Chorus Q2 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

17 January 2020


Chorus Q2 FY20 Connections Update

The Q2 period saw the gigabit fibre uptake surge and the completion of the UFB1
rollout.

Total fixed line connections declined by 12k to 1,432,000 (Q1 FY20: -6k; Q2
FY19: -21k)
• copper voice line reductions moderated in Q2 (Q2 -12k; Q1 -16k) while seasonal
factors (e.g. holidays and student disconnections) meant reduced broadband
growth in Chorus UFB areas

Total broadband connections stable at 1,206,000 (Q1 FY20: +10k; Q2 FY19: -
4k)
• another strong quarter for fibre demand, with 36k connections added
• 1Gbps connections now 13% of mass market fibre connections, at 87k connections
(Q1: 69k)
• UFB uptake rose from 55% to 56%, with the UFB1 rollout now complete and a
further 52,000 customers able to connect to fibre across the UFB1 and 2 footprint
• UFB2 uptake already at 34%

Monthly average data usage for December grew to 293GB, up from 279GB in
September
• copper broadband usage grew to 200GB vs 363GB for fibre users



David Collins
Chief Financial Officer

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
Mobile: +64 21 243 8412
Email: Nathan.beaumont@chorus.co.nz

---

Q2 FY20 Connections Update
17 January 2020

>Total fixed line connections declined by 12k to 1,432,000 (Q1 FY20: -6k; Q2 FY19: -21k)
▪copper voice line reductions moderated in Q2 (Q2 -12k; Q1 -16k) while seasonal factors (e.g.
holidays and student disconnections) meant reduced broadband growth in Chorus UFB areas
>Total broadband connections stable at 1,206,000 (Q1 FY20: +10k; Q2 FY19: -4k)
▪another strong quarter for fibre demand, with 36k connections added
▪1Gbps connections now 13% of mass market fibre connections, at 87k connections (Q1: 69k)
▪UFB uptake rose from 55% to 56%, with the UFB1 rollout now complete and a further 52,000
customers able to connect to fibre across the UFB1 and 2 footprint
▪UFB2uptakealreadyat34%
>Monthly average data usage for December grew to 293GB, up from 279GB in September
▪copper broadband usage grew to 200GB vs 363GB for fibre users
17 January 2020
Q2 FY20 overview
Q2 FY20 CONNECTIONS UPDATE
2
Gigabit fibre demand surges as UFB1 rollout ends

0
200000
400000
600000
800000
1000000
1200000
1400000
31-Dec-1831-Mar-1930-Jun-1930-Sep-1931-Dec-19
17 January 2020
31 Dec
2018
31 March
2019
30 June
2019
30 Sept
2019
31 Dec
2019
Unbundled copper
(no broadband)
39,00031,00024,00021,00018,000
Baseband copper
(no broadband)
244,000233,000214,000201,000192,000
Copper ADSL
(includes naked)
374,000352,000327,000304,000283,000
VDSL
(includes naked)
295,000283,000270,000257,000242,000
Fibre broadband
(GPON)
517,000556,000599,000645,000681,000
Data services
(copper)
5,0005,0005,0004,0004,000
Fibre premium
(P2P)
12,00012,00011,00012,00012,000
Total connections
1,486,0001,472,0001,450,0001,444,0001,432,000
Fibre (GPON)
VDSL
Copper ADSL
Unbundled copper
Baseband copper
Broadband connections steady at 1,206,000
Q2 FY20 CONNECTIONS UPDATE
>1,206,000 broadband connections comprises:
▪681,000 fibre (GPON) connections
▪525,000 VDSL/ADSL (copper) connections
Business premium
3

>Annual update to regulated copper pricing from mid
December
>36,000mass market fibre connections added in Q2 (vs
46k in Q1 FY20)
▪strong second tier RSP promotions of 1Gbps services,
together with RSP migration of 200Mbps customers,
drove 1Gbps connections from 69k to 87k
0
10
20
30
40
50
60
70
80
90
100
Dec-18Mar-19Jun-19Sep-19Dec-19
% of
plans
Total mass market fibre uptake by plan type
50Mbps
100Mbps
1Gbps
17 January 2020
26% increase in Gigabit uptake
200Mbps
Q2 FY20 CONNECTIONS UPDATE
$60 p.m.
$46 p.m.
$42.50 p.m.
$55 p.m.
Business/Education plans
4
-10
0
10
20
30
50Mbps100Mbps200Mbps1Gbps
Fibre plan movement by quarter
Q1Q2
Change in
connections
(‘000s)
Regulated copper pricingLine only (monthly)With broadband (monthly)
Prior pricing$31.19$42.02
From mid Dec 2019$31.68$42.35

17 January 2020
Connection changes by Zone (indicative)
Chorus UFB
zone*
Rural(non-
UFB) zone
Local Fibre
Company
UFB zone
Total connections at
31 Dec**
1,096,000196,000124,000
Broadband connections969,000154,00083,000
Copper (no broadband)
connections
127,00042,00041,000
* Includes planned UFB1, 2 and 2+ coverage
**Excludes 16k fibre premium and data services (copper) connections
Q2 FY20 CONNECTIONS UPDATE
No. of connections
5
02000004000006000008000001000000
Q1
Q2
Q1
Q2
Q1
Q2
Broadband connections
Copper (no broadband) connections
LFC
Zone
Rural
Zone
Chorus
UFB Zone
-7k-2k
-7k-3k
-2k
-2k+1k
+7k
+16k
-11k
-8k
N/C

Broadband mix in Chorus planned UFB zone
17 January 20206
Fibrenow 68% of Chorus broadband
connections
76% of Chorus broadband
connections in Auckland on fibre
-
100,000
200,000
300,000
400,000
500,000
600,000
700,000
800,000
900,000
1,000,000
Chorus UFB zone broadband mix
FibreCopper broadband
76
13
11
Auckland broadband connections
by type (%)
Fibre
Copper - VDSL
Copper - ADSL
Q2 FY20 CONNECTIONS UPDATE
No. of
connections

17 January 20207
Fibre continues to grow Wellington connections
Return to connection growth in recently completed UFB areas
1500
1600
1700
Sep-18Dec-18Mar-19Jun-19Sep-19Dec-19
Island Bay exchange
Q2 FY20 CONNECTIONS UPDATE
2500
2600
2700
2800
2900
3000
3100
3200
Sep-18Dec-18Mar-19Jun-19Sep-19Dec-19
Karori exchange
No. of
connections
No. of
connections
UFB rollout
UFB rollout

UFB1 rollout complete
>UFB uptake increased from 55% to 56% within completed
footprint
▪58%uptake across UFB1 footprint
▪uptake in UFB2 areas grew from 29% to 34%
(note: uptake includes some UFB2 areas that have been partially built, but not
yet submitted for Crown sign-off)
▪664,000 connections (Q1: 624,000) now within completed
footprint, including business premium
▪1,185,000customers able to connect (Q1: 1,133,000)
▪909,000 premises passed (Q1: 863,000) out of 1,054,000
target = UFB rollout 86% complete
>45,000fibre installations completed in Q2 (Q1: 53k)
▪customer satisfaction consistent at 7.8
▪field crew levels stable at ~670
▪weighted average lead times increased from 6 to 7 days
▪work in progress reduced from 23k (Q1) to 20k
Uptake
17 January 2020
Q2 FY20 CONNECTIONS UPDATE
8,000
10,000
12,000
14,000
16,000
18,000
20,000
JulyAugSeptOctNovDecJanFebMarAprilMayJune
Fibre installations (NZ wide)
FY18FY19FY20
8

0.00%
10.00%
20.00%
30.00%
40.00%
50.00%
60.00%
70.00%
Dec-18Mar-19Jun-19Sep-19Dec-19
% uptake
relative to
capable
addresses
UFB1 uptake: 58%
Q2 FY20 CONNECTIONS UPDATE
917 January 2020

Monthly average data usage now 293GB
>Monthly average data usage per connection on our network grew
to 293GBin Q2, up from 279GB (Sept)
▪363GBon fibre (Sept:360GB)
▪200GBon copper (Sept:187GB)
>Data usage growth typically slows in Q2 due to Christmas holidays
17 January 2020
200
363
293
0
50
100
150
200
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350
400
Dec-14
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Mar-18
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Sep-18
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Mar-19
Jun-19
Sep-19
Dec-19
CopperFibreAverage
Data
usage
(GB)
Monthly average data usage
per connection on our network
Q2 FY20 CONNECTIONS UPDATE
10
Peak time usage now typically more than 2Tbps: Christmas and New
Year’s Eve saw reduced data usage
Throughput (
Tbps
)

17 January 202011
Quality of fibre
broadband highlighted
in Commerce
Commission reporting
Source: Measuring Broadband New Zealand, Spring Report,
December 2019, Commerce Commission
>Fibre consistently enables multiple streams of
Ultra High Definition content while other
technologies have variable performance -see
Figure 11.
>Fibre ensures low latency performance. Latency
above 30ms can result in poor experience of
applications such as gaming or video calls -see
Figure 13.
Sam Knows testing showed:
Q2 FY20 CONNECTIONS UPDATE