Chorus Q3 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

10 April 2019


Chorus Q3 FY19 Connections Update
The Q3 period to 31 March 2019 saw broadband connections rebound, with UFB
uptake growing to 53%.

Total fixed line connections declined by 14k to 1,472,000 in Q3 (Q3 FY18: -
16k)
 broadband growth returned to Q1 levels in Chorus fibre areas, largely offsetting
declines in copper lines with no broadband
 the pace of connection losses in other fibre company zones slowed

Total broadband connections grew by 5k to 1,191,000 (Q3 FY18: +3k)
 fibre demand was strong through Q3, with 43,000 fibre installations completed
 fibre uptake within our UFB areas increased to 53%, up from 51% in
December
 Waiuku and Queenstown lead with 62% uptake, while demand in Auckland is
also strong at 57%
 demand for 1Gbps connections grew to 50,000 connections, up from 44,000 in
December

Monthly average data usage grew to 247GB
 fibre users now averaging 329GB monthly, up from 315GB in December
 peak time data usage has begun exceeding 1.8Tbps, up from 1.3Tbps in March
2018


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

---

Q3 FY19 Connections Update
10 April 2019

>Total fixed line connections declined by 14k to 1,472,000 in Q3 (Q3 FY18: -16k)
▪broadband growth returned to Q1 levels in Chorus fibre areas, largely offsetting declines in copper
lines with no broadband
▪the pace of connection losses in other fibre company zones slowed
>Total broadband connections grew by 5k to 1,191,000 (Q3 FY18: +3k)
▪fibre demand was strong through Q3, with 43,000fibre installations completed
▪fibre uptake within our UFB areas increased to 53%, up from 51% in December
▪Waiukuand Queenstown lead with 62% uptake, while demand in Auckland is also strong at 57%
▪demand for 1Gbps connections grew to 50,000 connections, up from 44,000 in December
>Monthly average data usage grew to 247GB
▪fibre users now averaging 329GBmonthly, up from 315GB in December
▪peak time data usage has begun exceeding 1.8Tbps, up from 1.3Tbps in March 2018
10 April 2019
Broadband connections rebounded, with UFB uptake growing to 53%
Q3 FY19 overview
Q3 FY19 CONNECTIONS UPDATE
2

0
200000
400000
600000
800000
1000000
1200000
1400000
1600000
Data services (copper)Fibre premium (P2P)
Fibre broadband (GPON)VDSL
Copper ADSLUnbundled copper (no broadband)
Baseband copper (no broadband)
10 April 2019
31 March
2018
30 June
2018
30 Sept
2018
31 Dec
2018
31 March
2019
Unbundled
copper
62,00053,00045,00039,00031,000
Baseband
copper
(no broadband)
279,000268,000255,000244,000233,000
Fibre broadband
(GPON)
394,000433,000479,000517,000556,000
VDSL
(includes naked)
325,000321,000309,000295,000283,000
Copper ADSL
(includes naked)
465,000433,000402,000374,000352,000
Data services
(copper)
6,0006,0005,0005,0005,000
Fibre premium
(P2P)
12,00012,00012,00012,00012,000
Total connections
1,543,0001,526,0001,507,0001,486,0001,472,000
Fibre (GPON)
VDSL
Copper ADSL
Unbundled copper
Baseband copper
Fibre now 47% of broadband connections
Q3 FY19 CONNECTIONS UPDATE
3

-15
-2
-4
-12
-1
-4
-13
-2
-4
13
-1
-9
5
-9
12
-7
-15
-10
-5
0
5
10
15
Copper (no broadband)
Broadband (fibre or copper)
Q2
Connection movements by Zone (indicative)
* 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
Q2Q2
Change in
connections
(‘000s)
Chorus UFB zone*Rural(non-UFB)
zone
Local Fibre
Company UFB zone
Total connections at 31 March**1,098,000200,000157,000
Broadband connections934,000153,000104,000
Copper (no broadband) connections164,00047,00053,000
10 April 2019
Q3
Q3
Q3
Q3
Q3
Q3
>Broadband connections grew by 12k in
Chorus UFB areas
▪broadband growth in Chorus areas offsetting
broadband reductions in LFC zone
▪line loss in LFC zone slowed slightly in Q3
▪VDSL and vectoring upgrades continue to
support broadband demand in rural areas
Q3 FY19 CONNECTIONS UPDATE
4

>39,000mass market fibre connections added in
Q3 (vs 32k Q3 FY18)
▪1Gbps uptake grew to 9%: 50k connections, up from
44k at 31 Dec
▪70% of mass market fibre connections on 100Mbps
>Q4 incentives for retailers to connect new customers, or
upgrade existing customers, to higher speed fibre plans:
▪>75% of orders in Q4 are 100Mbps or faster = $50
credit per eligible connection
▪15% <25% of orders in Q4 are 1Gbps = $125 credit
per eligible connection
▪> 25% of orders in Q4 are 1Gbps = $150 credit per
eligible connection
0
10
20
30
40
50
60
70
80
90
100
50Mbps100Mbps200MbpsGigabitEducationBusiness 100Mbps+
% of
plans
Total mass market fibre uptake by plan type
$41.50 monthly
$45 monthly
$65 monthly
10 April 2019
1Gbps connections gaining share
$55monthly
Q3 FY19 CONNECTIONS UPDATE
5

UFB uptake grows to 53%
>UFB rollout now 73% complete with another
33,000 premises passed
771,000 premises passed (31 Dec: 738,000)
1,024,000customers able to connect (31
Dec: 981,000)
543,000 connections (31 Dec: 504,000) =
uptake grew from 51% (31 Dec) to 53% (31
March)
>43,000 installations completed in Q3
▪weighted average lead times reduced to 9
daysvs 12 days in December
▪work in progress increased from 22k to 26k
Uptake
10 April 2019
Q3 FY19 CONNECTIONS UPDATE
-
2,000
4,000
6,000
8,000
10,000
12,000
14,000
16,000
18,000
20,000
JulyAugSeptOctNovDecJanFebMarAprilMayJune
Fibre installations (NZ wide)
FY18FY19
6

10 April 2019
0.00%
10.00%
20.00%
30.00%
40.00%
50.00%
60.00%
Jun-18Sep-18Dec-18Mar-19
ROLLOUT ONGOING
Note: % uptake can reduce in areas as the fibre rollout passes more addresses in a period
53%
AVERAGE
UPTAKE
% uptake
relative to
capable
addresses
UFB1 uptake
Q3 FY19 CONNECTIONS UPDATE
7

Chorus uptake on similar trajectory to Singapore
>Chorus fibre uptake compares favourably
to NetlinkTrust (Singapore)
▪Singapore fibre rollout completed in 2013
▪Chorus fibre rollout will be completed in
2022: the ongoing growth in network
footprint is offsetting the increase in fibre
uptake
▪Singapore’s fibre uptake has been driven by
the imminent shutdown of third party ADSL
and cable networks
Uptake
10 April 2019
0
10
20
30
40
50
60
70
80
90
100
20112012201320142015201620172018
Netlink Trust (Singapore)
Chorus (NZ)
Rollout
completed
Fibre
uptake (%)
Source: AnalysysMason, Chorus data
Q3 FY19 CONNECTIONS UPDATE
8

Fibre data usage up 61GB since March 2018
>Monthly average data usage per connection on our network
grew to 247GBfrom 235GB (Dec 2018)
▪329GBon fibre (Dec:315GB)
▪175GBon copper (Dec:174GB)
10 April 2019
0
50
100
150
200
250
300
350
CopperFibreAverage
Data
usage
(GB)
Monthly average data usage
per connection on our network
Q3 FY19 CONNECTIONS UPDATE
9

10 April 2019
Peak time data usage has begun exceeding 1.8Tbps
>Average peak time usage
in March 2018 was
1.34Tbps
10
Date