Chorus Q3 FY18 Connections Update

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







STOCK EXCHANGE ANNOUNCEMENT


13 April 2018


Chorus Q3 FY18 Connections Update

The Q3 period to 31 March 2018 was characterised by a continued slowdown in line loss, with
strong broadband demand in Chorus UFB zones
 total fixed line connections declined by 16k to 1,543,000 (-23k in Q2), with most of the
reduction in other fibre company zones as expected
 non-broadband copper lines declined by 17k, (-20k in Q2)
 total broadband connections grew by 3k to 1,184,000 (-3k in Q2)
 broadband connections grew by 11k within Chorus UFB zones

Fibre uptake in UFB areas now 43%
 strongest ever quarter for fibre demand with 67k orders
 67% of mass market fibre connections on 100Mbps
 25% increase in 1Gbps connections to 25,000
 continued increase, albeit off a low base, of off-net “win-backs” where fibre now available

Peak time data demand continues to surge
 new peak record of 1,599 gigabits per second network throughput on 4 April 2018
 185GB monthly average household data usage in March 2018, up from 174GB in December


ENDS


For further information:

Nathan Beaumont
Media and PR 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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Q3 FY18 Connections Update
13 April 2018

Q3 FY18 OVERVIEW
2
>The Q3 period to 31 March 2018 was characterised by a continued slowdown in line loss,
with strong broadband demand in Chorus UFB zones
▪total fixed line connections declined by 16k to 1,543,000 (-23k in Q2), with most of the
reduction in other fibre company zones as expected
▪non-broadband copper lines declined by 17k, (-20k in Q2)
▪total broadband connections grew by 3k to 1,184,000 (-3k in Q2)
▪broadband connections grew by 11k within Chorus UFB zones
>Fibre uptake in UFB areas now 43%
▪strongest ever quarter for fibre demand with 67k orders
▪67% of mass market fibre connections on 100Mbps
▪25% increase in 1Gbps connections to 25,000
▪continued increase, albeit off a low base, of off-net “win-backs” where fibre now available
>Peak time data demand continues to surge
▪new peak record of 1,599 gigabits per second network throughput on 4 April 2018
▪185GB monthly average household data usage in March 2018, up from 174GB in December
Q3 FY18 CONNECTIONS UPDATE

Q3 CONNECTION TRENDS
31 March
2017
30 June
2017
30 Sept
2017
31 Dec
2017
31 March
2018
Unbundled copper 90,00082,00076,00068,00062,000
Baseband copper
(no broadband)
328,000313,000302,000290,000279,000
Fibre broadband
(GPON)
259,000292,000328,000362,000394,000
VDSL
(includes naked)
224,000244,000294,000320,000325,000
Copper ADSL
(includes naked)
716,000650,000562,000499,000465,000
Data services
(copper)
9,0008,0007,0007,0006,000
Fibre premium
(P2P)
13,00013,00013,00013,00012,000
Total connections
1,639,0001,602,0001,582,0001,559,0001,543,000
>Total connections reduced by 16,000 to1,543,000
a reduction of 17,000copper lines with no broadband (including unbundled connections)
anincrease of 3,000total broadband connections to 1,184,000
fibre premium connections declined as customers move to lower cost/grade inputs
0
200000
400000
600000
800000
1000000
1200000
1400000
1600000
1800000
Data services (copper)Fibre premium (P2P)
Fibre broadband (GPON)VDSL
Copper ADSLUnbundled copper (no broadband)
Baseband copper (no broadband)
Copper ADSL
VDSL
Fibre (GPON)
Unbundled copper
Baseband copper

CONNECTIONS BY ZONE
4
>The table below shows indicative connection totals by zone as at 31 March
▪broadband connections within the Chorus UFB zone increased
▪connections in Rural (non-UFB) zone were stable
▪the pace of connection loss in the LFC UFB zone has slowed compared to the same time last
year
Q3 FY18 CONNECTIONS UPDATE
Chorus
UFB zone*
Q3 change
Rural
(non-UFB)
zoneQ3 change
Local Fibre
Company
UFB zone*Q3 change
TOTAL
Copper connections:
no broadband
219,000 -13k54,000-1k68,000 -3k341,000
Broadband:
copper and fibre
905,000+11k143,000-136,000-8k1,184,000
TOTAL 1,124,000197,000204,0001,525,000**
* Includes planned UFB1, 2 and 2+ coverage
**Excludes the 18k business fibre/copper data connections

0
10
20
30
40
50
60
70
80
90
100
Jun-16Sep-16Dec-16Mar-17Jun-17Sep-17Dec-17Mar-18
50Mbps100Mbps200Mbps
GigabitEducationBusiness 100Mbps+
>32,000mass market fibre connections added in Q3
▪25,000 connections now on gigabit plans (Q2: 20,000)
▪67% of mass market fibre connections on 100Mbps
▪100/20Mbps pricing increases to $45 monthly from 1 July
FIBRE UPTAKE & USAGE
5
Total mass market fibre uptake by plan type
% of
plans
>Monthly average data usage per connection on our
network grew to 185GBfrom 174GB in Dec 2017
▪268GBon fibre (Dec: 250GB)
▪144GBon copper (Dec:141GB)
GB
Q3 FY18 CONNECTIONS UPDATE
0
50
100
150
200
250
300
Dec-14
Mar-15
Jun-15
Sep-15
Dec-15
Mar-16
Jun-16
Sep-16
Dec-16
Mar-17
Jun-17
Sep-17
Dec-17
Mar-18
CopperFibreAverage
Monthly average data usage per connection on our network
GB

6
1328
1385
1449
1457
1599
0
200
400
600
800
1000
1200
1400
1600
1800
10-Dec-1718-Jan-181-Feb-1829-Mar-184-Apr-18
Record traffic peaks on Chorus’ network
ONLINE VIEWING DRIVING RECORD PEAKS
>New peak traffic record of 1,599 Gbpson 4
th
April
▪up 20% since Q2 record peak of 1,328Gbps on 10 December
▪increase equivalent to an extra 50,000 HD TV streams
Network
throughput
(Gbps)
Q3 FY18 CONNECTIONS UPDATE
TVNZ reports 1.33m live
streams (~30m viewing
minutes) during first 7 days
of Commonwealth Games

>Record quarter for fibre demand with 67k orders
32k fibre installations completed
weighted average lead times reduced from 14 to 8
days
field crews increased from 700 to 720
work in progress increased from 25k to 32k
>Migration activity fuelling order growth
▪30+ concurrent campaigns (RSP and Chorus led)
▪Hokitikabuild + ONT trial extended to Thames:
about 2/3 of customers spoken to so far agree to
ONT installation
▪strong response to trial Wellington off-net campaign
>43% UFB uptake at 31 March (Q2: 42%)
373,000 connections
863,000customers able to connect
643,000 premises passed
scheduled to pass 45,000 more premises in Q4
7
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
0
200,000
400,000
600,000
800,000
1,000,000
1,200,000
1,400,000
UFB rollout and uptake
UFB connectionsUFB available addresses
Planned footprint% Uptake
No. of
connections
FIBRE FOCUS
Q3 FY18 CONNECTIONS UPDATE
Uptake
Premisesto pass by Dec 2022~1,054,000*
Customers able to connect ~1.36 million
*Includes estimated 43k greenfieldspremises for UFB1

0.00%
5.00%
10.00%
15.00%
20.00%
25.00%
30.00%
35.00%
40.00%
45.00%
50.00%
Jun-17Sep-17Dec-17Mar-18
8
% uptake relative
to capable
addresses
43%
AVERAGE
UPTAKE
ROLLOUT COMPLETED IN THESE AREAS
UFB UPTAKE BY AREA
Q3 FY18 CONNECTIONS UPDATE
Note: % uptake can reduce in some areas as the fibre rollout
passes more addresses in a period

9
CONNECTION SPEED
>61% of broadband connections now on VDSL or fibre
>Average broadband speed has increased from 64Mbps in Dec 17 to 72Mbpsin March 18.
Q3 FY18 CONNECTIONS UPDATE
0
10
20
30
40
50
60
70
80
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-17Nov-17
Average Connection Speed (Mbps)
Active Connections
Connection Speed
ADSLADSL2+VDSL2GPONAverage Connection Speed