Chorus Q1 FY20 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

9 October 2019


Chorus Q1 FY20 Connections Update

The Q1 period saw line loss slow significantly as broadband uptake soared.

Total broadband connections grew by 10k to 1,206,000 (Q4 FY19: +5k)
 record quarter for fibre demand, with 46k connections added
 demand for 1Gbps connections grew to 69,000 connections, up from 58,000
in June
 25,000 more customers were passed by the fibre rollout
 UFB uptake rose from 53% to 55%

Total fixed line connections declined by 6k to 1,444,000 (Q4 FY19: -22k)
 connections in Chorus UFB areas grew by 5k
 disconnections in LFC areas slowed

Monthly average data usage grew to 279GB
 fibre users now averaging 360GB monthly, up from 341GB in June
 peak time network throughput now regularly above 2Tbps
 new peak time record of 2.5Tbps coincided with Wales vs Australia match


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

Steve Pettigrew
Stakeholder Communications Manager
Mobile: +64 (27) 2586257
Email: steve.pettigrew@chorus.co.nz

---

Q1 FY20 Connections Update
9 October 2019

>Total broadband connections grew by 10k to 1,206,000 (Q4 FY19: +5k)
▪record quarter for fibre demand, with 46k connections added
▪demand for 1Gbps connections grew to 69,000 connections, up from 58,000 in June
▪25,000 more customers were passed by the fibre rollout
▪UFB uptake rose from 53% to 55%
>Total fixed line connections declined by 6k to 1,444,000 (Q4 FY19: -22k)
▪connections in Chorus UFB areas grew by 5k
▪disconnections in LFC areas slowed
>Monthly average data usage grew to 279GB
▪fibre users now averaging 360GB monthly, up from 341GB in June
▪peak time network throughput now regularly above 2Tbps
▪new peak time record of 2.5Tbps coincided with Wales vs Australia match
9 October 2019
Line loss slows significantly as broadband uptake soars
Q1 FY20 overview
Q1 FY20 CONNECTIONS UPDATE
2

0
200000
400000
600000
800000
1000000
1200000
1400000
1600000
30-Sep-1831-Dec-1831-Mar-1930-Jun-1930-Sep-19
9 October 2019
30 Sept
2018
31 Dec
2018
31 March
2019
30 June
2019
30 Sept
2019
Unbundled copper
(no broadband)
45,00039,00031,00024,00021,000
Baseband copper
(no broadband)
255,000244,000233,000214,000201,000
Copper ADSL
(includes naked)
402,000374,000352,000327,000304,000
VDSL
(includes naked)
309,000295,000283,000270,000257,000
Fibre broadband
(GPON)
479,000517,000556,000599,000645,000
Data services
(copper)
5,0005,0005,0005,0004,000
Fibre premium
(P2P)
12,00012,00012,00011,00012,000
Total connections
1,507,0001,486,0001,472,0001,450,0001,444,000
Fibre (GPON)
VDSL
Copper ADSL
Unbundled copper
Baseband copper
Fibre now 53% of broadband connections
Q1 FY20 CONNECTIONS UPDATE
>1,206,000 broadband connections comprises:
▪645,000 fibre (GPON) connections
▪561,000 VDSL/ADSL (copper) connections
Fibre premium
3

>46,000mass market fibre connections added in Q1
(vs 43k in Q4 FY19)
▪1Gbps connections grew to 69k (Q4 FY19: 58k)
and are now ~11% of mass market fibre
connections
▪second tier retailers continue to grow market
share with some promoting 1Gbps at ~$85p.m.
▪100Mbps connections stable at 71%
0
10
20
30
40
50
60
70
80
90
100
Jun-18Sep-18Dec-18Mar-19Jun-19Sep-19
% of
plans
Total mass market fibre uptake by plan type
50Mbps
100Mbps
1Gbps
9 October 2019
Active wholesaler campaigns driving ARPU growth
200Mbps
Q1 FY20 CONNECTIONS UPDATE
$60 p.m.
$46 p.m.
$42.50 p.m.
$55 p.m.
Business/Education plans
Regulated copper
pricing
Line only
(monthly)
With broadband
(monthly)
Currentpricing$31.19$42.02
From mid Dec 2019$31.68$42.35
4
Copper pricing

▪premises growth, increasing broadband penetration
and winbackof offnetcustomers to fibre is fuelling
broadband demand in Chorus UFB areas
▪VDSL vectoring upgrade and premises growth helping
offset wireless competition in rural areas
▪mobile network operators are targeting their copper
voice customers with wireless voice services across all
Zones
9 October 2019
Connection changes by Zone (indicative)
-20
-15
-10
-5
0
5
10
15
20
Q1 FY19Q2 FY19Q3 FY19Q4 FY19Q1 FY20
UFB: copper lines (no broadband)UFB: broadband lines
LFC: copper lines (no broadband)LFC: broadband lines
Rural: copper lines (no broadband)Rural: broadband lines
Chorus UFB
zone*
Rural(non-
UFB) zone
Local Fibre
Company
UFB zone
Total connections at
30 Sept**
1,097,000198,000133,000
Broadband connections962,000154,00090,000
Copper (no broadband)
connections
135,00044,00043,000
* Includes planned UFB1, 2 and 2+ coverage
**Excludes 16k fibre premium and data services (copper) connections
Q1 FY20 CONNECTIONS UPDATE
Connections
(’000s)
5

Premises growth supporting broadband uptake
96,000 dwellings forecast to be consented in Auckland (2019-2024)
▪Auckland: new peak of ~13k dwelling unit
consents in 2018, forecast to keep growing
▪New Zealand: average of 37,000 new dwellings
forecast per annum for the next six years
▪New Zealand: multi-unit dwellings expected to
grow from 36% to 41% of new residential
dwellings by 2024
Q1 FY20 CONNECTIONS UPDATE
9 October 20196

UFB rollout 82% complete
>53,000 fibre installations completed in Q1 (Q4 FY19: 50k)
▪weighted average lead times reduced from 8 to 6days
▪work in progress stable at 23k
▪customer satisfaction increased from 7.7 to 7.8 (August)
▪field crews stable at ~670
>UFB uptake increased from 53% to 55%
▪624,000 connections (30 June: 584,000)
1,133,000customers able to connect (30 June: 1,108,000)
uptake in UFB2 areas already 29%
863,000 premises passed (30 June: 842,000) out of
1,054,000 target = 82% complete
Uptake
9 October 2019
Q1 FY20 CONNECTIONS UPDATE
8,000
10,000
12,000
14,000
16,000
18,000
20,000
JulyAugSeptOctNovDecJanFebMarAprilMayJune
Fibre installations (NZ wide)
FY18FY19FY20
7

0.00%
10.00%
20.00%
30.00%
40.00%
50.00%
60.00%
70.00%
Sep-18Dec-18Mar-19Jun-19Sep-19
ROLLOUT ONGOING
Note: % uptake can reduce in areas as the fibre rollout passes more addresses in a period and greenfield subdivisions are claimed
55%
AVERAGE
UPTAKE
% uptake
relative to
capable
addresses
UFB1 uptake
Q1 FY20 CONNECTIONS UPDATE
89 October 2019

Monthly average data usage now 279GB
>Monthly average data usage per connection on our network grew
to 279GBin Q1, up from 265GB (June)
▪360GBon fibre (June:341GB)
▪187GBon copper (June:188GB)
9 October 2019
360
279
187
0
50
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250
300
350
400
Dec-14
Mar-15
Jun-15
Sep-15
Dec-15
Mar-16
Jun-16
Sep-16
Dec-16
Mar-17
Jun-17
Sep-17
Dec-17
Mar-18
Jun-18
Sep-18
Dec-18
Mar-19
Jun-19
Sep-19
CopperFibreAverage
Data
usage
(GB)
Monthly average data usage
per connection on our network
Q1 FY20 CONNECTIONS UPDATE
9

9 October 2019
Rugby streaming driving higher data usage
Record 2.5 Tbpspeak at 9:25pm on 30 Sept coincided with Australia vs Wales
Q1 FY20 CONNECTIONS UPDATE
Copper data usage
Fibre data usageScheduled RWC match
NZ vs Canada
NZ vs Namibia
NZ vs SthAfrica
Chorus
network
throughput
10