Chorus’ annual shareholders’ meeting

Chorus Limited
Level 10, 1 Willis Street
P O Box 632
Wellington 6140
New Zealand
Email: company.secretary@chorus.co.nz







STOCK EXCHANGE ANNOUNCEMENT

1 November 2017


Chorus’ annual shareholders’ meeting


Please find attached the following prepared announcements which will be delivered at
Chorus’ annual shareholders’ meeting to be held in Wellington at 10.30am today:

 Chairman’s address;
 CEO’s address; and
 Presentation slides.

Copies of these announcements will be available on Chorus’ website later today.

The meeting will also be webcast live on the investor section of Chorus’ website at
www.chorus.co.nz/webcast.



ENDS


For further information:


Nathan Beaumont
Stakeholder Communications Manager
Phone +64 4 896 4352
Mobile: +64 21 243 8412
Email: Nathan.Beaumont@chorus.co.nz

Brett Jackson
Investor Relations Manager
Phone: +64 4 896 4039
Mobile: +64 27 488 7808
Email: Brett.Jackson@chorus.co.nz

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CHORUS LIMITED ANNUAL MEETING 1 NOVEMBER 2017

CHAIRMAN’S ADDRESS


Your Board continues to focus on creating long-term value for shareholders through
delivering better broadband for New Zealanders. Chorus is more than 70 per cent of
the way to our original goal of bringing fibre within reach of over a million potential
customers and we’re already on the cusp of achieving 40 per cent uptake.

That’s a big step up from the 24% uptake as recently as in June last year.
And, in the same period, we’ve made fibre available to another 100,000 premises.
This level of uptake has only been achievable because of the large investment we've
made to boost the number of customers we’re connecting each week. More
importantly, while volumes have increased, so has customer satisfaction. Kate will
talk a bit more about that shortly.

Fibre is clearly seen by New Zealanders as the premium broadband service and the
demand we’re seeing gave us the confidence in January to announce an extension of
our UFB partnership with government to another 200,000 or so customers. In late
August we agreed to go further again – to another 60,000 or so customers. We also
committed to complete our rollout work by the end of December 2022, two years
earlier than originally planned.

I can’t emphasise enough how fantastic this outcome is by world standards. We’re
taking fibre from Auckland, with a population of about 1.5 million to places like
Ahaura on the West Coast of the South Island with a population of about 370.
Blackball, Taylorville, Dobson, Moana, Kumara and Kaniere are all on the list too.

When we’re done, more than 1.3 million customers will be able to connect to our
fibre. That’s about three-quarters of the 87% of New Zealanders to be covered, with
the balance provided by the local fibre companies.

Our decision to commit to extending fibre further was not an easy one. We’ll be taking
on about $100 million more in peak debt funding. However, the Government has

committed to providing additional financing to reflect the greater cost of taking fibre
to these areas. And while it’s not a subsidy, this financing and the encouraging
demand for fibre helped tip the scales for us to invest in these more regional areas.

We weren’t successful in the second phase of the Government’s Rural Broadband
Initiative and Mobile Blackspot fund. We aren’t a mobile operator so mobile blackspots
were always going to be challenging, while the UFB2 extension programme was
developed in parallel and provided the best option for securing government
investment whilst creating a positive return for our shareholders.

We were also encouraged by the Government’s significant steps towards
implementing a utility-type regulatory framework to fibre. Draft legislation was
introduced to Parliament in August that outlines the adoption of a building block
model – as used for electricity and gas networks – which would apply to our fibre
network from 2020. If and when this framework is passed into law, it will be subject
to interpretation and implementation by the Commerce Commission. So the legislative
detail will be important to ensure a smooth transition to the new regime by 2020.
Labour has supported this regulatory direction, and we do not anticipate any change
from the new government.

It will be important that the legislative framework sets up a situation so that the
Commerce Commission is not asked to second guess the past, can transition to the
new regime without shocks for consumers and investors, and is clear on the utility
principles of regulation to enable future innovation and investment.

While fibre is clearly the focus of our investment, there are other areas of the
business that also deserve mention.

Our network team put a lot of emphasis on fault performance on the copper network
this year and they’ve delivered great results for customers. Last year, we struggled a
little after heavy winter rain and third party network damage, which led one of the
retailers to claim the copper network was unreliable in order to promote its own
wireless offering. The network maintenance teams kept repair times to around 24

hours this year despite a very challenging and wet autumn and winter, and clearly
demonstrated that the copper network continues to be highly reliable.

We also continued to invest in the copper network to provide customers with an even
better broadband experience. We upgraded more than 100 rural broadband cabinets
with VDSL capability and deployed a new technology nationally to improve copper
broadband stability and performance.

The new regulatory framework has not dealt with the rural parts of New Zealand
where the costs are highest. This will be something that needs to be looked at if New
Zealand wants to incentivise ongoing investment and enable better broadband for
people in non-fibre areas.

Competition from other networks – fibre and wireless – remains perhaps the single
most important challenge facing the business. While Chorus achieved net profit after
tax of $113 million and delivered EBITDA of $652 million, total connections reduced
by about 125,000. That translates to about $55 million in reduced revenue in the
current financial year.

The loss of copper connections to other fibre companies is expected. The more recent
dynamic is having a large vertically integrated retailer encouraging their customers on
to their own wireless broadband network. Wireless does make sense for some
customers in some locations, or if they are very low data users, but its benefits have
been oversold for many. That view has recently been backed up by Consumer New
Zealand who noted that some of the claims being made about wireless performance
don’t stack up.

Last year I said I was a little frustrated that retailers were not encouraging customers
to upgrade to much faster VDSL where it was available and that we intended to do
more to help customers realise what was on their doorstep. We’ve done that and
VDSL uptake has lifted significantly. That’s partly because we’ve been advertising its
availability, but also because we’ve been providing retailers with incentives to shift
their customers to better broadband – be it VDSL or fibre. That does come at a cost to

Chorus, but it makes sense to encourage customers to stay on our network –
particularly when we know we offer a better service.

We’ve invested heavily in improving the experience for customers moving to fibre as
well. Now that the processes we developed to support this migration with retailers are
bedded in and fibre connections are happening in large volumes, it’s time for us to
take a good look at how we can reduce our costs back to a more sustainable level.

A fully imputed dividend of 21 cents per share was declared and we’ve indicated an
increase to 22 cents for this financial year. We continued to offer a dividend
reinvestment plan so that we can retain cash for network investment purposes and to
provide an option for shareholders to build on their investment in us, and this remains
very popular with shareholders with a more than 50% uptake for the final dividend.
Given the additional capex we’ve committed for UFB2, we decided to have the final
dividend underwritten. This meant about 6 million additional shares were issued,
retaining more than 20 million dollars for investment purposes. No decisions have
been made on underwriting future dividends.

Just as Chorus itself is evolving, so is your Board. Keith Turner has been a director
since Chorus was established in 2011 and is standing down this year. We thank Keith
for his tremendous contribution through those formative and at times challenging
years, and particularly for his invaluable contribution to getting our capital build on
such an efficient footing.

We’re pleased to have Jack Mathews standing for the Board today. Jack brings wide
ranging experience from across media, telecommunications and technology industries.
The Board unanimously supports his appointment as an independent Director.
Kate McKenzie is also standing, clearly with our support! We appointed Kate as chief
executive back in February and she has done a great job getting up to speed very
quickly with the New Zealand environment and bringing her extensive Australian
telecommunications experience to bear.

One of the first things we did with Kate was to go through a major strategic review of
the company to consider technology and industry developments. This review gave us
even stronger confidence in Chorus’ future and the role of fibre.

It’s clear that New Zealand is different from most other countries because it is well on
the way to having fibre connected into most homes and businesses. We’ve already
bridged the challenging economics that other countries continue to grapple with and
where wireless, or copper networks are seen as the next best solution. As one
industry report said recently – New Zealand’s streets are paved with glass. And that
fibre optic glass is why we believe wireless networks will remain complementary
technologies. Fibre provides a dedicated connection that can carry substantial
amounts of data. Combine that capacity with our other infrastructure and there’s no
doubt Chorus has a strong role to play in helping New Zealanders enjoy the benefits
of emerging technologies.

I’ll now ask Kate as CEO to talk through what she and the rest of the Chorus team are
focused on.

Thank you.


ENDS

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CHORUS LIMITED ANNUAL MEETING 1 NOVEMBER 2017

CEO’s ADDRESS


Thank you Patrick and good morning everyone.

It’s great to have you join us in our offices today and I look forward to meeting some
of you after the meeting.

I’ve been chief executive for just over eight months now and I’m excited and
energised about Chorus and the opportunities associated with what it is providing for
New Zealand.

I’m not the only Australian to recognise that Chorus is doing great work for New
Zealand. Just last week the Australian Prime Minister was publicly referring to the New
Zealand model for fibre rollout as a shining example of the way to do things, versus
the current Australian approach. Clearly I’ve come to the right place!

And having met with a range of international network operators in the last few weeks,
I’m even more convinced than ever that we’re heading in the right direction. European
telcos would like to deploy more fibre, but tend to be constrained by the amount of
investment required and the limitations of their existing operating models.

However, there are a growing number of countries around the world where
widespread fibre networks are being recognised as the fourth utility. Singapore’s
Netlink Trust, for example, recently joined us as being a publicly listed network only
operator.

Chorus is at the centre of a very clear global trend – the thirst for high speed internet
connections.
You can see that in the rate at which we’re connecting people to VDSL broadband and
fibre. In the last three months alone 50,000 customers upgraded to VDSL and 36,000
on to our fibre network.

We now have 53% of broadband customers on high speed broadband, up from 45%
in June. As a result, the average broadband speed on our network has gone from
around 11 Megabits in 2012 to almost 60 megabits in September. And as people
switch on to faster broadband, they use it more.

If there’s one thing that gives me confidence in the future of fixed line broadband it’s
this chart. It tells you how critical our infrastructure is to people’s lives. At 6am we
see the amount of data on our network start to grow as people wake up and go
online. That traffic increases through the day and jumps up noticeably after 3pm –
when school gets out. It lifts again after 6pm as people arrive home and start
streaming online TV. Right through to the peak at about 9pm.

What’s amazing is the rate and pace at which this is increasing. Since June last year
we’ve seen a 51% increase in data traffic as represented by the different coloured
shading. That difference is mostly made up of an ever growing mountain of data
usage during those peak hours of viewing in the evening. More people are switching
on to the convenience of streaming video online – watching programmes when they
want.

And more and more content is becoming available online. First it was Netflix, Lightbox
and Youtube. Now Sky TV have made about half of their set top boxes internet
capable and TVNZ is livestreaming. More recently Vodafone has announced a TV
service that will stream video over our fibre network.

An important related trend is the growing data usage in each home. Average monthly
usage on our network was 162 Gigabytes in September compared to about 120
Gigabytes last year. Statistics New Zealand estimate 62% of residential connections
are now on unlimited data plans, up from 51% last year.

That’s a significant jump and some retailers – like Orcon, Stuff Fibre and My Republic
- have recognised the trend and now only sell unlimited data plans. Contact Energy
has recently joined them. They are the largest electricity retailer to start bundling
broadband with electricity - further proof of how broadband is now the fourth utility.

With traditional broadband retailers like Vocus also getting into electricity, we expect
to see more of this trend.

Despite the trends in our favour, we do face challenges and the biggest of those, as
Patrick mentioned, is the loss of connections to other networks. Total connections
reduced by about 125,000 last year and by a further 20,000 in the first quarter to the
end of September.

What are we doing about it?

The main change is that we’ve gone from being a passive wholesaler to being more
active in the marketplace. We can’t rely on all retailers to promote our products for us
when they have their own competitive motivations.

That’s why you may have seen us on your TV screen in May when we launched our
first mainstream ad campaign encouraging New Zealanders to ask for better.

We aren’t looking to become a retailer, but we do think we have an important role to
play in helping to ensure that consumers have accurate information about their
broadband options. As independent data from TrueNet has shown, fibre and VDSL are
excellent broadband products, and ADSL broadband matches fixed wireless for
webpage browsing.

It’s great to see Consumer New Zealand also stepping up in terms of the information
it is providing to customers. Their recent report confirms their view that some of the
claims being made about wireless performance don’t stack up relative to fixed line
options given speed, data and congestion limitations.

We know there are some customers who are looking forward to getting back on our
network as soon as fibre rolls past. If not sooner.

And we know our campaign is achieving results. The decline in connections has slowed
progressively in the last few months and broadband connections through the first
quarter were almost flat. But there’s still plenty more we can do.

If you haven’t done so already, you can check whether better broadband is available
at your home by visiting askforbetter.co.nz online. Chorus people will be more than
happy to help shareholders in the room with that afterwards.

Letting people know better broadband is available is one thing. Connecting them to it
is another. Installing fibre into a home is not a simple job – we’ve put a large amount
of resources and money into improving the process and we’ve made great progress.
Simplifying the process as much as we can will continue to be a focus – we want to
reduce the amount of effort involved for customers.

In the three months to the end of September we built 40,000 new connections for
customers.

That’s our highest ever quarter for build and is on top of the 129,000 we built through
last financial year.

Pleasingly, along with the growing volumes, customer satisfaction has gone from 6.9
out of 10 last June to 7.4.

We’re now working on ways to make connecting even easier for customers with about
a dozen different trials. In Hokitika, for example, we’re trialling connecting homes at
the same time as we’re building the network in the street. So far we’ve had 70% of
customers spoken to wanting a fibre connection.

And in Auckland, we’ve door knocked in an area where fibre was already available and
had 40% of customers saying they wanted a connection. Many people didn’t realise
that they can get fibre connected for free – that’s a pretty good deal.

These are promising starts towards our goal of reducing customer effort for a
connection to less than a day. There’s still a lot of work to do to continue to reduce
the amount of effort involved for customers wanting to connect.

We’re not just focused on connecting people to fibre. We’re also thinking about what
else can connect to our network and provide opportunities for growth.

It’s an exciting future, with Chorus at the heart of the information superhighway.
Exchange buildings as data centres, fibre connecting CCTV and other smart devices,
and infrastructure for micro cell sites. These are all logical extensions of the network
infrastructure we have today. We’re testing some of these scenarios and you can
expect to hear more on that over the coming year.

Our copper network is still a very important part of how we provide service to
customers, especially outside our fibre footprint. We put a lot of effort into
maintaining its performance through winter and we’re continuing to look at ways to
improve, such as how we can work with retailers to reduce unnecessary technician
visits. In September about 20% of the broadband faults reported to us were for issues
outside of our control, like customer modems.

That means technicians made more than 5,000 visits they didn’t need to. We’ve seen
one retailer reduce their avoidable technician visits to almost zero by committing
more expertise to customer troubleshooting. That’s a win-win for the retailer, us and
all customers who would have otherwise had to wait longer for their service to be
fixed.

This is one example of why we’ve begun making changes to the internal structure of
the business, with a big focus on lining up our processes and systems around the end-
to-end experience for customers. Putting customers at the centre of how we redesign
processes is something that I am personally very passionate about.

The first stage of this change is complete with revised executive functions and some
new executives in place. We’re now working through how this simplified structure can

transform the performance of the business, by delivering the best possible customer
experience at the lowest possible cost. This will allow us to reduce the size of our
organisation.

There’s plenty to be done, but I’m confident we’re on the right track and Chorus will
continue to play a pivotal role in shaping New Zealand’s digital future.

ENDS

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Annual Meeting
1 November 2017

Chairman’s Introduction & Address
CEO Address
Resolutions
Shareholder Discussion & Questions
Morning tea
AGENDA

(Chairman)
(Deputy Chairman)
YOUR BOARD

4
* Includes estimated 43k greenfieldspremises for UFB1
Premisesto be passed by
Chorus by Dec 2022
~1,054,000*
Customers able to connect by
rollout end
~1.36 million
Estimated communal capex to
pass premises
$2.26 to 2.37 billion
Crown funding Up to 1.33 billion
(57:43equity/debt)
-
20,000
40,000
60,000
80,000
100,000
120,000
140,000
FY12FY13FY14FY15FY16FY17FY18FY19FY20FY21FY22FY23
Chorus rollout schedule –indicative only*
UFB1UFB2 & UFB2+
* UFB1 build ends Dec 2019 and UFB2 build ends Dec 2022. Detailed scheduling for UFB2 & UFB2+ to be completed by end 2017.
FIBRE 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 ~370towns and rural communities
▪Chorus has increased its share of these additional UFB phases
Premises
passed

5
NEW ZEALAND IS TAKING FIBRE FURTHER...
>From Auckland, New Zealand’s largest city
▪population: 1.495m (2016)
>To Ahaura, in the South Island’s West Coast
▪population: 370 (2013)
>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

EXAMPLE OF REACH OF UFB ROLLOUT
>UFB deployment areas
▪UFB1: Greymouth only
▪UFB2: Hokitikaand Runanga
▪UFB2+: Ahaura, Blackball, Dobson, Kaniere,
Kumara, Moana, Taylorville

TRANSITION TO A REGULATED UTILITY MODEL
7
>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
Note: Legislative process subject to new
Government, followed by the Commerce
Commission process to set input
methodologies

8
FY17 RESULT OVERVIEW
See the Annual Report 2017 for the detailed calculation.

(Chairman)
(Deputy Chairman)
YOUR BOARD

CEO address: Kate McKenzie
10

0
10
20
30
40
50
60
0
200,000
400,000
600,000
800,000
1,000,000
1,200,000
1,400,000
May-11Nov-11May-12Nov-12May-13Nov-13May-14Nov-14May-15Nov-15May-16Nov-16May-17
Average Connection Speed (Mbps)
Active Connections
ADSLADSL2+VDSL2GPONAverage Connection Speed
11
CONNECTION SPEED
>With 53% of broadband connections now on VDSL or fibre, average broadband speed has increased from
33Mbps in Sept 16 to 59Mbpsin Sept 17.

12
FIXED 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

13
6%
5%
8%
33%
51%
62%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
201220132014201520162017
Share of residential connections by data cap
Unlimited
100GB or more
50GB to 100GB
20GB to 50GB
5GB to 20GB
Under 5GB
UNLIMITED DATA BECOMING THE NORM
Source: Statistics NZ ISP Survey June 2017
>62% of connections are now estimated to be on unlimited data

0
5000
10000
15000
20000
25000
Jul-15
Aug-15
Sep-15
Oct-15
Nov-15
Dec-15
Jan-16
Feb-16
Mar-16
Apr-16
May-16
Jun-16
Jul-16
Aug-16
Sep-16
Oct-16
Nov-16
Dec-16
Jan-17
Feb-17
Mar-17
Apr-17
May-17
Jun-17
Jul-17
Aug-17
Sep-17
Chorus fibre connection activity -all NZ
Connections built and activatedAdditional connections completedOrders
>585,000 premises passed (FY17:581,000) out of
~1,054,000 to be passed by the end of 2022
784,000customers now able to connect
14 days weighted average lead time for fibre
connection (was 22 days in June)
27k work in progress connections (was 32k in
June)
customer satisfaction with installation was 7.4
in August (rolling three month average)
15
FIBRE ROLLOUT AND UPTAKE
(net of cancellations and
rejections in the month)
>40,000 new fibre connections built in Q1, our
highest ever quarter for build

16
CREATING 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-building access points)

17
>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 to <1 day
▪preparing for new regulatory framework and a
post UFB rollout environment
TRANSFORMING CUSTOMER EXPERIENCE & COST

Resolutions
18

•Resolution 1: That Mr Jon Hartley be re-elected as a Chorus director.
•Resolution 2: That Ms Prue Flacks be re-elected as a Chorus director.
•Resolution 3: That Mr Jack Matthews be elected as a Chorus director.
•Resolution 4: That Ms Kate McKenzie be elected as a Chorus director
•Resolution 5: That the Board be authorised to fix the fees and expenses of
KPMG as auditor.
•Resolution 6: That Chorus’ constitution be altered in the form and manner
described in Explanatory Note 3 of the Notice of Meeting.
RESOLUTIONS

Shareholder questions
20

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 NZXMain Board and ASXlisting 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 NZXand ASXmarket
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.
21
Disclaimer

Annual Meeting
1 November 2017