Chorus investor roadshow

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

Email: company.secretary@chorus.co.nz





STOCK EXCHANGE ANNOUNCEMENT

25 March 2019


Chorus investor roadshow

The attached presentation has been prepared for our upcoming US roadshow.



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

Nathan Beaumont
Media and PR Manager
Phone: +64 4 896 4352
Mobile: +64 (21) 243 8412
Email: Nathan.Beaumont@chorus.co.nz

---

Introducing Chorus
New Zealand’s largest fixed line communications infrastructure business
25 March 2019

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
ADR ticker:CHRYY
~NZ$2.5 billion market capitalisation (at 20 March 2019)
S&P “BBB” stable; Moody’s “Baa2” stable
>A nationwide copper and growing fibre (FTTH) network
~1.5m connections, including ~1.2m broadband
70% of way through 11-year fibre to the premises rollout
~900 employees supported by ~4,000 contractors/subcontractors
51% fibre uptake, well ahead of expectations
streaming video services driving significant data consumption
25 March 20192
INVESTOR ROADSHOW

25 March 2019
An open access wholesale network
3
INVESTOR ROADSHOW

25 March 2019
Our network infrastructure
Copper VDSL to ~80% of lines; Fibre to pass ~1.36m end customers by 2023
~30,000km duct network
~600
exchanges
~11,000 cabinets
~280,000 poles
Exchange co-
location:
wireless co-
location and
network edge
computing
Offices: fibre
access and ‘fibre
to the desktop’
Fibreto smart
locations:
CCTV, traffic
lights
Fibre
backhaul: to
mobile towers,
small cells
FTTP: enabling unlimited
data, enhanced wi-fiand
TV broadcast capability
School wi-fitrials:
extend school network to
local students via Chorus
network
IoT: pole and cabinet
assets provide coverage
and power
infrastructure
4
INVESTOR ROADSHOW

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 (UFB2 and UFB2+) extended
coverage goal to 87% of population by the end of 2022
>Chorus was awarded ~75% of the fibre 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 (WEL Networks)
25 March 20195
INVESTOR ROADSHOW

25 March 2019
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
$m
6
INVESTOR ROADSHOW

~120,000 brownfields premises to be passed across UFB1 and UFB2
expect to claim another ~18k UFB1 greenfieldspremises already passed in prior years
25 March 2019
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
No. of
premises
7
INVESTOR ROADSHOW

UFB rollout 70% complete; 51% uptake
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
25 March 2019
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-June
2014 July-Dec2015 Jan-June2015 July-Dec
2016 Jan-June2016 July-Dec2017 Jan-June
2017 July-Dec2018 Jan-June
8
INVESTOR ROADSHOW

Record fibre demand and customer satisfaction
Achieved 50%‘fibre in a day’ target
25 March 2019
-
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
INVESTOR ROADSHOW

Transition to a regulated utility
25 March 2019

25 March 2019
Legislation passed in November 2018
>New regulatory framework to be implemented to replace UFB contractual framework (UFB1 ends Dec 2019)
87% of population where fibre will be available by end of 2022
Remaining 13% of population
Note: existing copper regulatory framework uses benchmarking and Total
Service Long Run Incremental Cost, with pricing last set in late 2015 for a
5-year period
Regulated copper
pricing
Line only
(monthly)
With broadband
(monthly)
From mid Dec 2018$31.19$42.02
From mid Dec 2019$31.68$42.35
11
Fibre access network
•Regulated asset base (RAB) with revenue
cap to be determined by Commerce
Commission
•Two fibre anchor products (voice only +
entry level broadband) at 2019 prices + CPI
•3 years after new regime commences, the
Commission can review the revenue cap
model and anchor products, subject to
specified conditions and statutory criteria
Where fibre is available:
•Copper network to be deregulated and
Telecommunications Service Obligation
(TSO) removed
•Chorus can withdraw copper service,
subject to minimum consumer
protection requirements
Where fibre is not available:
•Copper remains regulated and TSO
applies
•Copper pricing capped at 2019 levels
with CPI adjustments
•Commission required to review pricing
framework no later than 2025
INVESTOR ROADSHOW

25 March 2019
Regulated Asset Base implementation
Building block
cost stack
>Commerce Commission will determine the starting value of the RAB, regulatory WACC, cost allocations, expenditure
allowances and maximum allowable revenue
12
INVESTOR ROADSHOW

25 March 2019
Implementation of new fibreframework
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 to complete process by 1 January 2022
13
INVESTOR ROADSHOW

25 March 2019
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.
14
INVESTOR ROADSHOW

Proposed RAB framework similar to NZ electricity sector
Growing number of wholesale communication network comparators
CountryCompanyBusiness typeMarket
cap
EV/EBITDANet Debt
/EBITDA
Credit ratingWACC
New
Zealand
Vector Electricity
distribution
network
NZ$3.5b10.9x4.37xBBB –S&P
Baa1 –Moody’s
In April 2018 the NZ Commerce Commission
determined a FY19 WACC of 5.19% (post tax, 67
th
percentile) for electricity distribution businesses
New
Zealand
ChorusWholesale
communications
network (copper
+ fibre)
NZ$2.5b7.1x3.82xBBB –S&P
Baa2 –Moody’s
FibreWACC yet to be determined under new
regulatory framework. In Dec 2015, the NZ
Commerce Commission determined WACC of
5.56% (post tax, 50
th
percentile) for Chorus’
legacy network
SingaporeNetlink
NBN
Trust
Wholesale
communications
network (fibre
only)
NZ$3.4b15x2.2xNot ratedIn 2017, IMDA-the Singapore regulator -
determined WACCof 7% (pre-tax) under a RAB
framework for the Jan 2018 to Dec 2022 period
Czech
Republic
CETINWholesale
communications
network (fixed+
mobile)
Not listedBBB –Fitch
Baa2 –Moody’s
In 2015, CTU -the Czech regulator -determined
WACC (post tax) of 9.07% for NGA network and
6.39% for legacy network
1. Moody’s Investor Services has noted Chorus’ transition to a regulated utility model could support a higher leverage profile within the Baa2 credit rating.
2. Based on trailing 12 month financials.
3. In 2016, aEuropean Commission report recommended higher WACCs be applied to Next Generation Access networks to reflect different characteristics
from legacy networks, including systematic demand risks, intensive capital leverage and long-term pay-offs.
22
1
3
Source: Financial metrics based on Bloomberg data as at 20 March 2019
25 March 201915
2
2
INVESTOR ROADSHOW

Broadband: the 4
th
utility
25 March 2019

25 March 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
NZ market: population and premises growth
17
INVESTOR ROADSHOW

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 March 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
Chorus connection trends
18
INVESTOR ROADSHOW

-
15
-
2
-
4
-
12
-
1
-
4
13
-
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)
Total connections at 31 Dec**1,099,000202,000168,000
Broadband connections922,000153,000111,000
Copper (no broadband)
connections
177,00049,00057,000
25 March 201919
INVESTOR ROADSHOW

>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
25 March 2019
Fibreconnections pass 500k
$55monthly
20
INVESTOR ROADSHOW

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
25 March 201921
INVESTOR ROADSHOW

25 March 2019
71% of NZ broadband connections have no data cap
5%
8%
33%
50%
62%
71%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
201320142015201620172018
Share of connections by data cap
Unlimited
100GB or more
50GB to 100GB
20GB to 50GB
5GB to 20GB
Under 5GB
Source: Statistics NZ ISP Survey June 2018
Streaming is driving shift to unlimited data plans
22
, 2018
INVESTOR ROADSHOW

>Traffic at peak time has almost doubled since 2017
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 March 2019
Network throughput (
Gbps
)
Time of day
23
INVESTOR ROADSHOW

1,000 Gigabytes per month by 2023...
Video content and 4K, 8K to drive usage
25 March 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
24
INVESTOR ROADSHOW

Innovation
25 March 2019
Passive fibre infrastructure for ~400 desks, removing
need for legacy IT rackspaceand related investment.
trialling 10 Gigabit PON and wireless PON
infrastructure re-use trialled for IoTdelivery
‘fibre to the desktop’ concept trials in two
schools and two new office premises
school trials proving wi-fipotential to bridge
digital divide
network edge computing: three exchange sites
under development for Q3 FY19
4K TV trial: clear medium term potential for
broadcasting role
25
INVESTOR ROADSHOW

Capital and financial
management
25 March 2019

>FY19 dividend guidance of 23 cps,subject to
no material adverse changes in circumstances or
outlook.
>A Dividend Reinvestment Plan has been
available to NZ and Australian resident
shareholders with a 3% discount to prevailing
market price
Capital management
FY12*: prorated for the post
demerger period of seven
months
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 paid
for FY16, subject to no material adverse changes in
circumstances or outlook.
25 March 2019
>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.
27
INVESTOR ROADSHOW

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
25 March 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
28
INVESTOR ROADSHOW

FY19 guidance summary
FY19 EBITDA
$625 –645m
FY19 Gross capex
$820 –$860m
Fibre capex
$685m -$715m
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)
Copper capex
$75m -$95m
Common capex
$55m -$70m
UFB1 Cost Per Premises Passed
(CPPP)
$1,500 -$1,600
UFB2/2+ communal capex
$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)
$1,000 -$1,150
(excluding layer 2 and including standard installations and some non-standard
single dwellings and service desk costs)
25 March 201929
INVESTOR ROADSHOW

Capex: common and copper
CoppercapexH1 FY19
$m
H2 FY18
$m
H1 FY18
$m
Network sustain192916
Copperconnections111
Copper layer261816
Product122
Customer retention costs121829
Subtotal396864
25 March 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
Commoncapex
H1 FY19
$m
H2 FY18
$m
H1 FY18
$m
Informationtechnology171817
Building& engineering services7119
Other130
Subtotal253226
30
INVESTOR ROADSHOW

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
>pole replacement programme and growing housing demand
25 March 2019
>targeted RSP campaigns to drive fibre uptake and win back off-net
connections
31
INVESTOR ROADSHOW

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
25 March 201932
INVESTOR ROADSHOW

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
25 March 2019
>increasing as a result of long life assets
>NZ$500 million bond issued in December, Crown
funding notional interest increasing
>total connections decreasing
33
INVESTOR ROADSHOW

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
25 March 201934
INVESTOR ROADSHOW

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
25 March 2019
>rates increasing as fibre network expands
35
INVESTOR ROADSHOW

25 March 2019
Our focus
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
To achieve our objective to return to modest EBITDA
growth in FY20, subject to no material changes in
expected regulatory environment or competitive
outlook
36
INVESTOR ROADSHOW

Appendices
25 March 2019

▪Rural areas are disproportionately more expensive to maintain than
urban areas
▪Copper costs don’t reduce in proportion to the number of connections –
there is a significant fixed element
▪Fibre share of maintenance will grow, but at a lesser rate than copper
because variable fault rate is lower on fibre (although costlier to fix)
▪In the long run, we think there is around an annual $10m saving from
full copper to fibre migration in Chorus UFB areas
Copper maintenance:
urban (indicative)
Exchange + feeder
cable
Cabinet to street
boundary
In boundary (excludes
home wiring)
Fixed30%70%0%
Variable20%40%40%
25 March 2019
Fibre uptake initially reduces variable copper costs only
% FY18 lines
Chorus UFB
Rural (non-UFB)
LFC UFB
% FY18 reactive
maintenance cost
8
31
36
FY18 reactive maintenance
spend $m
Fibre
Copper -
fixed
Copper -
variable
Appendix A: Understanding network maintenance
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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 March 2019
▪within our UFB1 areas, there
are ~350 nodes (approx. 200
customers) with fewer than
10 copper connections
remaining
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Appendix B: copper deregulated in fibre areas from
January 2020
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25 March 2019
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.
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