Q4 FY20 overview

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

Email: company.secretary@chorus.co.nz

STOCK EXCHANGE ANNOUNCEMENT

10 July 2020

Q4 FY20 overview

COVID-19 constrains Q4 fibre growth

Lockdown period had a significant impact on Q4 fibre activity and uptake
1. restrictions on non-essential activity reduced fibre installations by ~15k and
halted UFB2 rollout
2. reduced fibre installations and constraints on door to door marketing saw Q4 fibre
connection growth drop to 27k from 32k in Q3
3. Chorus provided $5 million financial support to service companies to assist with
reduced field force workflow/revenue and help retain workforce for rapid
resumption of work in Alert Level 3

Total fixed line connections declined by 4k to 1,415,000* (Q3 FY20: -13k)
Broadband connections returned to Q2 level of 1,206,000*, with 4k growth
(Q3 FY20:-4k)

*totals exclude 10,000 free broadband connections provided to student households

Authorised by:
JB Rousselot
Chief Executive Officer

ENDS

For further information:

Steve Pettigrew
Head of External Communications
Mobile +64 (27) 258 6257
Email: Steve.Pettigrew@chorus.co.nz
Brett Jackson
Investor Relations Manager
Phone: +64 4 896 4039
Mobile: +64 (27) 488 7808
Email: Brett.Jackson@chorus.co.nz

---

Q4 FY20 Connections Update
10 July 2020

>Lockdown period had a significant impact on Q4 fibre
activity and uptake
▪restrictions on non-essential activity reduced fibre installations
by ~15k and halted UFB2 rollout
▪reduced fibre installations and constraints on door to door
marketing saw Q4 fibre connection growth drop to 27k from
32k in Q3
▪Chorus provided $5 million financial support to service
companies to assist with reduced field force workflow/revenue
and help retain workforce for rapid resumption of work in Alert
Level 3
>Total fixed line connections declined by 4k to 1,415,000*
(Q3 FY20: -13k)
>Broadband connections returned to Q2 level of 1,206,000*,
with 4k growth (Q3 FY20:-4k)
*totals exclude 10,000 free broadband connections provided to student households
10 July 2020
Q4 FY20 overview
Q4 FY20 CONNECTIONS UPDATE
2
COVID-19 constrains Q4 fibre growth
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)
FY18FY19FY20

>We’ve implemented a broad range of initiatives to support community and
industry including:
▪providing 10,000broadband connections, free-of-charge for six months, to
families without broadband as part of government initiatives for online
schooling
▪enabling temporary disconnections by removing disconnection and
reconnection fees for businesses
▪making a $2 million relief fund available to retailers for debt incurred from
consumers and small businesses unable to pay their connection bills during
the lockdown period
▪introducing price reductions on our 1Gbps and small business plans from 1
July
▪delaying our annual CPI increase until 1 October and limiting increases to
selected fibre plans, despite increases to our service company and other costs
▪continuing to invest in broadband capacity as network demands change post-
lockdown
>It remains to be seen what impact wider COVID-19 economic effects will have on
connections in the coming months
10 July 20203
Our response to COVID-19
Q4 FY20 CONNECTIONS UPDATE

UFB uptake reaches 60%
>UFB uptake increased from 58% to 60% within completed
footprint in Q4
▪uptake in UFB1 areas grew from 60% to 63%
▪uptake in UFB2 areas grew from 35% to 37%
(note: uptake includes some UFB2 areas that have been partially built, but not yet
submitted for Crown sign-off)
▪725,000 connections (Q3: 695,000) now within completed
footprint, including business premium connections
▪1,209,000customers able to connect (Q3: 1,198,000)
▪931,000 premises passed* (Q3: 920,000) out of 1,054,000
target = UFB rollout 88% complete
>31,000fibre installations completed in Q4 (Q3: 38k)
▪customer satisfaction increased from 7.9 to 8.1
*under the UFB contract, a multi-dwelling unit or single office block is one premises
Uptake
10 July 2020
Q4 FY20 CONNECTIONS UPDATE
4
0
100,000
200,000
300,000
400,000
500,000
600,000
700,000
800,000
900,000
1,000,000
ADSLVDSLFibre
Fibrenow 73% of Chorus broadband
connections in planned UFB zone
No. of
connections

0
200000
400000
600000
800000
1000000
1200000
1400000
30-Jun-1930-Sep-1931-Dec-1931-Mar-20Jun-20
10 July 2020
30 June
2019
30 Sept
2019
31 Dec
2019
31 March
2019
30 June
2020
Unbundled copper
(no broadband)
24,00021,00018,00017,00015,000
Baseband copper
(no broadband)
214,000201,000192,000185,000179,000
Copper ADSL
(includes naked)
327,000304,000283,000261,000245,000
VDSL
(includes naked)
270,000257,000242,000228,000221,000
Fibre broadband
(GPON)
599,000645,000681,000713,000740,000
Data services
(copper)
5,0004,0004,0004,0004,000
Fibre premium
(P2P)
11,00012,00012,00011,00011,000
Total connections
1,450,0001,444,0001,432,0001,419,0001,415,000
Fibre (GPON)
VDSL
Copper ADSL
Unbundled copper
Baseband copper
Fibre now makes up 53% of Chorus connections
Q4 FY20 CONNECTIONS UPDATE
>1,206,000 broadband connections comprises:
▪740,000 fibre (GPON) connections
▪466,000 VDSL/ADSL (copper) connections
Business premium
5
Note: Free education connections are excluded from this data

27,000mass market fibre connections added
▪1Gbps connections grew from 105k to 115k
and now represent 16% of mass market
fibre
▪about 20% of orders are for 1Gbps
▪100Mbps plans reduced to 69% share of
connections
▪small business plans grew to 3k; 100Mbps
business plan reduced from $55 to $52 from
1 July
0
10
20
30
40
50
60
70
80
90
100
Jun-19Sep-19Dec-19Mar-20Jun-20
% of
plans
Total mass market fibre uptake by plan type
50Mbps
100Mbps
1Gbps
10 July 2020
1Gbps plans grow to 115k
200Mbps
Q4 FY20 CONNECTIONS UPDATE
$60 p.m.
$46 p.m.
$42.50 p.m.
$55 p.m.
Business/Education plans
6
-10
0
10
20
30
50Mbps100Mbps200Mbps1Gbps
Fibre plan movement by quarter
Q1Q2
Change in
connections
(‘000s)
$56 p.m.
from 1 July
$43.56 p.m.
from 1 Oct
$47.15 p.m.
from 1 Oct
$56.38 p.m.
from 1 Oct

10 July 2020
Connection changes by Zone (indicative)
Chorus UFB
zone*
Rural(non-
UFB) zone
Local Fibre
Company
UFB zone
Total connections at
30 June**
1,097,000195,000108,000
Broadband connections980,000155,00071,000
Copper (no broadband)
connections
117,00040,00037,000
* Includes planned UFB1, 2 and 2+ coverage
**Excludes 15k fibre premium and data services (copper) connections
Q4 FY20 CONNECTIONS UPDATE
7
8
3
7
16
1
1
-4
-8
-7
-7
-5
-5
-8
-11
-1
-1
-2
-2
-2
-2
-2
-3
-15-5515
Q4
Q3
Q2
Q1
Q4
Q3
Q2
Q1
Q4
Q3
Q2
Q1
Broadband connections
Copper (no broadband) connections
LFC
Zone
Rural
Zone
Chorus
UFB Zone
N/C
Change in connections (‘000s) by zone**
>Chorus UFB zone: 8kbroadband growth despite
lower fibre installation volumes due to COVID-19
limitations on non-essential work
>LFC zone: slowdown in broadband disconnects
through lockdown period
>Rural: VDSL and fibre connections continued to grow,
offsetting ADSL reductions. Fibre connections now 20k

0.00%
10.00%
20.00%
30.00%
40.00%
50.00%
60.00%
70.00%
80.00%
Sep-19Dec-19Mar-20Jun-20
% uptake
relative to
capable
addresses
UFB1 uptake: 63%
Q4 FY20 CONNECTIONS UPDATE
810 July 2020
Average uptake

Data usage returns to pre-lockdown growth path
>monthly average data usage per connection on our network
reduced to 313GBin June, down from 346GB (March)
▪387GBon fibre (March:429GB)
▪198GBon copper (March:225GB)
>Q4 data usage was artificially lower (~10%) because
international streaming providers have constrained their
bandwidth delivery in response to COVID-19 effects on some
telco networks
>April data usage (not shown on chart) was significantly higher
because it reflected the effect of Alert Level 4 lockdown
▪average: 406GB
▪fibre: 495GB
▪copper: 273GB
10 July 2020
200
225
198
363
429
387
293
346
313
0
50
100
150
200
250
300
350
400
450
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
Dec-19
Mar-20
Jun-20
CopperFibreAverage
Data
usage
(GB)
Monthly average data usage
per connection on our network
Q4 FY20 CONNECTIONS UPDATE
9

10 July 202010
Video meetings drive ‘new normal’ of higher
upstream traffic
>upstream traffic peaked ~60% higher (than January
levels) when lockdown began, driven by rapid adoption
of video conferencing applications
>upstream traffic remains 10% higher than pre-
lockdown, reflecting ongoing adoption of work from
home practices and two-way bandwidth hungry
applications
LOCKDOWN PERIOD
>downstream traffic initially peaked
~40% higher (than January levels)
when lockdown began
>downstream traffic dipped in the first
week of lockdown as streaming
providers limited streaming quality
Q4 FY20 CONNECTIONS UPDATE
% change from January traffic level
Upstream traffic remains 10% higher than pre-lockdown levels

10 July 202011
Video meetings create Godzilla effect
Upstream traffic spikes half hourly, consistent with meeting start times
Q4 FY20 CONNECTIONS UPDATE

10 July 202012
Commerce
Commission report
notes strong fixed
line performance
>The Measuring Broadband New Zealand
report for May 2020 noted:
▪on average, fixed line
broadband(ADSL/VDSL/fibre)
connections experienced no significant
drops in download speed during the first
week of lockdown.
▪average download speeds for fixed
wireless plans decreased by around
25%.
▪90% of latency tests performed through
fibre connections were below 20ms. By
comparison, 96% of Fixed Wireless
latency tests were above 30ms.
www.measuringbroadbandnewzealand.com/
Source: Measuring Broadband New Zealand, Autumn Report, May 2020
Q4 FY20 CONNECTIONS UPDATE