017 37REVENUE FY17
$m
FY16
$m
EXPENSES FY17
$m
FY16
$m
Basic copper 450 489* Labour costs 74** 78
Enhanced copper 248 242* Provisioning 43 60
Fibre 198 133 Network maintenance 87 89
Value Added 36 35 Other network costs 27 34
Network Services IT costs 60** 65
Field Services 76 83* Rents, rates and property 30 28
maintenance
Infrastructure 23 20
Regulatory levies 13 13
Other 9 6
Electricity 14 14
Total 1,040 1,008 Consultants 10 4
* included ~6 months of the final copper pricing determination Insurance 3 3
Other 27 26
Note: simplifying revenue categories for FY18 Total 388 414
** These costs are impacted by a changed capitalisation approach in FY17
Chorus Investor Roadshow - October 2017 38FY18 REVISED REVENUE REPORTING CATEGORIES
Category Description FY17
$m
Copper line (no broadband) Revenues received for copper lines where no broadband service is provided by Chorus (i.e. 163
‘voice only’ UCLL, SLU, SLES, Baseband IP, UCLFS lines).
Copper based broadband Revenues received for copper lines where an ADSL or VDSL broadband service is provided by 501
Chorus, including the backhaul (tail extension services) relating to these services.
Data services (copper) Revenues received for the ~8,000 data services connections on copper. 32
Fibre broadband (GPON) Revenues for business and residential fibre connections on GPON. 123
Fibre premium (P2P) Revenues for enterprise/network grade bandwidth and direct (dark) fibre point-to-point (P2P) 79
connections.
Note: Includes regional backhaul previously included in Value Added Network Services and fibre
backhaul for copper connections previously included in Basic Copper.
Value added network Revenues for carrier grade data transport services and aggregation handover links. 34
services
Infrastructure No change 23
Field services No change 76
Other revenue No change 9
Total revenue 1,040
Chorus Investor Roadshow - October 2017
39CHORUS WHOLESALE PRICING – KEY SERVICES
Regulated copper pricing: effective 16 December 2015 Key mass market (GPON) fibre product pricing as at 01 July 2017
Copper line only Year 1 - $29.75 Voice only $25.00 UFB contracted products.
Year 2 - $30.22 FY19 pricing applies until end of 2019 with subsequent
50/10Mbps FY17: $40.50
Year 3 - $30.70 pricing subject to regulatory framework.
FY18: $41.50
Year 4 - $31.19
FY19: $42.50
Year 5 - $31.68
100/20Mbps FY17: $43
Copper line with broadband Year 1 - $41.19
FY18: $44
Year 2 - $41.44
FY19: $45 Commercial products. Prices subject to change on notice,
Year 3 - $41.71
200/20Mbps FY17-FY19: $55 but must be within UFB contracted price cap in Chorus
Year 4 - $42.02
1Gbps residential FY17-FY19: $65 UFB areas.
Year 5 - $42.35
1Gbps business (SME) FY17-FY19: $75
Business 100/100Mbps FY17-FY19: $175+ UFB contracted product. FY19 pricing applies until end of
to 1G/1G 2019 with subsequent pricing subject to regulatory
framework.
Fibre premium point-to-point products
High Speed Network Service 100Mbps to 1Gbps over Ethernet. $380+ Price capped in Chorus UFB areas until end of 2019
Premium/Bitstream 4 with subsequent pricing subject to regulatory
Direct Fibre Access Layer 1 (unmanaged) dark fibre. $355 framework.
Bandwidth Fibre Access Layer 1 bandwidth managed fibre. 100Mbps, 1Gbps or 10Gbps. $380+
Commercial products. Prices subject to change on
Intra Candidate Area Layer 1 or 2 fibre backhaul, used between local exchanges within UFB $450+ notice, but must be within UFB contracted price cap
Backhaul areas. in Chorus UFB areas.
Chorus Regional Transport Connecting New Zealand's major UFB centres with 10Gbps and 100GE various 40
bandwidth options.
Chorus Investor Roadshow - October 2017Disclaimer
This presentation:
• Is provided for general information purposes and does not constitute investment advice or an offer of or invitation to purchase
Chorus securities.
• Includes forward-looking statements. These statements are not guarantees or predictions of future performance. They involve
known and unknown risks, uncertainties and other factors, many of which are beyond Chorus’ control, and which may cause
actual results to differ materially from those contained in this presentation.
• Includes statements relating to past performance which should not be regarded as reliable indicators of future performance.
• Is current at the date of this presentation, unless otherwise stated. Except as required by law or the NZX Main Board and ASX
listing rules, Chorus is not under any obligation to update this presentation, whether as a result of new information, future
events or otherwise.
• Should be read in conjunction with Chorus’ audited consolidated financial statements for the year to 30 June 2017 and NZX and
ASX market releases.
• Includes non-GAAP financial measures including "EBITDA”. These measures do not have a standardised meaning prescribed by
GAAP and therefore may not be comparable to similar financial information presented by other entities. However, they should
not be used in substitution for, or isolation of, Chorus' audited consolidated financial statements. The EBITDA information used
in this presentation has been subject to audit. We monitor EBITDA as a key performance indicator and we believe it assists
investors in assessing the performance of the core operations of our business. Refer to the appendices of Chorus’ 2017 annual
results investor presentation for further detail relating to EBITDA measures.
• Has been prepared with due care and attention. However, Chorus and its directors and employees accept no liability for any
errors or omissions.
• Contains information from third parties Chorus believes reliable. However, no representations or warranties are made as to the
accuracy or completeness of such information.
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