Chorus Q2 FY19 Connections Update

Chorus Limited
Level 10, 1 Willis Street
P O Box 632
Wellington
New Zealand

Email: company.secretary@chorus.co.nz

STOCK EXCHANGE ANNOUNCEMENT

17 January 2019


Chorus Q2 FY19 Connections Update

The Q2 period to 31 December 2018 saw UFB uptake grow to 51%, with fibre
demand stronger than the same period in 2017.

Total fixed line connections decreased by 21k to 1,486,000 in Q2 (Q1
FY19: -19k). This was an improvement on the equivalent period in Q2 FY18
(- 23k).
 Broadband connections continued to grow in Chorus fibre areas (+5k).

Total broadband connections decreased by 4k to 1,186,000 (Q1 FY19:
+3k), consistent with seasonal Q2 broadband disconnections.
 517,000 broadband connections are now on fibre, with 38,000 fibre
connections added in Q2 (Q1 FY19: 46,000; Q2 FY18: 34,000)
 1Gbps connections grew 22% to 44,000.

Data consumption continues to grow, with 25 November setting a record of
~11 million gigabytes
 Monthly average household data usage was 235GB in December, up from
221GB in September. Fibre users now average 315GB monthly, up from
307GB in September.

ENDS


For further information:

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

Holly Cushen
Senior Communications Specialist
Mobile: +64 (21) 029 94144
Email: holly.cushen@chorus.co.nz

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Q2 FY19 Connections Update
17 January 2019

>Total fixed line connections decreased by 21k to 1,486,000 in Q2 (Q1 FY19: -19k)
▪this was an improvement on the equivalent period in Q2 FY18 (-23k)
▪broadband connections continued to grow in Chorus fibre areas (+5k)
>Total broadband connections decreased by 4k to 1,186,000 (Q1 FY19: +3k), consistent with
seasonal Q2 broadband disconnections
▪517,000 broadband connections now on fibre
▪38,000 fibre connections were added in Q2 (Q1 FY19: 46,000; Q2 FY18: 34,000)
▪1Gbps connections grew 22% to 44,000
>Data consumption continues to grow, with 25 November record of ~11 million gigabytes
▪235GBmonthly average household data usage in December, up from 221GB in September
▪fibre users now average 315GBmonthly, up from 307GB in September
17 January 2019
UFB uptake grew to 51%, with fibre demand stronger than the same period in 2017
Q2 FY19 overview
Q2 FY19 CONNECTIONS UPDATE
2

0
200000
400000
600000
800000
1000000
1200000
1400000
1600000
30-Jun-1730-Sep-1731-Dec-1731-Mar-1830-Jun-1830-Sep-1831-Dec-18
Data services (copper)Fibre premium (P2P)
Fibre broadband (GPON)VDSL
Copper ADSLUnbundled copper (no broadband)
Baseband copper (no broadband)
17 January 2019
31 Dec
2017
31 March
2018
30 June
2018
30 Sept
2018
31 Dec
2018
Unbundled
copper
68,00062,00053,00045,00039,000
Baseband
copper
(no broadband)
290,000279,000268,000255,000244,000
Fibre broadband
(GPON)
362,000394,000433,000479,000517,000
VDSL
(includes naked)
320,000325,000321,000309,000295,000
Copper ADSL
(includes naked)
499,000465,000433,000402,000374,000
Data services
(copper)
7,0006,0006,0005,0005,000
Fibre premium
(P2P)
13,00012,00012,00012,00012,000
Total connections
1,559,0001,543,0001,526,0001,507,0001,486,000
Fibre (GPON)
VDSL
Copper ADSL
Unbundled copper
Baseband copper
Q2 connection trends
Q2 FY19 CONNECTIONS UPDATE
3

Q2
>Total fixed line connections decreased by 21k to 1,486,000 in Q2 (Q1 FY19: -19k)
▪broadband connections continued to grow in Chorus UFB areas (+5k), albeit at a slower pace than
Q1 (+13k) reflecting seasonal factors (e.g. holidays and student disconnections)
17 January 2019
Connection movements by Zone -indicative
CONNECTIONS
Chorus
UFB zone*
Rural
(non-UFB)
zone
Local Fibre
Company
UFB zoneTOTAL
Broadband:copper
+ fibre
922,000153,000111,0001,186,000
Copper
connections: no
broadband
177,00049,00057,000283,000
TOTAL 31 Dec1,099,000202,000168,0001,469,000**
TOTAL 30 Sept1,106,000203,000181,0001,490,000**
* Includes planned UFB1, 2 and 2+ coverage
**Excludes fibre premium and data services (copper) connections
Q2 FY19 CONNECTIONS UPDATE
-20
-15
-10
-5
0
5
10
15
Chorus UFBRuralLFC UFB
Q1 and Q2 changes by zone and
service
Copper (no broadband)
Broadband (fibre or copper)
Q1
Q1
Q1
Q1
Q1
Q1
Q2
Q2
Q2
Q2
Q2
No. of
connections
(‘000s)
4

UFB rollout and uptake
>51% UFB uptake at 31 Dec (30 Sept: 50%)
504,000 connections
981,000customers able to connect
738,000 premises passed
strong rate of uptake in UFB2 areas: Horotiu52%,
Hokitika43%
>Good progress on customer experience initiatives
▪customer satisfaction score of 7.8achieved in November,
up from 7.5 in September
▪achieved target of connecting 50%of fibre installations
within a day
field crews reduced to 750vs 770 at 30 Sept
work in progress reduced to 22kvs 25k at 30 Sept
weighted average lead times increased to 12 days in
December (30 Sept: 8 days)
17 January 2019
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 (RHS)
No. of
connections
Uptake
Premisesto pass by Dec 2022~1,054,000*
Customers able to connect ~1.36 million
*Includes estimated 43k greenfieldspremises for UFB1
Uptake
Q2 FY19 CONNECTIONS UPDATE
5

17 January 2019
0.00%
10.00%
20.00%
30.00%
40.00%
50.00%
60.00%
Mar-18Jun-18Sep-18Dec-18
ROLLOUT COMPLETED IN THESE AREAS
Note: % uptake can reduce in areas as the fibre rollout passes more addresses in a period
51%
AVERAGE
UPTAKE
% uptake
relative to
capable
addresses
UFB1 uptake
Q2 FY19 CONNECTIONS UPDATE
6

>38,000mass market fibre connections added in Q2
▪44,000 connections now on gigabit plans (Q1: 36,000)
▪71% of mass market fibre connections on 100Mbps
17 January 2019
Fibre uptake and data demand
0
10
20
30
40
50
60
70
80
90
100
Jun-16Sep-16Dec-16Mar-17Jun-17Sep-17Dec-17Mar-18Jun-18Sep-18Dec-18
50Mbps100Mbps200MbpsGigabitEducationBusiness 100Mbps+Other
0
50
100
150
200
250
300
350
CopperFibreAverage
% of
plans
Data
usage
(GB)
Monthly average data usage
per connection on our network
Total mass market fibre uptake by plan type
>Monthly average data usage per connection on our
network grew to 235GBfrom 221GB (Sept 2018)
▪315GBon fibre (Sept: 307GB)
▪174GBon copper (Sept:163GB)
$41.50 monthly
$45 monthly
$65 monthly
Q2 FY19 CONNECTIONS UPDATE
7

17 January 2019
Data usage continues to rise
>Total data usage on Chorus’ network grew strongly through 2018 (see Graph 1)
▪weekends (orange columns) typically had the highest data usage, with Sunday 25 November setting the
2018 record at just under 11 million gigabytes of data
▪Sunday 1 April (Easter holidays) had the lowest usage with 6 million gigabytes
▪data usage on weekends tends to be lowest through December and January
▪there was a clear correlation between weekday data usage and school holidays (April, July, October)
>Peak time usage, typically around 9pm in the evening, also grew strongly in 2018 (see Graph 2)
▪live streaming of the Commonwealth Games (4-15 April) drove a significant step up in peak time traffic
▪new season releases and software updates associated with gaming phenomenon Fortnitedrove
subsequent record peaks in usage in May, July, September and October
▪the lowest peak time usage was recorded on New Year’s Eve
Q2 FY19 CONNECTIONS UPDATE
8

17 January 2019
Q1 FY19 CONNECTIONS UPDATE
Graph 1: Daily data usage on Chorus’ network in 2018
9

17 January 2019
Graph 2: Peak time usage in 2018, by day
10