Chorus Investor presentation

25 February 2019
H1 FY19 RESULT PRESENTATION

25 February 2019
H1 FY19 RESULT PRESENTATION
Disclaimer
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 resultsto
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 2018 and NZX and ASX
market releases.
• Includes non-GAAP financial measures such as "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. They should not be used in substitution for,
or isolation of, Chorus' audited consolidated financial statements. 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.
• Has been prepared with due care and attention. However, Chorus and its directors and employees accept no liability for any errorsor
omissions.
• Contains information from third parties Chorus believes reliable. However, no representations or warranties (express or implied) are
made as to the accuracy or completeness of such information.
2

Agenda
>HY19 overview, connections and trends4-6
>Active wholesaler strategy, fibre demand and rollout7-10
>Financial results12-14
>Capex 15-18
>FY19 guidance update19
>Capital management, debt, Crown financing20-22
>New start: Transition to a regulated utility 23-26
>Innovation and data demand27-30
>Our focus for H231
>Connections and market trends, UFB programme overview32-35
25 February 2019
Kate McKenzie, CEO
David Collins, CFO
Kate McKenzie, CEO
H1 FY19 RESULT PRESENTATION
3
Appendices

25 February 2019
H1 FY19 RESULT PRESENTATION
H1 FY19 result overview
4

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15
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2
-
4
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12
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1
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4
13
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1
-
9
5
0
-
9
C H O R U S U F B
Z O N E *
R U R A L
L O C A L F I B R E
C O M P A N Y U F B
Z O N E
INDICATIVE CONNECTION
CHANGES BY ZONE
Copper (no broadband)Broadband (fibre or copper)
Q2
>Total fixed line connections decreased by 40k to
1,486,000 (H1 FY18:-43k)
▪copper lines with no broadband decreased by 38k,
mostly in Chorus UFB areas
▪1k reduction in data services over copper
>Total broadband connections decreased by 1k to
1,186,000 (H1 FY18:-5k)
▪strong growth in Chorus UFB areas, offsetting
reductions in LFC areas
▪VDSL and vectoring upgrades helping limit rural
wireless effect
▪Note: disconnections typically higher in Q2
Connection movements by Zone
* Includes planned UFB1, 2 and 2+ coverage
**Excludes 17k fibre premium and data services (copper) connections
Q1
Q1
Q1
Q1
Q1
Q1
Q2
Q2
Q2
Q2
Q2
Change in
connections
(‘000s)
5
Total connections at 31 Dec**1,099,000202,000168,000
Broadband connections922,000153,000111,000
Copper (no broadband)
connections
177,00049,00057,000
25 February 2019
H1 FY19 RESULT PRESENTATION
see Appendix A for connection trends by product category

>84,000mass market fibre connections added in H1
▪71% of mass market fibre connections on 100Mbps
▪44,000 connections on gigabit plans (FY18: 30,000)
▪glide path announced for 1Gbps pricing:
•Residential: $60 from July 2019; $56 from July 2020
•Business: $75 currently; $70 from July 2019; $66 from
July 2020
0
10
20
30
40
50
60
70
80
90
100
50Mbps100Mbps200MbpsGigabitEducationBusiness 100Mbps+Other
% of
plans
Total mass market fibre uptake by plan type
$41.50 monthly
$45 monthly
$65 monthly
625 February 2019
H1 FY19 RESULT PRESENTATION
Fibreconnections pass 500k
$55monthly

7
Active wholesaler strategy continues
10k proactive fibre installations in H1
25 February 2019
H1 FY19 RESULT PRESENTATION
0%
2%
4%
6%
8%
10%
12%
14%
FibreFixed
Wireless
Intention to change
broadband technology
>7k via Chorus door knocking; 3k in association with
retailers
>Total 21k installations since activity began in FY18
▪~14k have activated service to date
▪Chorus-led installations to date resulted in 40%
uptake after 6 months; 70% after 12 months
▪off-net customer uptake slower at ~30% activation
within 6 months, but with minimal effort and reflects
contractual barriers to churn

8
Record fibre demand and customer satisfaction
Achieved 50%‘fibre in a day’ target
25 February 2019
H1 FY19 RESULT PRESENTATION
-
2,000
4,000
6,000
8,000
10,000
12,000
14,000
16,000
18,000
20,000
JulyAugSeptOctNovDecJanFebMarAprilMayJune
Fibre installations
FY18FY19

9
Demand continues to accelerate in new build areas
0%
10%
20%
30%
40%
50%
60%
0612182430364248546066
Fibre orders completed as a % of fibre
capable addresses (by months available)
2013 Jan-June2013 July-Dec2014 Jan-June2014 July-Dec
2015 Jan-June2015 July-Dec2016 Jan-June2016 July-Dec
2017 Jan-June2017 July-Dec2018 Jan-June
25 February 2019
>Time taken to achieve 30% uptake has
shortened from 2 to 3 years for initial
UFB rollout years, to 6 months for most
recent areas
▪step change occurred in 2015, coinciding
with arrival of Netflix in NZ
>Strong rate of uptake in UFB2 areas
▪Hokitika: 43%
▪Horotiu: 52%
H1 FY19 RESULT PRESENTATION

UFB rollout and uptake
>51% UFB uptake at 31 Dec (30 June: 45%)
504,000 connections (30 June: 415,000)
981,000customers able to connect (30 June: 932,000)
738,000 premises passed (30 June: 700,000)
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
1025 February 2019
H1 FY19 RESULT PRESENTATION

Financial performance
David Collins, Chief Financial Officer
25 February 2019
H1 FY19 RESULT PRESENTATION

Income statement
H1
FY19
$m
H2
FY18
$m
H1
FY18
$m
Operating revenue489491499
Operating expenses(171)(167)(170)
Earnings before interest, tax,
depreciation and amortisation
(EBITDA)
318324329
Depreciation and amortisation(196)(195)(192)
Earnings before interest and income tax122129137
Net interest expense(79)(74)(70)
Net earnings before income tax435567
Income tax expense(13)(17)(20)
Net earnings for the period303847
H1 FY19 RESULT PRESENTATION
1225 February 2019
>Increasing as a result of long life assets
>$500 million bond issued in December, Crown
funding notional interest increasing
>Total connections decreasing

H1
FY19
$m
H2
FY18
$m
H1
FY18
$m
Fibre broadband (GPON)13610890
Fibre premium (P2P)373840
Copper based voice566469
Copper based
broadband
181202219
Data services copper101314
Field Services393535
Value added network
services
161617
Infrastructure121112
Other243
Total489491499
copper revenues declining as customers migrate to fibre or competing
fibre/wireless networks. Annual increase in regulated copper line and
broadband pricing in mid December.
>increase in chargeable network relocation and subdivision activity
>revenue growing as fibre uptake increases
>some churn to lower input fibre services or other networks
Revenue
13
H1 FY19 RESULT PRESENTATION
25 February 2019

H1
FY19
$m
H2
FY18
$m
H1
FY18
$m
Labour 373439
Provisioning324
Network maintenance384443
Other network costs181915
IT262727
Rents, rates and
property maintenance
131311
Regulatory levies867
Electricity978
Consultants423
Insurance221
Other131112
Total171167170
>6% reduction in staff numbers from H1 FY18; offset partially by CPI increases
>fault volumes reducing overall, helped by fewer extreme weather events and
retailers using API tools to reduce unnecessary truck rolls
Expenses
>increase in third party requests for network relocation activity
14
H1 FY19 RESULT PRESENTATION
25 February 2019
>rates increasing as fibre network expands

Gross Capex
15
H1 FY19 RESULT PRESENTATION
H1 FY19 gross capex of $395m vs H1 FY18 $391m
25
26
39
64
331
301
H1 FY19H1 FY18
CommonCopperFibre
Fibre capex increased to 84% of gross capex (H1 FY18:77%) as fibre
connections spend grew and copper capex reduced
$395m
$391m
25 February 2019

Capex: common and copper
CoppercapexH1 FY19
$m
H2 FY18
$m
H1 FY18
$m
Network sustain192916
Copperconnections111
Copper layer261816
Product122
Customer retention costs121829
Subtotal396864
16
H1 FY19 RESULT PRESENTATION
25 February 2019
>ongoing investment in poles, proactive
maintenance and roadworks projects
>reduced spend following end of ~$20m VDSL
vectoring rollout in FY18
>reducing as incentives are more targeted and RSP
focus shifts from VDSL to fibre uptake
CommoncapexH1 FY19
$m
H2 FY18
$m
H1 FY18
$m
Informationtechnology171817
Building& engineering services7119
Other130
Subtotal253226

Capex: Fibre
FibrecapexH1
FY19
$m
H2
FY18
$m
H1
FY18
$m
UFB communal119118113
Fibre connections & layer 2161149145
Fibre products & systems7710
Other fibre connections &
growth
363728
Customer retention costs885
Subtotal331319301
>UFB1 rollout $78m; UFB2/2+ rollout $41m
>95,000 new installations in H1 FY19 (H1 FY18: 77,000)
Cost per UFB1 premises passed (CPPP): ~$1,662 vs $1,500 -$1,600 guidance
38,000 premises passed (H1 FY18 32,000) included 13,000 UFB 2/2+ premises
~80,000 brownfields premises to be completed in H2 FY19
17
H1 FY19 RESULT PRESENTATION
>pole replacement programme and growing housing demand
25 February 2019
>targeted RSP campaigns to drive fibre uptake and win back off-net
connections

Capex: Fibre connections & layer 2
Fibre connections & layer 2 capexH1 FY19H2 FY18 H1 FY18
Layer 2 (long run programmeaverage of $100 per connection)$9m$16m$16m
Premium business fibre connections$4m
600 connections
$5m
600 connections
$6m
800 connections
Single dwelling units and apartments connections$100m
95k connections
$79m
79k connections
$84m
77k connections
Backbonebuild: multi-dwelling units and rightsof way
* Estimated 55-60% requiring backbone build now completed
$48m
9.5k completed
$49m
7.3k completed
$39m
5.8k completed
TOTAL SPEND$161m$149m$145m
Cost per UFB1 premises connected (CPPC): $1,038* vs $1,000 -$1,150 guidance
* excludes layer 2 and includes standard installations, some non-standard single dwellings and service desk costs
95,000 single dwelling unit and apartment connections completed (includes 5,000 UFB2)
Layer 2 spend reducing as UFB1 rollout comes to an end; ongoing spend for UFB2/2+, growth and bandwidth demand
Connections capex of $161m
18
H1 FY19 RESULT PRESENTATION
25 February 2019

FY19 guidance -updated
H1 FY19 updatePrior FY19 guidance
FY19 EBITDA
No change$625 –645m
FY19 Gross capex
No change$820 –$860m
Fibre capex
$685m -$715m$660m -$690m
Fibre connections &
layer 2 capex
$310m -$340m (based on mass market 175,000-
195,000fibre connections, and 19,000backbone
builds and including service desk costs)
$280 –$310m (based on mass market 155,000 –
175,000 fibre connections,and 14,000 backbone builds
and including service desk costs)
Copper capex
$75m -$95m$90m -$110m
Common capex
No change$55m -$70m
UFB1 Cost Per Premises
Passed (CPPP)
No change$1,500 -$1,600
UFB2/2+ communal
capex
No change$90m -$110m
(based on estimated starting premises of 45,000 to
55,000 and premises handed over of 25,000 to 35,000)
UFB1 Cost Per Premises
Connected (CPPC)
No change$1,000 -$1,150
(excluding layer 2 and including standard installations
and some non-standard single dwellings and service
desk costs)
19
H1 FY19 RESULT PRESENTATION
25 February 2019

▪supplementary dividend of 1.68cps payable to
non-resident shareholders
▪record date: 19March2019
▪payment date: 16 April2019
▪Dividend Reinvestment Plan applies with
3% discount to prevailing market price; open
to New Zealand and Australian resident
shareholders
Capital management & FY19 dividend
H1 FY19 interim dividend of 9.5cps, fully imputed
>The Chorus Board considers that a ‘BBB’ credit
rating or equivalent credit rating is appropriate
for a company such as Chorus. It intends to
maintain capital management and financial
policies consistent with these credit ratings.
>During the UFB build programme to 2020, the
Board expects to be able to provide shareholders
with modest dividend growth from a base of
20cps per share paid for FY16, subject to no
material adverse changes in circumstances or
outlook.
20
H1 FY19 RESULT PRESENTATION
25 February 2019
>FY19 dividend guidance of 23 cps, subject to
no material adverse changes in circumstances or
outlook.

Debt
Term debt profile
As at
31 Dec 2018
$m
Borrowings2,362
+ PV of CIP debt
securities (senior)
137
+ Net leases payable238
Sub total2,737
-Cash(281)
Total net debt2,456
Net debt/EBITDA3.82 times
Financial covenants require senior net debt/EBITDA
ratio to be no greater than 4.75 times
S&P rating down driver adjusted debt/EBITDA
greater than 4x for a sustained period
>At 31 Dec, debt of $2,362m comprised:
▪Long term bank facilities of $350m undrawn;
▪NZ bond: $400m and $500m
▪Euro Medium Term Notes $1,462m (NZ$ equivalent at
hedged rates)
NZ
$M
21
H1 FY19 RESULT PRESENTATION
25 February 2019
677
400
500
785
7272
107
137
14
33
60
72
0
100
200
300
400
500
600
700
800
CIP debt securities available
Face value of CIP debt securities issued
EUR EMTN
NZ Bond
GBP EMTN

25 February 2019
H1 FY19 RESULT PRESENTATION
22
Crown financing
$800m received at 31 December from Crown Infrastructure Partners (CIP)
388388
24
76.576.5
278
105
U F B 1
E Q U I T Y
U F B 1 D E B TU F B 2 / 2 +
E Q U I T Y
U F B 2 / 2 +
D E B T
AS AT 31 DECEMBER
drawnundrawn
>up to $1.33 billion available by 2023 (57:43 equity/debt)
▪CIP equity securities
•unique class of security with no right to vote at shareholder meetings, but
entitle the holder to a right to repayment preference on liquidation
•an increasing portion of the securities will attract dividend payments from 30
June 2025 onwards
•the dividend rate is based on 180 day NZ bank bill rate, plus 6% p.a. margin
•may be redeemed at any time by cash payment of total issue price or the
issue of Chorus shares (at a 5% discount to the 20-day VWAP for Chorus
shares)
▪CIP debt securities
•unsecured, non-interest bearing and carry no voting rights at shareholder
meetings
•Chorus is required to redeem the securities in tranches from 30 June 2025 to
2036 by repaying the issue price to the holder

New start: transition to a
regulated utility
Kate McKenzie, Chief Executive Officer
25 February 2019
H1 FY19 RESULT PRESENTATION

25 February 2019
H1 FY19 RESULT PRESENTATION
24
Implementation of new fibreframework
UFB1 rollout contract ends Dec 2019
Chorus can charge up tothe product price caps
agreed with Crown Infrastructure Partners. Price caps
‘frozen’ until 2022, with annual CPI adjustment in July
•voice only: $25
•30/10Mbps: $42.50
•100/20Mbps: $46
•200/20Mbps: $55
•1Gbps: $65
•Direct FibreAccess Service: $355
Unbundled fibre(commercial price) to be available in
UFB1 areas from January 2020.
Transition period:
1 December 2019 to January 2022
Start of first regulatory period under new RAB
framework
Price caps and CPI adjustments continue for voice
service, broadband service (product to be
confirmed) and Direct FibreAccess Service
Price caps are removed from other products
Unbundled fibreto be available in UFB2/2+ areas
from January 2026
First regulatory period:
1 January 2022 to January 2025
Input methodologies: emerging views paper due in May; draft decision in November
>Commerce Commission granted deferral until 1 January 2022

25 February 2019
H1 FY19 RESULT PRESENTATION
25
Key implementation parameters
ParametersChorus view
Asset valuationRABto include all assets supporting fibreaccess services, including fibrein LFC areas.
Valuation method defined by Act as actual cost incurred for post 2011 assets; book value
for pre-existing. The Commission has acknowledged real financial capital maintenance as
key principle underpinning the building block model.
DepreciationAct requires straight line depreciation for initial RAB valuation.
Allocation of shared
costs between fibre
access and other
services
No method prescribed in Act. The Commission will need to determine allocation for initial
RAB valuation and then principles for cost allocation after the implementation date.
Precedent is accounting based cost allocation, but more complexity for telco networks
given high degree of asset sharing and rapidly growing fibreuptake.
Unrecovered lossesAct prescribes adding an asset to RAB to enable recovery of financial losses on
investment prior to implementation. The Commission has proposed using a building block
methodology.
Crown financingAct requires actual cost of Crown financing to be considered in valuing the financial
losses asset, but no method prescribed. Commission should recogniseCIP financing was
not costless given contractual terms and financing structure.
WACCWACCto be set for loss calculation period andfor post implementation period. Nature of
Chorus/fibrebusiness and international comparators support WACC uplift.

H1 FY19 RESULT PRESENTATION
26
Copper deregulated in fibre areas from January 2020
Fibre uptake is above 71% in 10 exchange areas
Exchangearea
(>1,000
connections)
RegionFibre penetration:
% of total Chorus
connections
Fibre penetration:
% of Chorus
broadband
connections
WhitbyWellington82%83%
CorstorphineDunedin74%78%
LynmoreRotorua73%78%
NgongotahaRotorua73%77%
Halfway BushDunedin73%79%
North East ValleyDunedin72%76%
Kelvin GrovePalmerston North71%79%
Browns BayAuckland71%76%
BelmontWellington71%74%
GlenitiTimaru71%77%
25 February 2019
▪within our UFB1 areas, there
are ~350 nodes (approx. 200
customers) with fewer than
10 copper connections
remaining

H1 FY19 RESULT PRESENTATION
27
Innovation
Fibre to the desktop (Passive Optical LAN)
concept trials in two schools and two new office
premises (UCG, Network for Learning)
data centre sites on track for Q3 completion
end-to-end management interface selected
Network capability
Network edge computing
trialling 10 Gigabit PON and wireless PON
wi-ficapable ONT now being deployed
25 February 2019
Passive fibre infrastructure for ~400 desks, removing
need for legacy IT rackspaceand related investment.

28
Stream big
Shift to online delivery steps up
new Freeview smartvudevice streams
channels without need for TV aerial or
satellite dish
Vodafone leveraging Sky Sport via
their Vodafone TV platform
Spark launching sports streaming
service
H1 FY19 RESULT PRESENTATION
25 February 2019

>Traffic at peak time has almost doubled since 2017
29
Data demand isn’t slowing
>Monthly average data usage per connection on our
network grew to 235GBfrom 210GB (June 2018)
▪315GBon fibre (June:297GB)
▪174GBon copper (June:160GB)
25 February 2019
H1 FY19 RESULT PRESENTATION
Network throughput (
Gbps
)
Time of day

30
1,000 Gigabytes per month by 2023...
Video content and 4K, 8K to drive usage
H1 FY19 RESULT PRESENTATION
25 February 2019
Application requirements in Mbps
0
200
400
600
800
1000
1200
1400
June 2019June 2020June 2021June 2022June 2023June 2024
Chorus forecast: average monthly
broadband usage (GB)
CopperFibre
GB
Source: Cisco VNI, Forecast and Trends, 2017-2022

25 February 2019
Our focus for H2
connecting more customers to fibre, while continuing to lift satisfaction levels
growing broadband connections and enhancing our product portfolio
continuing to shape our business for a fibre future
31
H1 FY19 RESULT PRESENTATION
To achieve our objective to return to modest EBITDA
growth in FY20, subject to no material changes in
expected regulatory environment or competitive
outlook

Appendices
25 February 2019
H1 FY19 RESULT PRESENTATION

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)
25 February 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
Appendix A: Connection trends
33
H1 FY19 RESULT PRESENTATION

25 February 2019
-
200,000
400,000
600,000
800,000
1,000,000
1,200,000
1,400,000
1,600,000
1,800,000
Broadband uptake by retailer (all technology)
SparkVodafoneVocus2degreesTrustpowerROM
Source: IDCSource: IDC
-
200,000
400,000
600,000
800,000
1,000,000
1,200,000
1,400,000
1,600,000
1,800,000
NZ broadband market –by technology
Chorus xDSLChorus mass market fibreChorus premium fibre
Local fibre companies (UFB)Other fibre networksOther xDSL
Vodafone cableFixed (mobile) wirelessLegacy fixed wireless, satellite
34
H1 FY19 RESULT PRESENTATION
Appendix B: NZ market trends

~120,000 brownfields premises across UFB1 and UFB2
expect to claim another ~18k UFB1 greenfieldspremises already passed in prior years
25 February 2019
Appendix C: UFB programme overview
FY19 is peak communal build year
Programme guidanceNotes
UFB1 communal$1.75 -$1.8 billion
Tracking towards the top end of guidance
and excludes growth (e.g.additional splitter
investment)
UFB1 cost to
connect (CPPC)
$1,050 -$1,250
Fora standard residential connection,
including layer 2 and service desk costs,
and in 2011 dollars. Tracking towards the
top half of the range.
UFB2* communal$505 -$565 million
Combined guidance range for UFB2 and 2+
UFB2* cost to
connect
$1,650 -$1,850
In2017 dollars and including layer 2,
backbone costs for MDUs and rights of way
with 10 or fewer premises and service desk
costs
* combined UFB2 and 2+ rollout plans
35
H1 FY19 RESULT PRESENTATION