Chorus Q4 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 July 2019


Chorus Q4 FY19 Connections Update

The Q4 period saw fibre connections grow to 50% of Chorus’ total broadband
connections.

Total broadband connections grew by 5k to 1,196,000 (Q3 FY19: +5k)
 demand for 1Gbps connections grew to 58,000 connections, up from
50,000 in March
 fibre demand was strong, with 50,000 fibre installations completed
 weighting of build programme to Q4, kept fibre uptake steady at 53% with
84,000 more customers passed

Total fixed line connections declined by 22k to 1,450,000 in Q4 (Q3 FY19:
-14k)
 voice only disconnections increased as retailers targeted their customers
with wireless voice

Monthly average data usage grew to 265GB
 fibre users now averaging 341GB monthly, up from 329GB in March
 Aucklanders average 364GB monthly on fibre, 308GB monthly across
copper and fibre
 peak time data usage has begun exceeding 2Tbps, up 77% from June
2017 level


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

---

Q4 FY19 Connections Update
17 July 2019

>Total broadband connections grew by 5k to 1,196,000 (Q3 FY19: +5k)
▪demand for 1Gbps connections grew to 58,000 connections, up from 50,000 in March
▪fibre demand was strong, with 50,000fibre installations completed
▪weighting of build programme to Q4, kept fibre uptake steady at 53% with 84,000 more customers
passed
>Total fixed line connections declined by 22k to 1,450,000 in Q4 (Q3 FY19: -14k)
▪voice only disconnections increased as retailers targeted their customers with wireless voice
>Monthly average data usage grew to 265GB
▪fibre users now averaging 341GBmonthly, up from 329GB in March
▪Aucklandersaverage 364GBmonthly on fibre, 308GB monthly across copper and fibre
▪peak time data usage has begun exceeding 2Tbps, up 77% from June 2017 level
17 July 2019
50% of broadband connections now on fibre
Q4 FY19 overview
Q4 FY19 CONNECTIONS UPDATE
2

0
200000
400000
600000
800000
1000000
1200000
1400000
1600000
30-Jun-1830-Sep-1831-Dec-1831-Mar-1930-Jun-19
17 July 2019
30 June
2018
30 Sept
2018
31 Dec
2018
31 March
2019
30 June
2019
Unbundled copper
(no broadband)
53,00045,00039,00031,00024,000
Baseband copper
(no broadband)
268,000255,000244,000233,000214,000
Copper ADSL
(includes naked)
433,000402,000374,000352,000327,000
VDSL
(includes naked)
321,000309,000295,000283,000270,000
Fibre broadband
(GPON)
433,000479,000517,000556,000599,000
Data services
(copper)
6,0005,0005,0005,0005,000
Fibre premium
(P2P)
12,00012,00012,00012,00011,000
Total connections
1,526,0001,507,0001,486,0001,472,0001,450,000
Fibre (GPON)
VDSL
Copper ADSL
Unbundled copper
Baseband copper
Fibre now 50% of broadband connections
Q4 FY19 CONNECTIONS UPDATE
3
>1,196,000 broadband connections comprises:
▪599,000 fibre (GPON) connections
▪597,000 VDSL/ADSL (copper) connections

-15
-2
-4
-12
-1
-4
-13
-2
-4
-18
-1
-7
13
-1
-9
5
-9
12
-7
12
-7
-20
-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 16k fibre premium and data services
(copper) connections
Q1
Q1
Q1
Q1
Q1
Q1
Q2
Q2
Q2
Q2
Q2Change in
connections
(‘000s)
Chorus UFB zone*Rural(non-UFB)
zone
Local Fibre
Company UFB zone
Total connections at 30 June**1,092,000199,000143,000
Broadband connections946,000153,00097,000
Copper (no broadband) connections146,00046,00046,000
17 July 2019
Q3
Q3
Q3
Q3Q3
Q3
>Strong broadband growth in Chorus UFB areas
▪broadband growth is outpacing premises growth in
Chorus UFB areas and offsetting broadband
disconnections in LFC zone
▪VDSL and vectoring upgrades continue to support
broadband demand in rural areas
▪voice line loss increased in Chorus UFB zone and
LFC zone as retailers targeted their customers with
wireless voice
Q4 FY19 CONNECTIONS UPDATE
4
Q4
Q4
Q4
Q4
Q4
Q4

>43,000mass market fibre connections added in Q4 (vs
39k Q3)
▪1Gbps connections grew by 8k to 10% of mass market
fibre connections, up from 50k connections in Q3
▪95%+ of Dunedin Gigatownconnections retained on
1Gbps following end of sponsorship
▪71% of mass market fibre connections on 100Mbps
>Focus on enhancing product portfolio
▪small business plans launched 1 July with enhanced
restoration levels: 100Mbps plan $55 per month;
1Gbps plan $65 per month
▪10GPONtrial underway with retailers; use cases
identified
0
10
20
30
40
50
60
70
80
90
100
Jun-18Sep-18Dec-18Mar-19Jun-19
Business + Education
% of
plans
Total mass market fibre uptake by plan type
50Mbps
100Mbps
1Gbps
17 July 2019
Active wholesaler campaigns driving ARPU growth
200Mbps
Q4 FY19 CONNECTIONS UPDATE
5
$60 p.m.
$46 p.m.
$42.50
p.m.
$55 p.m.

UFB rollout now 80% complete
>50,000 installations completed in Q4
▪weighted average lead times reduced from 9 to 8 days
▪work in progress decreased from 26k to 23k
>Uptake steady at 53% with fibre passing another
84,000 customers in Q4
584,000 connections (31 March: 543,000)
1,108,000customers able to connect (31 March:
1,024,000)
842,000 premises passed (31 March: 771,000) out of
1,054,000 target
Uptake
17 July 2019
Q4 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

17 July 2019
0.00%
10.00%
20.00%
30.00%
40.00%
50.00%
60.00%
70.00%
Sep-18Dec-18Mar-19Jun-19
ROLLOUT ONGOING
Note: % uptake can reduce in areas as the fibre rollout passes more addresses in a period and greenfield subdivisions are claimed
53%
AVERAGE
UPTAKE
% uptake
relative to
capable
addresses
UFB1 uptake
Q4 FY19 CONNECTIONS UPDATE
7

17 July 20198
Fibre penetration by exchange area
Uptake has increased strongly in exchange areas listed in HY19 presentation
Exchangearea
(>1,000 connections)
RegionFibre penetration
(total Chorus connections)
Fibre penetration
(Chorus broadband connections)
% of total
connections
change from
Dec 2018
% of broadband
connections
change from
Dec 2018
WhitbyWellington86%+4%88%+5%
CorstorphineDunedin78%+4%82%+4%
LynmoreRotorua77%+4%83%+5%
NgongotahaRotorua77%+4%82%+5%
Halfway BushDunedin78%+5%84%+5%
North East ValleyDunedin79%+7%84%+8%
Kelvin GrovePalmerston
North
76%+5%84%+5%
Browns BayAuckland76%+5%82%+6%
BelmontWellington76%+5%80%+6%
GlenitiTimaru76%+5%82%+5%
Q4 FY19 CONNECTIONS UPDATE

Monthly average data usage now 265GB
>Aucklandersuse significantly more data
▪308GBmonthly average data usage
▪364GB on fibre
▪213GB on copper
>Monthly average data usage per connection on our network grew
to 265GBin Q4 from 247GB (March 2019)
▪341GBon fibre (March:329GB)
▪188GBon copper (March:175GB)
17 July 2019
0
50
100
150
200
250
300
350
Dec-14
Mar-15
Jun-15
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Mar-17
Jun-17
Sep-17
Dec-17
Mar-18
Jun-18
Sep-18
Dec-18
Mar-19
Jun-19
CopperFibreAverage
Data
usage
(GB)
Monthly average data usage
per connection on our network
Q4 FY19 CONNECTIONS UPDATE
9

17 July 201910
77% increase in network traffic at peak time since June 2017
Fixed line network delivering consistent performance at peak time
41.8
9.3
24.3
40.9
9.1
18
0
5
10
15
20
25
30
35
40
45
VDSLADSLFixed Wireless
Download speed:
Copper line vs fixed wireless
24-7Peak time
26% drop in
performance at
peak time
0
200,000
400,000
600,000
800,000
1,000,000
1,200,000
1,400,000
1,600,000
1,800,000
2,000,000
Average peak time throughput on
Chorus network
Peak time = busiest daily 15 minute period
TbpsMbps
Q4 FY19 CONNECTIONS UPDATE
Source: Commerce Commission, June 2019