Chorus 2020 full year results & annual report

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

Email: company.secretary@chorus.co.nz

STOCK EXCHANGE ANNOUNCEMENT

24 August 2020

Chorus 2020 full year results & annual report

The following are attached in relation to Chorus’ FY20 full year results and annual report:
1. Media Release
2. Investor Presentation
3. Annual Report (including audited financial statements)
4. NZX Financial Results Announcement
5. NZX Distribution Notice
6. Letter to investors

Chief Executive Officer JB Rousselot, and Chief Financial Officer David Collins, will
discuss the FY20 full year results by webcast at 10.00am New Zealand time today. The
webcast will be available at www.chorus.co.nz/webcast
.

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
Head of External Communications
Mobile: +64 (27) 258 6257
Email: steve.pettigrew@chorus.co.nz

---

Distribution Notice

Updated as at 18 December 2019



Please note: all cash amounts in this form should be provided to 8 decimal places

Section 1: Issuer information
Name of issuer Chorus Limited
Financial product name/description Ordinary shares
NZX ticker code CNU
ISIN (If unknown, check on NZX
website)
NZCNUE0001S2
Type of distribution
(Please mark with an X in the
relevant box/es)
Full Year X Quarterly
Half Year Special
DRP applies X
Record date 15/09/2020
Ex-Date (one business day before the
Record Date)
14/09/2020
Payment date (and allotment date for
DRP)
12/10/2020
Total monies associated with the
distribution
1

$62,228,818
Source of distribution (for example,
retained earnings)
Retained earnings
Currency NZD
Section 2: Distribution amounts per financial product
Gross distribution
2
$0.19444444
Gross taxable amount
3
$0.19444444
Total cash distribution
4
$0.14000000
Excluded amount (applicable to listed
PIEs)
$0.00000000
Supplementary distribution amount $0.02470588
Section 3: Imputation credits and Resident Withholding Tax
5

Is the distribution imputed Fully imputed
Partial imputation
No imputation

1
Continuous issuers should indicate that this is based on the number of units on issue at the date of the form
2
“Gross distribution” is the total cash distribution plus the amount of imputation credits, per financial product, before the deduction of
Resident Withholding Tax (RWT).
3
“Gross taxable amount” is the gross distribution minus any excluded income.
4
“Total cash distribution” is the cash distribution excluding imputation credits, per financial product, before the deduction of RWT.
This should include any excluded amounts, where applicable to listed PIEs.
5
The imputation credits plus the RWT amount is 33% of the gross taxable amount for the purposes of this form. If the distribution is
fully imputed the imputation credits will be 28% of the gross taxable amount with remaining 5% being RWT. This does not constitute
advice as to whether or not RWT needs to be withheld.

If fully or partially imputed, please
state imputation rate as % applied
6

100%
Imputation tax credits per financial
product
$0.05444444
Resident Withholding Tax per
financial product
$0.00972222
Section 4: Distribution re-investment plan (if applicable)
DRP % discount (if any)
2%
Start date and end date for
determining market price for DRP
14/09/2020 18/09/2020
Date strike price to be announced (if
not available at this time)
29/09/2020
Specify source of financial products to
be issued under DRP programme
(new issue or to be bought on market)
New Issue
DRP strike price per financial product
$unknown
Last date to submit a participation
notice for this distribution in
accordance with DRP participation
terms
16/09/2020
Section 5: Authority for this announcement
Name of person

authorised to make
this announcement
David Collins
Chief Financial Officer
Contact person for this
announcement
Brett Jackson
Investor Relations Manager
Contact phone number
+64 27 488 7808
+64 4 896 4039
Contact email address Brett.Jackson@chorus.co.nz
Date of release through MAP

24/08/2020





6
Calculated as (imputation credits/gross taxable amount) x 100. Fully imputed dividends will be 28% as a % rate applied.

---

Results announcement
(for Equity Security issuer/Equity and Debt Security issuer)
Updated as at 17 October 2019


Results for announcement to the market
Name of issuer Chorus Limited
Reporting Period 12 months to 30 June 2020
Previous Reporting Period 12 months to 30 June 2019
Currency New Zealand Dollars
Amount (000s) Percentage change
Revenue from continuing
operations
$959,000 -1%
Total Revenue $959,000 -1%
Net profit/(loss) from
continuing operations
$52,000 -2%
Total net profit/(loss) $52,000 -2%
Interim/Final Dividend
Amount per Quoted Equity
Security
$0.14000000
Imputed amount per Quoted
Equity Security
$0.05444444
Record Date 15 September 2020
Dividend Payment Date 12 October 2020
Current period Prior comparable period
Net tangible assets per
Quoted Equity Security
$1.39 $1.64
A brief explanation of any of
the figures above necessary
to enable the figures to be
understood
This announcement should be read in conjunction with the
attached annual report, audited financial statements for the year
ended 30 June 2020 contained in that report, media release and
investor presentation.
Authority for this announcement
Name of person

authorised
to make this announcement
David Collins
Chief Financial Officer
Contact person for this
announcement
Brett Jackson
Investor Relations Manager
Contact phone number +64 4 896 4039
Contact email address Brett.Jackson@chorus.co.nz
Date of release through MAP

24/08/2020

Audited financial statements accompany this announcement.

---

Annual Report 2020
01 Chorus Board and management overview
21 Management commentary
31 Financial statements
69 Governance and disclosures
104 Glossary

Patrick Strange
Chair
Mark Cross
Chair Audit & Risk Management Committee
FY20 results overview
1 Excludes free education connections provided as part of Chorus’ COVID-19 response.
2 Earnings before interest, income tax, depreciation and amortisation (EBITDA) is a non-GAAP profit measure. We monitor this as a key
performance indicator and we believe it assists investors in assessing the performance of the core operations of our business.
3 Based on the mean response to “How likely are you to recommend your company as a place to work?”
EBITDA
2
Customer satisfaction
DividendEmployee engagement score
3
Fixed line connections
1
Broadband connections
1
Fibre connections
1
Net profit after tax
FY20
24cps
FY19
23cps
FY20
8.5 out of 10
3
FY19
7. 6
FY20
751,000
FY19
610,000
FY20
$52m
FY19
$53m
FY20
1,206,000
FY19
1,196,000
FY20
1,415,000
FY19
1,450,000
FY20
8.1 out of 10
(target 7.9)
FY19
7. 7
FY20
$648m
FY19
$636m
This report is dated 24 August 2020 and is signed on behalf of the  Board of Chorus Limited.

Annual Report 20201
Dear investors
This year saw our broadband infrastructure
pass its greatest ever test. The COVID-19
pandemic meant New Zealanders were heavily
reliant on our copper and fibre network to keep
connecting, working and learning through
months of change and uncertainty. Our business
and our people rose to the challenge, helping
deliver strong operational results and further
cement broadband’s role as an essential utility.
Despite the operational restrictions and financial
impact of COVID-19, we were pleased to be able
to achieve our goal of modest EBITDA growth.
This was achieved through our ongoing focus on
reducing costs and reshaping our business for a
fibre-centric future.
We celebrated a significant milestone with the completion of
the original ultrafast broadband (UFB1) rollout in November.
There are now approximately 150,000 homes and businesses
remaining to pass in the UFB2 rollout area by the end of
2022. Together, these projects are delivering far reaching
socio-economic benefits, with a growing number of smaller
communities throughout New Zealand connected to fibre.
We’ve continued to see strong growth in fibre uptake,
up from 53% to 60% during the year. Just as importantly,
customer satisfaction with fibre installations rose from 7.7
to 8.1 out of ten. This exceeded our target of 7.9. Together,
these developments helped us deliver another strong
year of broadband connection growth, with an increase
of 10,000 lines. We finished the year with 1,415,000 fixed
line connections, down just 35,000 lines from the year
before. This was a marked improvement on the level of line
reductions experienced in prior years.
The good progress we made in optimising our business and
reducing costs meant we achieved EBITDA of $648 million.
This was up from $636 million in FY19 and was in line with
our February upgrade to EBITDA guidance of a range of
$640 to $655 million. Net profit after tax was $52 million
compared to $53 million in FY19.
While COVID-19 had a negative financial impact on EBITDA,
it has accelerated some of the positive underlying trends
that support our business. International telecommunications
providers are seeing a “fixed line renaissance”, with consumers
now placing even greater value on the reliability and capacity
of fixed line services relative to alternative wireless networks.
We’ve seen this reflected in demand trends on our network,
with a growing proportion of consumers opting for our
premium 1 gigabit per second plans.
The consumption of streaming services through
lockdown contributed to significant increases in monthly
broadband usage, while the almost overnight adoption of
videoconferencing services has reinforced the need for stable
upstream broadband performance.
Monthly average household data usage surged from 265GB
to 313GB across the year. Fibre customers averaged 387GB in
June, up from 341GB the year before,
The completion of the UFB1 rollout, together with the
suspension of non-essential rollout and connection activity
during the COVID-19 lockdown, saw a substantial drop in
overall capital expenditure from $804 million in FY19 to
$663 million this year.
The sudden suspension of non-essential field activity
through the lockdown period placed financial strain on
our service companies and we chose to provide $5 million
in financial support to them and their subcontractors.
This helped assist with reduced workflow and retain our
workforce for the rapid resumption of activity when alert
levels were relaxed. A relief fund of $2 million was also made
available to retailers to help address the expected increase in
bad debts for consumers and small businesses unable to pay
their bills during lockdown.
We were pleased to be able to play a part in supporting the
wider community deal with the consequences of COVID-19.
Where the Ministry of Education identified households
needing a broadband connection, for students to keep
up with their schooling, we made our existing network
connections available free of charge for a six-month period.
About 10,000 students had been connected under this
initiative by the end of FY20.
Our people helped make our COVID-19 initiatives happen,
and keep our essential infrastructure going, all while
embracing working from home in an extremely short
timeframe. They’ve shown great resilience through change
this year as we’ve begun reshaping our organisational
structure from a build to operate focus. Despite the resulting
reduction in staff numbers, employee engagement was 8.5 in
June 2020, up from 7.6 out of 10 in FY19. Our employee net
promoter score
1
also rose, from
+
28 to
+
67, putting us in the
top 5% of our international ‘technology’ company benchmark.
We continue to put considerable effort and focus into the
Commerce Commission’s process to establish the new
utility-style regime for our fibre access network. Aspects of
the Commission’s November 2019 draft decision were an
improvement on their earlier views. However, we believe the
proposed settings don’t yet reflect the commercial realities of
the network investment we’ve made since 2011. The various
phases of the implementation process will continue through
FY21, with the new framework to apply from January 2022.
A fully imputed final dividend of 14 cents per share will be
paid on 12 October 2020, bringing total dividends for FY20 to
24 cents per share.
1 Net Promoter Scores can range from -100 to +100 and are calculated
by subtracting the percentage of detractors (0-6 engagement score)
from the percentage of promoters (9-10 engagement score).

Annual Report 20202
Figure x:
Chorus UFB uptake
0%
50%
40%
30%
20%
10%
60%
70%
80%
90%
100%
UFB1UFB2Contractual target
FY12
FY19FY18FY17FY16FY15FY14FY13FY20
1.1 A major milestone: UFB1 complete
In November 2019, we celebrated the completion of our nine-
year contract with the Government to bring fibre to 28 major
towns and cities. The rollout of 28,000 kilometres of fibre was
achieved on time and within our guidance range of $1.75 to
$1.8 billion. The project was a textbook case study of how a
public-private partnership can combine the benefits of private
sector disciplines with broader socio-economic objectives.
We’re already approaching the halfway mark of the second
phase of our fibre rollout programme, UFB2. Together, the
UFB1 and 2 projects have, so far, made fibre available to about
1.2 million homes and businesses.
Our successful execution of the UFB programme is clear
when you consider the UFB1 contractual target was 20%
uptake by 2020. We finished FY20 with 751,000 active fibre
connections nationwide, up from 610,000 the year before.
Across the UFB1 area, fibre uptake grew from 54% to 63%
of homes and businesses. In our recently completed UFB2
areas, uptake has already reached 37%. The increased pace
at which consumers are embracing fibre, as it becomes
available, is evident from Figure 1 when you compare the
uptake rates of UFB1 and 2.
1.2 COVID-19 pauses fibre deployment
Fibre uptake would have been higher still had it not been
for COVID-19. When New Zealand entered Alert level 4 on
25 March we ceased all non-essential build, maintenance and
installation activity. This meant the UFB2 rollout went on hold
until the lockdown restrictions began easing from 27 April.
Although broadband was recognised as an essential service,
we could only perform physical broadband installations in
limited circumstances: for those premises that did not have
an existing fixed line, or where customers had business or
educational requirements not met by an existing service.
Our door-to-door fibre migration programme was also
suspended. Fibre installations slowed markedly, from a typical
average of 650 daily to about 100 a day and the number of
working installation crews dropped from ~640 to ~260.
As a result, on 27 March we announced a reduction in our
FY20 capital expenditure guidance from a range of $660
million to $700 million, to a new range of $610 million to
$650 million.
Behind the scenes, the telecommunications industry was
working together to keep networks operating. We worked
with retailers to fast track the handover and backhaul
capacity upgrades they needed to keep services congestion
free. We introduced a process to enable retailers to
temporarily disconnect business lines, so businesses wouldn’t
be charged while they couldn’t trade, and we waived our
reconnection fee. As the economic consequences of the
nationwide lockdown became clearer, we announced we
would delay an expected annual inflation increase on our
wholesale broadband charges until later in the year.
Other support measures included $5 million to support our
service company workforce and their subcontractors through
the period of reduced workflow, as well as a $2 million
relief fund to help retailers address expected increases in
customers unable to pay their bills during lockdown.
Figure 1:
UFB1 and UFB2 uptake rates

Annual Report 20203
World Cup in September/October 2019. This meant that when
the COVID-19 lockdown occurred, we were able to manage a
record peak in demand of 3 terabits per second (Tbps) on the
evening of 27 March. This was substantially higher than the prior
record of 2.6Tbps that we experienced during the streaming of
a Rugby World Cup quarter-final match.
Figure 2 shows how usage patterns changed from the pre-
lockdown period (in blue) to the Alert Level 4 lockdown period
(in green), and then began to moderate as restrictions were
gradually relaxed through Alert levels 3 and 2, enabling growing
numbers of people to return to work and school.
1.3 Broadband confirmed as the 4th utility
The demands placed upon our network as a result of
COVID-19 clearly confirmed broadband’s status as the 4th
utility. Broadband traffic increased by about 35% through
the lockdown period as New Zealanders were required to
connect, work and learn from home. This increase would’ve
been approximately 10% higher if global streaming services
such as Netflix and Youtube hadn’t limited the bandwidth
requirements of their streaming service. These measures
were intended to assist international network operators, but
they were in no way needed for our network because of the
significant capacity we had available.
Once fibre has been laid, we can continue to add capacity to
the fibre network by investing in network electronics. We’d
made substantial investment in capacity ahead of the Rugby
Figure 2:
Changes in downstream usage over COVID-19 lockdown period
Figure 2:
Changes in downstream usage over COVID-19 lockdown period
12:00AM12:00PM4:00AM4:00PM12:00AM8:00PM8:00AM
Time of day
Alert Level 2
21 May 2020
25 May 2020
26 May 2020
27 May 2020
Pre COVID-19
2 March 2020
3 March 2020
9 March 2020
16 March 2020
Alert Level 4
1 April 2020
2 April 2020
14 April 2020
16 April 2020
Alert Level 3
4 May 2020
5 May 2020
6 May 2020
7 May 2020
0
0.5
1.5
1.0
2.0
2.5
Downstream traffic (Tbps)

Annual Report 20204
Another notable development during the lockdown period
was the significant change in upstream traffic, with growth of
85%. This was because video conferencing services came to
the fore during lockdown as people sought a richer connection
experience than voice calls. Applications such as Zoom, Skype,
We believe increased daytime bandwidth demand and
consumers’ stronger focus on broadband reliability, particularly
for videoconferencing, is here to stay. Our consumer research
found that over two-thirds of those in the workforce want to
continue working from home or have flexible working days.
Google Hangouts and Houseparty, require two-way video
traffic. The effect on upstream data traffic on our network can
be seen in Figure 3. Interestingly, the staggered spikes in the
daytime traffic profile are consistent with video conferencing
meetings being scheduled on the hour and half hour.
About 26% of working New Zealanders believe their productivity
during lockdown was the same as being in the office, while 46%
thought they were more productive at home.
Figure 3:
Changes in upstream usage over COVID-19 lockdown period
Figure 3:
Changes in upstream usage over COVID-19 lockdown period
0
0.05
0.10
0.20
0.15
0.25
0.30
Time of day
22 April 202017 March 202023 April 202018 March 202021 April 202016 March 2020
Upstream traffic (Tbps)
12:00AM12:00PM4:00AM4:00PM12:00AM8:00PM8:00AM

Annual Report 20205
1.4 Data usage momentum continues
The combination of continuing growth in online streaming
demand and COVID-19 driven changes to consumer
behaviour saw peak time usage grow more than 30% from
the year before. That’s the equivalent of more than half a
million simultaneous high-definition video streams.
Translated to monthly average usage, households were
using 313GB in June 2020, up from 265GB last year. Fibre
consumers were averaging 387GB a month, compared to
198Gb for copper customers.
Our own and independent forecasts suggest average data
usage on fibre is likely to exceed 1,000GB a month by 2024.
This may be conservative. The increase is expected to be
fuelled by the proliferation of 4K television sets, followed
by 8K in the near future, and bandwidth hungry services
such as online gaming. The highest peak time usage during
the lockdown period, for example, coincided with the
international release of a game update for Call of Duty.
Figure 4:
Average daily internet usage across the Chorus network June 2018 – 2020
As data demand keeps growing, fibre’s ability to deliver
consistent throughput at dedicated speeds is a significant
competitive advantage. We’ve seen uptake of 1Gbps
connections on our network grow from 10% to 16% of mass
market fibre connections this year. Our consumer research
in the weeks following the COVID-19 lockdown indicates a
greater willingness from customers to consider upgrading
their broadband plans, to ensure broadband reliability.
An independent report, published by the Commerce
Commission in May, highlighted the strong performance of
fibre and copper broadband despite the increased bandwidth
demand through lockdown. In contrast to fixed line services,
their monitoring highlighted a 25% reduction in average
download speeds for wireless broadband, particularly at peak
times. This reflects the shared nature of wireless networks,
that makes them more prone to congestion. The report
also noted that fixed wireless connections are more likely
to experience issues with applications requiring low latency,
such as online gaming and video calls.
Figure 4:
Average daily internet usage across the Chorus network June 2018 – 2020
0
0.25
0.5
0.75
1.0
1.25
1.5
2.0
1.75
2.50
2.25
3.0
2.75
Time of day
Note: data represents average of traffic across all days in June, excluding corporate traffic.
June 2019June 2020June 2018
Network throughput (Tbps)
Peak traffic
of 3 Tbps
on 27 March 2020
12:00AM12:00PM4:00AM4:00PM12:00AM8:00PM8:00AM

Annual Report 20206
1.5 Keeping our focus on customer experience
We’re focused on continuing to do everything we can to make
it as easy as possible for consumers to get fibre connected.
Our overall customer satisfaction score for fibre installations
had increased to 8.1 by the end of FY20, up from 7.7 out of
ten at the start of the period. This was above our target of 7.9
and reflects the positive effects of various initiatives we’ve
implemented through FY19 and FY20. These included a focus
on reducing rescheduling, minimising site visits through our
fibre in a day process and managing a growing proportion
of installations through our door knocking programme.
Our technicians also continued to rate highly, with scores
increasing from 8.5 to 8.7 over the year. These were good
results, but we’re continuing to aim higher.
With fibre now installed in more than 800,000 homes and
businesses, we’re putting a greater focus on the switching
experience of customers when they move to fibre ‘intact’
premises. These are homes, or businesses, where fibre is
already installed and we just need to activate the broadband
service. We improved customer satisfaction in these instances
from 7.0 to 7.3 through the year, but we believe there’s plenty
of room to make the process much better for customers.
We’re working with retailers on ways we can do this.
Our digital systems are playing a growing role in simplifying
the end-to-end experience for consumers. Traffic on our
website, for example, doubled in the year as we’ve made it a
richer source of information for people wanting to learn more
about their broadband options and performance. Retailers
and service companies are embracing the online tools we’ve
deployed to improve the experience for customers. This
includes our new assurance channels that are providing
better diagnosis of faults and automate the dispatch of
technicians. We’ve seen a three-fold increase in the volume
of requests on these digital tools, including those used by our
internal teams, and this is helping streamline processes and
reduce our operational costs.
1.6 Driving fibre uptake as an active wholesaler
While demand for fibre is growing, the continuing evolution
of technology, market dynamics and industry regulation
means we operate in a dynamic sector. With some retailers
promoting access to their own mobile and fixed wireless
networks to their existing customers, we’ve adopted an
active wholesaler strategy. This means that we have a range
of in-market activity to promote uptake of our services
and help consumers understand that nothing beats a fibre
connection when it comes to reliable, uncongested and
unlimited broadband.
With rollout growth in our fibre footprint beginning to slow,
our active wholesaling activity has stepped up another level
and included:
• our own door knocking campaigns to drive hundreds of
daily fibre installation requests
• retailer incentives to connect customers on alternative
networks to our network
• sending selected consumers prepaid gift cards for
redemption on uptake of a fibre service
• advertising campaigns tailored to specific customer
segments
• improving our processes for property developer customers.
Our local fibre migration campaigns have proved highly
successful in stimulating additional fibre demand. We had
32,000 homes receive an installation through this programme
and we’re seeing about half of these customers switch their
fibre connection on within just six months.
1.7 Continuing to innovate
Another important aspect of being an active wholesaler is
our desire to keep innovating, finding new ways in which our
network can be used to make New Zealand better. During the
year we launched our new Hyperfibre services, utilising new
network technology that enables 2Gbps or 4Gbps symmetric
speeds. This equipment is only just beginning to be deployed
in other countries and we believe it will make big differences
for businesses that transfer large amounts of data, work in
the cloud, or rely on instantaneous communication.
Small businesses are an integral part of the economy and
we introduced a revised fibre product to provide them
with a faster fault restoration commitment. This puts small
businesses on an even footing with those that use our
premium fibre products.
For retailers, we developed a national tail extension
service so it’s easier for them to expand their fibre services
nationwide. This service means they only need one network
handover point, greatly reducing the cost of transport
services between multiple UFB areas and enhancing their
ability to grow a geographically dispersed customer base.

Annual Report 20207
With our new Wi-Fi capable fibre terminals installed in a
growing number of homes and businesses, we’ve taken a
new approach and co-developed a Wi-Fi service based on
detailed input from our retailers. The proposed new service
will remove the need for retailers to dispatch their own
routers to customers and enable customers to get their
broadband up and running almost straight away. This could
in turn reduce the retail cost of broadband for short term
customer connections, because retailers would no longer
need to recover the cost of a router over a short timeframe.
We’re taking a close interest in the release of the new Wi-Fi
standard, Wi-Fi 6. Wi-Fi 6 capable devices, like routers and
mobile phones, are now available and can deliver a big
step up in Wi-Fi performance with enhanced speed and
reduced latency. As well as enabling better home broadband
performance, Wi-Fi 6 is being seen as a potential alternative
to 5G in enterprise and other private environments where
cost effective capacity and support for a large number of
devices is important. We’re exploring the different roles
Wi-Fi 6 might play in complementing the unlimited capacity
provided by our fibre access products.
Figure 5:
Our network infrastructure
~600 exchanges~12,000 cabinets~300,000 poles
~40,000km duct network~54,000km fibre
~130,000km of copper

Annual Report 20208
The New Zealand broadband market remains
highly competitive. Since 2011 the fibre rollout
has been a trigger for consumers to reconsider
their choice of broadband provider, with
industry reports suggesting large incumbent
retailers continue to experience declining
market share. This reflects the way our open
access network fosters competition, by enabling
about 100 retailers to offer services on an
equivalent basis. Another notable feature of the
retail landscape in recent years is the growth of
retailers that bundle electricity and broadband
services.
Further competition is expected with Sky TV’s
announcement in April 2020 that it intends to become a
broadband retailer. Sky TV currently delivers most of its pay
TV content via satellite with about 586,000 subscribers.
However, it has increased its online delivery in recent years
and also reported 415,000 streaming subscribers, including
about 130,000 subscribers on the Lightbox streaming service
purchased from Spark.
The strength of our role as a neutral host, providing
independent network infrastructure to various service
providers, was reflected in our winning a new contract
with the Rural Connectivity Group. A joint venture between
New Zealand’s three mobile network operators – 2degrees,
Spark and Vodafone – the Group is building hundreds of
new mobile sites under a rural service agreement with the
Government. We’ve been selected to provide fibre backhaul
for their rural cellsites within fibre reach for a 10-year period.
We saw some industry consolidation during the year, with
the most notable development being Vocus’ purchase of
Stuff Fibre and its reported 20,000 customers. Infrastructure
funds also showed increasing interest in the New Zealand
telecommunications industry.
In May 2020, First State Investments announced an
agreement to purchase Ultrafast Fibre from its electricity
network owners. Their fibre network covers about
237,000 homes and businesses in the central North Island.
This follows Brookfield and Infratil’s acquisition of Vodafone
New Zealand in mid-2019.
2.0
The New Zealand
market
Figure 6:
The New Zealand fixed line market
Rationalisation, new entrants and new business models are disrupting the NZ market.
Note: Fibre to the premises will cover ~87% of NZ population by the end of 2022
Power + Broadband
Mobile networkWireless Broadband
Chorus
Nationwide network access
wholesaled to ~100 retail service providers;
Fibre to pass ~1.36m homes and businesses
Local Fibre Companies:
Enable – Ultrafast Fibre – Northpower
Fibre to pass ~450k homes and businesses
Retail Service
Providers:
Local Media:
(Broadcast)
Local Media:
(On Demand)
Fixed Line
Access
Networks:
TV3
3Now
BBC iPlayer Apple TV Google Play Netflix YouTube Hulu Amazon Disney+
International
media providers:
OnDemand
TVNZSky TV
Neon
Trustpower
Others e.g.
Slingshot, Orcon, Flip
Vocus
Vodafone TV
Vodafone
HFC cable in
Wellington +
Christchurch
(~60k customers)
Spark Sport
+Skinny
Spark
2degrees
Sky
Megatel
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Annual Report 20209
2.1 Initial 5G deployments
In the months immediately following its transfer of ownership,
Vodafone New Zealand announced an intention to invest
in 5G capability. 5G coverage was switched on in parts
of Auckland, Wellington, Christchurch and Queenstown
in December 2019. Vodafone has said it hopes 25% of its
broadband customers will migrate to its fixed wireless network
and it will provide 5G fixed wireless services later in 2020.
Using its 4G network, it offers fixed wireless plans in datacap
tiers up to 600GB in major cities and urban regional centres.
Spark launched 5G in five provincial townships in late 2019
with fixed wireless broadband plans sold in three datacap
tiers: up to 60GB; 60GB to 120GB; and more than 120GB.
In Auckland, Spark offers plans of up to 600GB on its 4G
network. Spark announced the launch of 5G mobile and fixed
wireless services in Palmerston North in July 2020, with four
more centres to follow.
The Government had intended to hold an auction for short
term management rights, through to late 2022, for 3.5GHz
spectrum. This auction was cancelled in May 2020 as a result
of COVID-19 and the spectrum was directly allocated to
2degrees (60MHz), Spark (60MHz) and wholesale wireless
network operator Dense Air (40MHz). The auction of 3.5 GHz
rights beyond 2022 is yet to be scheduled.
The interim allocation of 3.5GHz spectrum is expected to
make further expansion of 5G coverage possible. However,
dates are yet to be announced for the auction of the millimetre
wave spectrum considered necessary for small cell coverage.
To date, international experience suggests the business
case for small cell deployments remains uncertain. We’re
continuing to explore opportunities to grow our backhaul and
co-location services for mobile network operators.
Our market driversWhat we’re focused on
Large vertically integrated retailers are encouraging
customers to use their own fixed wireless, cable
and legacy fibre networks to reduce their wholesale
network costs.
We’re an active wholesaler, promoting our extensive broadband
footprint through advertising, retailer campaigns and our own door
knocking initiatives. Our network supports about 100 retailers.
Competing fibre companies have overbuilt our
existing copper network with fibre as part of the
Government’s UFB programme.
We’re optimising our business in these competing areas and
maximising our broadband share in other areas experiencing
premises growth, particularly Auckland.
Traditional voice only connections are declining with
changing demographics and wireless service options.
We’re commercialising new potential revenue streams identified
by our innovation programme, such as data centres and smart
city connectivity.
Technology keeps evolving, with 5G potentially
enhancing the capability of mobile/wireless
technologies as a fixed line alternative for
low data users.
We see 5G as complementary technology with many more cellsites
likely to require fibre backhaul. Fibre is recognised as providing highly
reliable broadband, particularly at peak usage times. About 16% of our
fibre consumers are on 1Gbps services and we’ve launched 2Gbps and
4Gbps Hyperfibre products.
Figure 7:
Summary of key market trends

Annual Report 202010
3.0
Regulatory
environment
We operate our wholesale only network within
the regulatory framework established by the
Telecommunications Act. We’re also subject
to the requirements of four open access deeds
of undertaking for copper, fibre and Rural
Broadband Initiative services that focus on the
provision of services on a non-discriminatory
basis. This regime will remain in place outside of
the revised utility model now being implemented
by the Commerce Commission.
Approximately 40% of our FY20 revenues were from
copper services with pricing and terms regulated by the
Commerce Commission (the Commission) under the Act.
The Commission set a five-year schedule of pricing for our
regulated copper services in December 2015, following
a detailed price review process. Our fibre services aren’t
currently regulated with most instead subject to contractual
pricing and terms agreed with the Government as part of
our UFB contracts.
3.1 Moving to a regulated utility model
In November 2018, the Telecommunications (New Regulatory
Framework) Amendment Act passed into law with bipartisan
political support. This marked the culmination of five years
of policy review of the regulatory framework that applies to
our business and the decision to transition to a utility-style
framework for fibre access services.
Under the new framework our fibre investment will be
regulated according to a utility style building block model
from 2022. This model is already used to regulate other
New Zealand utility businesses, such as electricity lines
and gas networks. It is recognised as supporting private
sector investment to meet network upgrades and increasing
consumer demands through ongoing incentives to innovate,
invest and improve efficiency for the long term benefit
of customers.
Key features of the proposed regime are:
• deregulation of the copper network from 1 January 2020
in areas where fibre is available and the right to withdraw
copper services, where this is appropriate, subject to a
code being developed by the Commission.
• continued regulation of the copper network in areas
where fibre is not available, with copper pricing adjusted
for inflation.
• the regulated asset base (RAB) for fibre will include
unrecovered losses incurred before 2022, with pre 2011
assets valued at depreciated historical cost and post 2011
assets at depreciated actual cost.
• Crown financing will be treated according to its actual
cost to Chorus.
• key fibre prices will be frozen at 2020 pricing levels,
adjusted for inflation, until 2022.
• unbundling of the fibre network available in UFB1 areas
on a commercial basis from 2020.
Figure 8:
New regulatory framework to replace UFB contractual framework by January 2022
87% of population where fibre will be available by end of 2022Remaining 13% of population
Fibre access network
• Regulated asset base (RAB) with revenue cap
to be determined by Commerce Commission
• Price caps on contracted fibre products,
with annual inflation adjustment, until 2022.
Price caps then only apply to fibre voice service,
a fibre broadband service and direct fibre.
• Unbundled fibre (commercial price)
to be available in UFB1 areas from 2020
and UFB2 areas from 2026
• Three years after new regime commences,
the Commission can review the revenue
cap model and anchor products, subject to
specified conditions and statutory criteria
Copper - where fibre is available:
• Copper network to be deregulated and
Telecommunications Service Obligation
(TSO) removed
• Chorus can withdraw copper service,
subject to minimum consumer protection
requirements being developed by the
Commission and due in September 2020
Copper - where fibre is not available:
• Copper remains regulated and TSO applies
• Copper pricing capped at 2019 levels with
CPI adjustments
• Commission required to review pricing
framework no later than 2025

Annual Report 202011
The Commission is required to establish the key input
methodologies that set the framework for determining the
starting value of our regulated asset base, the regulatory
weighted average cost of capital, cost allocations, and
our maximum allowable revenue. It has been granted
a one-time deferral from 1 January 2020 until 1 January 2022
to complete its implementation work.
Indicative fibre regulation timeline
October 2020Input methodologies
final decision due
November 2020Input methodologies decision
due on financial loss asset
provisions
Q3 2020
Proposed approach & process
paper for price-quality decision
Q2 2021Draft price-quality decision due
Q3/Q4 2021Final price-quality
decision due
3.2 Fibre input methodologies
The Commission released its draft decision on the Fibre Input
Methodologies in November 2019. While the draft decision
improved on aspects of the Commission’s prior Emerging
Views paper, we and our investors have made subsequent
submissions on areas of concern, including:
• the implied WACC rate for the period to 2022 is still
below that required to ensure our cost of capital reflects
a fair return to investors, given the substantial investment
risks taken in financing the UFB rollout. In particular, the
Commission has proposed calculating the WACC each
year from 2011 through to 2022, by using the prevailing
5-year risk free rate that applied in each year.
• the proposed asset beta of 0.49 underestimates the asset
beta of a fibre network, particularly through the rollout
period. A higher asset beta was acknowledged by Crown
Fibre Holdings before the rollout began and has been used
by regulators for European fibre networks.
• the draft decision suggested no WACC uplift from the
50th percentile. This is completely at odds with all other
regulated utilities in New Zealand, and other international
regulators have recognised the need for an uplift to
encourage fibre network investment.
• while a small ex ante allowance to compensate for asset
stranding risk is considered, the indicated allowance
doesn’t adequately reflect the technological risk that could
emerge over time and the effect this could have on our
return on network investment.
A final decision is expected in October 2020, with a separate
decision on the financial loss asset due in November. This
will set the rules for a Price Quality Determination, which
will establish our revenue cap and quality requirements for 1
January 2022 to 31 December 2024. The final Price Quality
Determination is expected in late 2021.
3.3 Commercial services for fibre unbundling
We’ve built our fibre network to enable unbundled fibre
services by providing a second fibre to each premises.
This means retailers can choose to use our passive
infrastructure - fibre optic cables, ducts, and poles –
and their own broadband electronics, to deliver services to
customers. Unbundled services are available in our UFB1
areas
from today and will be in UFB2 areas from 2026.
We’ve developed commercial terms for these services,
including a monthly access charge of $28.55 per month
to cover access to the fibre between the premises and the
splitter, as well as $200 per month to access the feeder fibre
from each splitter to a central network point. The pricing
reflects the fact that passive infrastructure costs, known
as layer 1, comprise most of our rollout investment, with
broadband electronics, known as layer 2, representing a
very small component.
The architecture of the fibre network, with most customers
connected to street-based splitters, means the economics
of fibre unbundling are different from copper unbundling,
where exchange-based equipment could potentially serve
much larger numbers of customers. This means fibre
unbundling will most likely appeal to larger retailers.
Our pricing seeks to strike a fair balance between enabling
fibre unbundling and ensuring a competitive
playing field for all other retailers.
The Commission has said that it will develop guidance
on fibre equivalence and non-discrimination obligations
following concerns from some retailers about our proposed
pricing. This is expected in September 2020.
3.4 Copper withdrawal code
The Commission is developing a copper withdrawal code
that it aims to publish in September 2020. This will detail
the consumer protections and process that will regulate
when we’ll be permitted to stop providing copper services,
in areas where an equivalent fibre service is available.

Annual Report 202012
4.0
Making New Zealand
better
Infrastructure is at the heart of the delivery
of economic, environmental and social
sustainability. It’s also at the heart of
what we do. We’ve invested in substantial
upgrades of our communications
infrastructure for more than a decade,
enabling New Zealanders to access data at ever increasing
speeds and reduced latency. This investment means
New Zealand is one of just a few countries already well on
the way to becoming a Gigabit society.
• We completed an ADSL2+ fibre to the cabinet upgrade,
reaching 80% of the population, in 2012
• In partnership with Government, the Rural Broadband
Initiative between 2011-2016 connected fibre to rural
schools, hospitals and Vodafone towers. It also enabled
further expansion of our fibre to the cabinet and VDSL
footprint in rural areas.
• An upgrade to VDSL vectoring technology in 2018 gave
broadband speeds a further boost for tens of thousands
of homes across selected rural and urban areas
• Our fibre to the premises rollout began in 2011 and has
progressively extended gigabit speeds across larger towns
and cities. The UFB2 rollout is expanding this reach further
again, to hundreds of smaller communities, some with as
few as 50 premises.
Outside of these larger infrastructure projects, we’re
continually upgrading parts of our network as technology
evolves and changes in local demand, or investment barriers,
enable new investment. During FY20 we completed work
to remove the remaining first generation copper broadband
equipment serving some remote rural areas. This involved
laying 70 kilometres of fibre and installing about 160 VDSL
capable network nodes. Fibre was also extended to provincial
marae as part of a Government development project and we
built our first submarine fibre connection, to provide network
resiliency for Waiheke Island.
We continue to look for ways to bridge the challenging
economics of rural fibre investment. We collaborated with
a community near Akaroa, for example, to integrate the
extension of fibre with their waterpipe project. This was a
new model for us and helped connect about 40 homes.
Our network construction programmes
have been a significant source of
employment since 2011. However, the
biggest benefit is for New Zealand’s wider
economy over time. In 2012, Alcatel
Lucent’s Bell Labs estimated the rollout
of fibre could contribute more than $32 billion in economic
benefits to New Zealand over 20 years. A 2017 Sapere
Research Group study estimated the wider social benefits
from fibre uptake at about $2 billion annually. This was on
top of a $3 billion annual contribution business uptake could
make to Gross Domestic Product.
Businesses are making use of gigabit connectivity to innovate
and deliver new sustainable services both in New Zealand
and overseas. We’re continuing to enhance our products
to give businesses an added edge, with features such
as prioritised restoration. Our new Hyperfibre products,
offering 2Gbps and 4Gbps speeds, are unlocking a new
era of connectivity for customers such as film production
businesses who transfer large amounts of data.
Our network links communities across
New Zealand, providing the platform over
which a range of increasingly essential
digital services are delivered. Our work on
the Rural Broadband Initiative with Nokia,
for example, was recognised with the
Broadband Delivering Social Impact award at the Broadband
World Forum in FY19.
Broadband networks are set to play an even larger part in the
future of sustainable communities as technology evolves.
We’ve undertaken trials to explore how our infrastructure
may help develop the Internet of Things and other solutions
that make our communities more inclusive, safe and resilient.
This might include our cables connecting devices, such as
traffic lights and CCTV cameras, or it could involve the use
of our pole, cabinet and exchange assets as sites for other
network connectivity (e.g. mobile networks) and devices.
Education has been a major focus of our
work ever since schools were some of the
priority customers we first connected to
fibre by our urban and rural rollouts.
In recent years we’ve worked with
government organisations to explore
ways our network technology could bridge the digital divide
between those students who have broadband at home and
those who don’t. This has included trials using Wi-Fi access
points to enable students without home broadband to log in
to their local school network from home.
When COVID-19 forced the shutdown of schools across
New Zealand, our broadband network underpinned a rapid
transformation in education practices, as schooling was
shifted online. However, we were also concerned about
the effect an extended lockdown period could have on
the digital divide within school communities. We therefore
offered to switch our existing intact connections on for
We take a long term view of our network infrastructure investments and our people take pride in
delivering an asset for New Zealand’s ongoing social and economic betterment. The broadband
networks we build and maintain are closely aligned with the infrastructure-focused elements of the
United Nations Sustainable Development Goals.

Annual Report 202013
homes identified by the Ministry of Education as requiring
broadband for essential learning. About 10,000 homes have
been connected by retailers delivering broadband services
using our free wholesale connections. We’ve made this
service available for free for a six-month period.
COVID-19 has accelerated awareness of
how broadband can reduce the need for
carbon emitting activity. The widespread
availability of fibre means businesses
and employees throughout most of
New Zealand can adopt flexible work
options and video conferencing.
Faster adoption will magnify the potential environmental
benefits. The Energy Efficiency and Conservation Authority
has estimated if one in five New Zealanders opted to work
from home once a week, it would prevent 84 kilotonnes of
carbon dioxide entering the atmosphere annually. Swapping
business flights between Auckland and Wellington for an
online meeting could reduce transport emissions by another
65 kilotonnes.
We expect our investment in fibre to help us achieve an 80%
reduction in our scope 1 and 2 emissions, from our FY12 base
year, by 2030. The fibre network requires less electricity to
operate than our existing copper network and, as customers
migrate to fibre, we’ll begin to switch off some of the copper
network equipment. The fibre network will also require fewer
technician visits, leading to a reduction in vehicle related
emissions over time.
We’ve avoided a net cumulative 73 kilotonnes of
carbon dioxide equivalent emissions (CO2e) since FY12,
including Scope 3 emissions. Our FY20 emissions were
19 kilotonnes-CO2e, 44% lower than in FY12, with reductions
across all major sources. This included a reduction of
1 kilotonne of Scope 1 direct emissions, due to lower
generator diesel consumption and fewer refrigerant losses.
Scope 2 electricity emissions reduced by 5 kilotonnes
from our FY12 base year. Network electricity consumption
accounted for 89% of combined Scope 1 and 2 emissions.
Emission reductions were mainly due to a greening national
electricity grid and energy efficiency improvements.
The national grid has been over 80% renewable since 2015,
although carbon intensity has increased over the past
few years.
Scope 3 value chain emissions were 9 kilotonnes and have
halved since FY12. This is driven by reduced electricity
consumption by customers’ network located in our
exchanges. Our field service vehicle fleet, excluding
subcontractors, accounted for 56% of measured Scope
3 emissions. The COVID-19 lockdown and increased
videoconferencing meant our travel emissions were 40%
below base year levels.
0
10
5
15
Kilotonnes CO
2
e
Figure 9:
Scope 1 and 2 Emissions
Note: FY20 electricity emissions have been estimated in advance of the release of
government electricity generation and emission data. Service company fleet emissions
are included in Scope 3 value chain emissions because the vehicles are owned and
operated by third parties. Our FY19 reporting again achieved a B rating from CDP, a global
organisation that collects self-reported environmental information.
Electricity
Diesel generators
Refrigerant
Company vehicles
Natural gas
FY12FY13FY14FY15FY16FY17FY18FY19FY20
While enhanced broadband infrastructure
was previously acknowledged as helping
medical practitioners deliver telemedicine
for regional patients, no-one had envisaged
the degree to which COVID-19 would
normalise telemedicine as a solution for
urban medical practices. Hospitals and medical centres have
fibre readily available because they were priority customers
for our urban and rural fibre rollouts. We expect COVID-19 to
stimulate greater adoption of broadband-based technology
solutions for health purposes in the coming years.
For our own business, COVID-19 spurred an increased focus
on the mental wellbeing of our people while they were
required to work from home. We delivered webinars from
mental health experts and partnered with Mentemia, a local
online app providing mental health and wellbeing resources,
led by Sir John Kirwan. Our internal mental support network
increased the frequency of their meetings to provide peer
support and helped identify specific matters we could focus
our resources on. These included online fitness videos, a
working with children webinar, nutrition and mental health
motivation sessions.
We ran monthly engagement surveys through the
heightened Alert Levels. These helped us understand
employee wellbeing in greater detail and measure the
effectiveness of our COVID-19 response.

Annual Report 202014
4.1 Our people
We monitor employee engagement regularly as part of our
commitment to building an inspiring culture and improving
customer experience. We were pleased to grow employee
engagement from 7.6 out of 10 in FY19 to 8.5 in June 2020.
The increase in our employee net promoter score, from
+
28
to
+
67, puts us in the top 5% of our international ‘technology’
company benchmark. Our company values, culture and
concern for wellbeing continue to rate highly.
Our people said we responded appropriately to the
COVID-19 pandemic with an average score of 9.5 out of ten.
This reflected our comprehensive programme of work to
ensure people were informed and kept connected with each
other through an uncertain time. The nature of our business
meant we were able to rapidly transition to online working
from the start of the lockdown period. With an existing
flexible work policy and technology platforms that enable
remote working, we’re considering how we can continue to
improve the flexible options available for our people.
We continue to evolve our employee benefits programme
to help shape our culture. In addition to two wellbeing
leave days we’ve now launched a new parental leave policy
– Families@Chorus – that provides up to eight weeks paid
leave for all new parents.
Employees can also take a volunteer day each year
to undertake activities in their local community. About
2,700 volunteer days have been used since we began
the programme in FY13. Given the limitations created by
COVID-19 this year, employees who hadn’t used their
volunteer day could select a charity to receive the equivalent
of a day’s pay. This saw $207,000 donated amongst four
charities: Lifeline, Women’s Refuge, KidsCan and the
Porirua E-Learning Trust.
The structure of our organisation also underwent some
change this year as we began the transition from a build
to operate focus. We merged our Network and Field
Management team with our Customer Care team during the
year to reflect the changing nature of our work focus now that
the fibre rollout peak is behind us. This meant a reduction in
roles and we finished the year with 870 permanent and fixed
term employees, down from 918 at the end of FY19.
In November, we bade farewell to chief executive
Kate McKenzie when she returned home to Australia after
leading the company for almost three years. JB Rousselot
has stepped easily into the role from the Australian equivalent
of Chorus, NBN Co, where he previously held roles as Chief
Strategy Officer and oversaw network and service operations.
JB has a great mix of skills and telecommunications industry
experience, to help drive our focus on making the most of
our fibre network’s potential.
For more information on our people, see the Diversity &
Inclusion section on page 86.
4.2 Keeping communities connected
A large part of our everyday work is focused on providing a
stable and reliable network for customers. New Zealanders
place great reliance upon the availability of our network both
as a utility service for their daily lives and businesses, as well
as a critical lifeline service in times of emergency. Our people
and technicians often go the extra mile to keep communities
connected when extreme events occur.
The substantial investment we’ve made in deploying fibre
to the premises has increased our network’s resilience
to climate-related risks. Fibre is less susceptible to water
and lightning related faults than the cables and street-
based electronics in the copper network. This has been
demonstrated by low fibre fault volumes in extreme weather
events, including tornadoes and flooding.
Earthquakes remain a primary focus for our network resiliency
planning. In the past, network damage from large quakes was
largely restricted to localised copper cables, with minimal
damage to exchange buildings. We have a comprehensive
insurance programme typical of large scale infrastructure utilities,
covering all risks of physical damage and business interruption for
above ground assets. Specific cover is provided for earthquake
damage to underground cables in Auckland, Hamilton,
Wellington and Dunedin. We undertake probability based loss
estimate modelling to ensure that the policy limit covering
material damage and business interruption is adequate.
The average duration of network interruptions was 23 hours
across our fibre and copper network in FY20. This was within
our targeted service levels, but was up from 18 hours in FY19,
partly due to the effects of several large storm events. We met
our fibre service level targets as contracted with the Crown:
• Layer 1: actual downtime of 40 minutes vs limit of
120 minutes (FY19: 50 minutes)
• Layer 2: actual downtime of 1 minute vs limit of 30 minutes
(FY19: 1 minute)
We worked with and supported a wide range of groups and
organisations in FY20, including:
• industry and government organisations such as TUANZ,
InternetNZ, the Telecommunications Forum (TCF) and
Local Government New Zealand
• membership and initiatives with Business NZ and
Infrastructure NZ
• the creativebusinessnow.nz campaign, promoting New
Zealand’s creative media industry globally, in the wake of
COVID-19
• enabling online viewing of the Doc Edge 2020
documentary film festival for the first time, with subsidised
tickets, free short movies and free screenings for schools
• School Gateway Programmes, our fifth year of offering
insights into the telecommunications industry, with NCEA
credits, to groups of year 12 and 13 students in Auckland,
Wellington and Tauranga
• partnership with Squawk Squad to develop and grow their
digital education platform in NZ schools for an eight-week
programme on the environment and climate change
• providing community groups with technology-related gifts
as part of our Little Fibre Miracles initiative to mark the end
of phase one of our Ultra-Fast Broadband rollout

Annual Report 202015
• Digital Journey, a social enterprise that delivers digital
projects and initiatives to support businesses to deploy,
use, understand and benefit from digital services
• support for NZ TechWeek, with training seminars for
older consumers to learn the benefits of smart home
applications and broadband technology.
• partnership with Keep NZ Beautiful, local councils,
business associations and community beautification
groups to select about 120 of our street cabinets for
illustration by local artists
• a range of community support, learning and art
organisations that use subsidised space within our
exchange buildings.
As we approach the end of the UFB rollout we’re
concentrating on the transition that will be required in
the way we operate and maintain our network assets.
The volume of build work has begun declining with the end
of the UFB1 rollout. The volume of network faults requiring
technician support is also reducing as customers transition
from our copper network either to our fibre network, or
alternative fibre and wireless networks. With our fibre uptake
at 60%, the volume of new fibre installations required each
year is also expected to begin declining.
We work closely with our service company partners to
maintain our workforce at sustainable levels so we can
meet customer demand for fibre connections and deliver a
good customer experience. They have completed strategic
workforce plans for the expected decline in workforce
numbers as the UFB rollout winds down.
Fixed price contracts are in place for the remaining UFB2
network deployment and for subsequent connections to
customers. Contracts are in place through to March 2022
for maintenance of our copper and fibre networks, as well
as new fibre build outside our planned UFB areas.
4.3 Focus on our supply chain
We’re committed to doing the right thing by people working
on our behalf, including those workers who’ve come to
New Zealand to build a better life for themselves and their
families. We commissioned an independent review into
our subcontractor workforce in FY19, after the Labour
Inspectorate identified allegations ranging from poor labour
standard practice (e.g. poor record keeping, non-payment of
holiday pay) through to a small number of serious allegations
of exploitation.
The Board receives regular updates on the implementation
of initiatives recommended by the review. Action we’ve taken
so far includes:
• incorporating a supplier code of practice into key supply
contracts
• setting up a trust fund to support workers affected by
discontinued contractors
• establishing a worker welfare portal and independent
whistleblower process
• requiring subcontractors to complete training that ensures
awareness of minimum employment standards, along with
mandatory statutory declarations of compliance
• implementing some changes to payment codes and
processes to improve fairness and transparency
• barring 28 companies from working on our network, out of
approximately 800 subcontractors.
Contract
scope
Maintenance of copper
and fibre; fibre build
outside UFB areas
Connecting premises
to fibre
UFB2 network build
ContractorDowner
Visionstream
UCG
Visionstream
Broadspectrum
Electronet
Visionstream
Contract
period
Until
March 2022
Until
March 2022
Until
December 2022
Figure 10:
Service company contracts

Annual Report 202016
5.0
4.4 Health and safety
The health, safety and wellbeing of our people is paramount.
No business objective will be prioritised over the health or
safety of any person. This includes our direct employees
and the thousands of people working on our behalf to build,
connect and maintain our network. Our health and safety
focus extends to anyone who is in, or in the vicinity of,
our workplaces.
We’ve established an open reporting culture and work
with our contractors and suppliers to ensure their systems
and procedures meet our health and safety expectations.
Technicians must undergo induction training, including health
and safety, before conducting any work on our behalf.
Worker welfare was a priority for us as we developed our
response to the COVID-19 pandemic. We worked closely with
our service company partners to develop clear guidelines for
work that could be undertaken through the lockdown period
and kept customers informed of our focus on social distancing
practices. We also sourced and provided additional personal
protection kit to service companies.
0
1
2
3
4
5
6
Injury frequency rate
2.43
0.78
2.67
0.61
FY19FY18
TRIFRLTIFR
LTIFR: number of lost time injuries + medical treatment injuries
+ restricted work injuries divided by total work hours × 1,000,000
3.10
1.16
FY20
Figure 11:
Injury frequency rates FY19 – FY20
The volume of work performed, including our service
companies, reduced from 13 million work hours in FY19
to 10 million in FY20. This was due to a combination of the
end of the UFB1 rollout, changed installation processes and
the suspension of non-essential work during the
COVID-19 lockdown.
The Total Recordable Injury Frequency Rate (TRIFR) decreased
from 2.67 to 2.43 with an overall reduction in the number of
injuries requiring medical treatment. The main injuries were
sprains and strains and hand lacerations caused by manual
handling activity. There were no fatalities. Although the
number of lost time injuries remained stable year on year, the
reduction in work hours meant an increase in the Lost Time
Injury Frequency Rate (LTIFR) from 0.61* in to 0.78. Our results
are favourable when benchmarked with other infrastructure
companies, with the next closest result a TRIFR of 7.16 and LTIFR
of 2.69 (May 2020 results).
For FY21, we’re focusing our efforts on the continuous
improvement of governance and operational assurance.
Our approach is prioritised by our critical risks, such as vehicle
accidents and electricity network strikes when digging.
We’re benchmarking our assurance and management
activity against the three lines of defence risk management
methodology. The capabilities of our people and continued
collaboration with our service company partners to enhance
health and safety practices is a constant priority.
* FY19 LTIFR previously reported as 0.53 was updated to 0.61 following
reclassification of an incident

Annual Report 202017
assurance and feedback on our assessments and controls.
This includes testing our security incident responses and
liaising with New Zealand’s National Cyber Security Centre
on advanced cyber threats. We have insurances for key
cybersecurity risks.
We recorded no material cybersecurity incidents or privacy
complaints from regulatory bodies in FY20.
4.6 Waste and recycling
We have an extensive waste minimisation process for
network activities. In FY20, we recovered 195 tonnes of
waste ducting from our fibre rollout for re-use in the local
manufacturing of new duct. About 37 tonnes of redundant
metal network components were recovered for recycling.
About 24 tonnes of batteries and 4 tonnes of e-waste
were diverted from landfill. We recorded no significant
environmental incidents during the year.
4.5 Cybersecurity and privacy
As a wholesale network operator, rather than a retailer,
we don’t bill consumers directly for broadband or phone
services. This means we hold very limited consumer
information. For the information we do hold, we adhere
to the requirements of the New Zealand Privacy Act. The
Telecommunications Information Privacy Code (2003) also
stipulates that we must not collect telecommunications
information except in limited exceptional circumstances.
We provide our people with annual information security
and awareness training.
Our Board receives comprehensive cybersecurity reports
every six months, with interim updates as required. We
have detailed policies, processes, and registers to ensure
cybersecurity is addressed through technology selection,
network delivery practices, and ongoing operations and
protection of our IT systems. We undertake regular reviews,
including external audits and ad-hoc reviews, to provide

Annual Report 202018
5.0
Outlook
COVID-19 has both underlined broadband’s
role as an essential utility, while also increasing
global appreciation of the true value of a fibre
network. We’re thankful that New Zealand
made infrastructure choices a decade ago that
have allowed us to be in the enviable position
of having already deployed fibre to most
New Zealanders. This has meant that demand for
our services has continued to be strong, despite
the wider economic impact of the pandemic.
We’re hopeful this demand continues and we’ll
keep considering ways we can support the wider
community and economy beyond the various
initiatives we’ve already undertaken.
With the UFB rollout winding down, our focus is all about
connecting more New Zealanders to fibre. We’ve put this at
the top of our strategic focus with a target of 1 million fibre
connections by 2022. This is a substantial step up from the
751,000 connections we have today, but we know the socio-
economic benefits of fibre connectivity make it a worthwhile
goal. The sustainability of our business rests on making
New Zealand better, by bridging digital divides and enabling
work, education and creativity through better broadband.
It’s reflected too in one of the four pillars of our strategy: to
win in our core fibre business. In FY21, you can expect to
see us continuing to lift our activity as an active wholesaler.
We’ll be knocking on a whole lot more doors and providing
targeted incentives to retailers and customers to sustain the
connection momentum we’ve built up over the last year.
We know there will be increased competitive intensity as mobile
network operators seek to leverage their own 5G investments,
but we have the utmost confidence in our product. As the
Commerce Commission has shown through its reporting,
fixed line services clearly outperform shared wireless networks
on key measures such as latency and concurrent streaming
on multiple devices. We believe recent COVID-19 experiences
and the shift to more home-based work mean Kiwis will value
unlimited data and rock solid broadband like never before.
Although the Commerce Commission is expected to publish
a copper withdrawal code before the end of 2020, we’re not
going to switch copper off overnight. There’ll be lengthy notice
requirements that we’ll need to follow and we’ll take a careful,
considered and consumer-centric approach. As we’ve said
before, it will only be where fibre is already available, and on a
localised street-by-street basis. Consumers should, therefore,
be aware that suggestions of needing to immediately change
networks because of a ‘pending shutdown of copper’ may not
be correct. Many retailers provide services across our copper
and fibre network, so consumers might wish to shop around by
visiting websites like www.broadbandcompare.co.nz.
The gradual withdrawal of copper services is linked closely
with another of our strategic pillars, the optimisation of
our non-fibre assets. As our network becomes increasingly
fibre-centric we’re looking closely at the assets we need
to deliver services into the future. We’ve already begun to
dispose of non-essential network sites and are reshaping
our investment programmes to better reflect ongoing local
demand. The removal of legacy broadband equipment
from our network should also start to reduce ongoing
maintenance and electricity costs.
At the same time, we keep exploring opportunities to grow
new revenues. Our innovation programme has successfully
identified several initiatives that we’ve moved through to
product stage, such as our edge centre facilities and the
impending launch of a Wi-Fi service using our latest in-
home fibre network devices. We have more ideas in the
pipeline, including exploring the opportunities created by
technology developments like the latest Wi-Fi standard,
Wi-Fi 6. As technology and consumer demands evolve,
we’re conscious too of the need to look for potential new
partnerships and wholesale customers that might deliver
innovative new services for consumers.

Annual Report 202019
The changes to our strategic focus are of course occurring
against the backdrop of our shift from building to operating
our new fibre network, and the shift to becoming a regulated
utility from January 2022. While these aren’t immediate
changes, they’re already shaping the way we think about
Chorus’ future operating model. We know, for example,
that we’ll need to develop core utility functions such as
compliance and asset management that are subtly different
from the way we’ve traditionally operated. Our organisation
and our service company partners will also need to keep
evolving as the fibre rollout winds down and we no longer
have to operate a copper and fibre network side by side.
Underpinning this all, is of course the expectation of a clear
and certain regulatory environment that supports ongoing
infrastructure investment. We, and many investors, continue
to advocate for a fair return that respects the risks taken in
the first decade of our partnership with Government and
the longer-term nature of our investment. As we’ve said
previously, while the Commission’s November 2019 draft
decision was an improvement on its earlier views, there
is still a significant gap between retrospective economic
assumptions and commercial reality. Under the current
proposed settings, investors will not consider UFB a model
for the successful transformation of more New Zealand
infrastructure.
We know too that investors are rightly interested in more clarity
of our future dividend intentions, given the constraints on past
returns through the UFB investment cycle. Our intention is that
in FY22 we’ll transition to a more utility-like dividend policy,
based on a pay-out range of free cash flow. This transition
period will be moderated by the need to balance our BBB
credit rating with the ongoing investment needed to complete
the UFB rollout and fibre connections. In the meantime, we’ve
provided more commentary on our proposed approach in
the full year results presentation, as well as guidance of a FY21
dividend of 25 cents per share.
Our strategic focus

Annual Report 202020

Annual Report 202021
Management
commentary
22 In summary
23 Revenue commentary
24 Expenditure commentary
28 Capital expenditure commentary
29 Long term capital management

Annual Report 202022
2020
$M
2019
$M
Operating revenue 959 970
Operating expenses (311) (334)
Earnings before interest, income tax, depreciation and amortisation 648 636
Depreciation and amortisation (402) (393)
Earnings before interest and income tax 246 243
Net finance expense (173) (165)
Net earnings before income tax 73 78
Income tax expense (21) (25)
Net earnings for the year 52 53
In summary
1 Excludes free education connections provided as part of Chorus’ COVID-19 response.
We report earnings before interest, income tax, depreciation
and amortisation (EBITDA) of $648 million for the year ended
30 June 2020 (FY20), an increase of $12 million on the prior
year (FY19). Net earnings decreased by $1 million year on year.
The FY20 results reflect the positive benefits of a continued
decline in network maintenance costs and a reduction in
annual regulatory levies. However, there was also a net
$12 million impact to EBITDA from the COVID-19 lockdown.
We responded to the broader effect of COVID-19 on our
industry and community with funding for a range of support
initiatives, while work restrictions reduced both maintenance
and capitalisable work.
Depreciation has increased, reflecting the continued rollout
of our network partially offset by older software assets
coming to the end of their useful lives. There has been a
net increase in finance expense due to an overlap in debt,
between the new Euro Medium Term Notes (EMTN) issued in
December 2019 and the old EMTN repaid in April 2020. This
increase is also due to a full year of interest being incurred on
the NZD Bond issued in December 2018.
Capital expenditure of $663 million was above the revised
FY20 guidance range of $610 million to $650 million,
because of a faster than expected resumption of fibre
installations after the lockdown period ended.The significant
decrease from FY19 capital expenditure of $804 million was
due to the conclusion of the UFB1 rollout in December 2019,
ongoing reductions in copper network spend, as well as the
reduced activity during the COVID-19 lockdown period.
We will pay a final dividend of 14 cents per share on
12 October 2020 and the dividend reinvestment plan will
be available.
Connections
30 Jun 2020
Connections
31 Dec 2019
Connections
30 Jun 2019
Fibre broadband (GPON)740,000681,000599,000
Fibre premium (P2P)11,00012,00011,000
Copper VDSL221,000242,000270,000
Copper ADSL245,000283,000327,000
Data services over copper4,0004,0005,000
Unbundled copper15,00018,00024,000
Baseband copper179,000192,000214,000
Total fixed line connections
1
1,415,0001,432,0001,450,000
Management commentary

Annual Report 202023
Revenue commentary
2020
$M
2019
$M
Fibre broadband (GPON)393294
Fibre premium (P2P)7374
Copper based voice82106
Copper based broadband271344
Data services over copper1618
Value added network services2930
Infrastructure2424
Field services products6574
Other66
Total revenue959970
Revenue overview
Our product portfolio encompasses a broad range of
wholesale broadband, data and voice services across a
mix of regulated and commercial products. Revenues of
$959 million decreased from FY19 revenues of $970 million.
This largely reflected a reduction of 35,000 total fixed
line connections from FY19, as customers migrated to
alternative fibre and wireless networks. These line losses
were predominantly copper based voice connections and
were partly offset by an increase of 10,000 broadband
connections over the year, together with increases in average
revenue per user across our fibre broadband services.
Fibre broadband (GPON)
Fibre broadband revenues continue to grow as customers
migrate to our growing fibre network and broadband
penetration increases. Fibre broadband connections grew by
24% to 740,000, with about 69% of connections on 100/20
Mbps plans, down from 71% in FY19. Uptake of 1 Gbps plans
grew from 10% to 16% throughout the year, driven by our
incentive campaigns to promote higher speed plans. This
revenue category was also impacted by $1 million of relief
provided by Chorus to customers for their losses incurred
over the COVID-19 lockdown.
Fibre premium (P2P)
Fibre premium (point to point) revenues remained in line
with FY19. Direct Fibre Access Service and other backhaul
connections grew to 5,600 and 2,100 connections
respectively, largely offsetting ongoing reductions in
legacy point to point connections.
Copper based voice
Copper based voice revenues continue to decline as
customers migrate to either a fibre based connection on our
network, or to alternative fibre and wireless networks. The
pace of decline slowed from 54,000 baseband copper lines
in FY19 to 35,000 in FY20. Unbundled copper connections
declined at the same rate as the prior year.
Data services over copper
Data services over copper connections continued to decline
as retailers transition business customers from legacy
services to cheaper fibre based services, either on our fibre
network, or on alternative local and CBD fibre networks.
Copper based broadband
Copper based broadband revenue continues to decline as
customers migrate from our ADSL and VDSL broadband
services to either our fibre network, or alternative fibre and
wireless networks. This revenue category was also impacted
by $1 million of relief provided by Chorus to customers for
their losses incurred over the COVID-19 lockdown.

Annual Report 202024
Value added network services
Value added network services revenue declined slightly in
FY20. The main driver for this revenue category is national
data transport services, which provide network connectivity
across legacy backhaul links and aggregation handover links.
Infrastructure
Infrastructure revenues remained flat year on year. While
there was ongoing growth in demand for commercial
co-location, this was largely offset by a reduction in demand
for unbundled copper access space in exchanges.
Field services
Field services revenue reduced by $9 million relative to FY19,
due to reduced demand across a range of field services.
These included copper-based installations, new property
developments and roadworks, as well as the effect of
COVID-19 restrictions on field activity.
Other
Other income largely consisted of revenue generated from
the provision of billing and network management services to
Spark, and settlements.
Expenditure commentary
Operating expenses
2020
$M
2019
$M
Labour8074
Network maintenance6475
Other network costs2933
Information technology4750
Rent and rates1313
Property maintenance1217
Electricity1517
Provisioning56
Insurance33
Consultants97
Regulatory levies716
Other2723
Total operating expenses311334
Total operating expenses were $311 million in FY20,
a 7% reduction from $334 million in FY19. This reflected
our continued focus on reducing overall costs,
supported by the network maintenance benefits of
an increasingly fibre-centric customer base and a net
reduction in regulatory related costs. These savings
were partly offset by COVID-19 cost impacts.
Labour
Labour of $80 million represented staff costs that were not
capitalised. At 30 June 2020 we had 870 employees, a 5%
decrease from 30 June 2019 of 918 employees. These staff
reductions were due to the conclusion of the UFB1 fibre
rollout and the resulting merger of our Network and Field
Management team with our Customer Care team.
However, labour costs increased by $6 million from FY19
due to:
• COVID-19 related reductions in capitalisable activity and
an increase in annual leave provisions; and
• Additional staff and contractors required to support our
transition to the new regulated utility framework.
Labour costs and the associated overheads in relation to the
UFB build and connect activity are capitalised. As this activity
reduces over time, we expect the related labour cost savings
to be largely capital in nature.

Annual Report 202025
Network maintenance
Network maintenance costs reduced by $11 million from
FY19. This was due to fewer network faults and technician
visits as a result of a number of factors, including:
• Very dry weather conditions in the upper North Island for
much of FY20;
• An ongoing decrease in fault volumes as more customers
are connected to the newer fibre network and our total
connection numbers reduce; and
• A reduction in reported faults and third party damage to
the network through COVID-19 alert levels 3 and 4.
While the volume of technician visits reduced, the average
cost per fault increased with a higher mix of higher cost
faults on our fibre street network.
Other network
Other network costs are variable year to year and include
a range of costs associated with service partner contracts,
fibre access from third parties, roadworks projects, fibre
order cancellations and network spares. In FY20, these costs
included approximately $5 million in payments to service
companies for COVID-19 support. Total costs were lower due
to reduced activity and outgoings across a range of areas.
Information technology
Information technology costs were down $3 million
compared to FY19. The ongoing replacement of legacy
shared systems with our own in-house solutions has
achieved lower maintenance and support costs.
Rent and rates
Rent and rates costs relate to the operation of our network
estate including exchanges, radio sites and roadside cabinets.
These costs include rates that are levied on network assets
both above and below ground. Increases in rates expenditure
for FY20 have largely been offset by reductions in building
operating costs.
Property maintenance
Property maintenance costs decreased in FY20, as FY19 costs
included deferred maintenance activity and the COVID-19
lockdown prevented some programmed work from being
undertaken in FY20.
Electricity
Electricity costs decreased in FY20 due to lower electricity
prices and consumption. About 50% of our electricity
requirements have been hedged, with a current end date of
June 2022.
Provisoning
Provisioning represents costs to provide connection services
that are unable to be capitalised. These costs are reducing as
the level of copper related activity reduces.
Consultants
Consultant costs increased by $2 million from FY19 as
we engaged consultants to provide advice and support
implementing the new regulated utility framework applying
to our fibre access network from January 2022.
Regulatory levies
Regulatory levies reduced by $9 million compared to FY19.
This reflected a reduction in our share of the FY18/19
Telecommunications Development Levy and confirmation
that our contribution will reduce further for the FY19/20
period when the total industry levy reduces from $50 million
to $10 million.
Other
Other costs include expenditure on general costs such as
advertising, telecommunications, travel, training and legal
fees. These increased by $4 million in FY20, mainly as a result
of increased marketing expenses to support our copper to
fibre migration initiatives.

Annual Report 202026
Depreciation and amortisation
2020
$M
2019
$M
Estimated
useful life (years)
Weighted average
useful life (years)
Fibre cables103902020
Ducts, manholes and poles544820-5049
Copper cables606110-3022
Cabinets37415-2017
Property15155-5025
Network electronics62602-2510
Right of use assets141310-5027
Other1–2-106
Less: Crown funding (27) (25)
Total depreciation319303
Amortisation
Software
49 562-105
Other intangibles––6-3522
Customer retention 34 34 0-44
Total amortisation8390
The weighted average useful life represents the useful life in
each category weighted by the net book value of the assets.
During FY20, $663 million of expenditure on network and
intangible assets was capitalised. The ‘UFB communal’ and
‘Fibre connections and fibre layer 2’ included in ‘fibre’ capital
expenditure was largely capitalised against the network
assets categories of fibre cables (45%) and ducts, poles and
manholes (40%). The average depreciation rate for UFB
communal infrastructure spend is based on an estimated life
of 40 years, reflecting the very high proportion of long life
assets being constructed.
Software and other intangibles largely consist of the software
components of billing, provisioning and operational systems,
including spend on Spark-owned systems.
We expect that incremental costs incurred in acquiring new
contracts with new and existing customers are recoverable.
These costs are capitalised as customer retention assets.
Capitalised customer retention assets are amortised against
expenses when related revenues are recognised, either
upfront or over the life of the contract (currently estimated to
be within a maximum of four years). In FY20, the amount of
amortisation was $34 million and there was no impairment in
relation to the costs capitalised.
Our depreciation profile is expected to reflect the greater mix
of longer dated UFB assets we’ve been building since 2011.
The offset of Crown funding against depreciation is expected
to increase over time until the UFB build is completed in
December 2022 and the contracted Crown funding is
received. The associated amortisation credit to depreciation
will continue to increase accordingly.

Annual Report 202027
Finance income and expense
(Income)/expense
2020
$M
2019
$M
Finance income (12) (10)
Interest on syndicated bank facility 5 5
Interest on EMTN – GBP 40 53
Interest on EMTN – EUR 44 39
Interest on fixed rate NZD bonds 40 31
Other interest expense 27 26
Capitalised interest (3) (4)
Interest costs 153 150
Fair value adjustment on interest rate swaps not in hedge relationship - (3)
Ineffective portion of changes in fair value of cash flow hedges 3 6
Total finance expenses excluding CIP securities (notional) interest 156 153
CIP securities (notional) interest 29 22
Total finance expense 185 175
Finance income is higher in FY20 as the proceeds from the
December 2019 EUR denominated Euro Medium Term Notes
(EMTN) and the December 2018 NZD Bond were held on
term deposit, until required for repayment of the GBP EMTN.
Interest costs increased by $3 million year on year. This was
due to the new EUR 300 million EMTN issued in December
2019, and a full year’s interest being paid on the $500 million
NZD fixed rate bonds issued in December 2018. The increase
was partly offset by the reduction in the GBP EMTN interest
expense, following repayment of the debt in April 2020.
The weighted effective interest rate on debt has reduced to
5.16% (FY19: 5.75%).
Other interest expense includes lease interest of $21 million
(FY19: $20 million), $5 million amortisation (FY19: $3 million)
arising from the difference between fair value and proceeds
realised from interest rate swap resets, and a $1 million
one-off expense in FY20 for restructuring forward dated
interest rate swaps (FY19: $2 million). Notional interest on
Crown Infrastructure Partners (CIP) securities also increased
as Crown funding continued to grow.
At a minimum, we aim to maintain 50% of our debt
obligations at a fixed rate of interest. We have fully hedged
the foreign exchange exposure on the EUR EMTNs with cross
currency interest rate swaps. A portion of the floating interest
on the EUR cross currency interest rate swaps has been
hedged using interest rate swap instruments.
Ineffectiveness
The GBP EMTN hedging relationship was reset with a fair
value of $49 million on 9 December 2013, following the
close out of the interest rate swaps relating to the EMTN.
This amount was being amortised over the life of the
derivative and flowed as ineffectiveness in the income
statement. In FY20, the remaining balance of $2 million
(FY19: $6 million) flowed through as ineffectiveness, closing
out this derivative instrument.
The foreign exchange exposure on the EUR EMTNs has been
fully hedged and interest rate exposure partially hedged.
For hedge accounting purposes the hedging relationships
consist of a fair value hedge and two cash flow hedges.
The interest rate exposure on the ten-year resettable NZD
bond from December 2023 has also been fully hedged.
Provided that the hedges remain effective, any future gains
or losses will be processed through the hedge reserve. Minor
differences in the hedged values will flow to finance expense
in the income statement over the life of the derivatives as
ineffectiveness. Neither the direction,nor the rate of the
impact on the income statement can be predicted as it is
influenced by external market factors. In FY20, ineffectiveness
was $1 million (FY19: nil) across these hedge relationships.
Taxation
The FY20 effective tax rate is 29% (FY19: 32%). The reduction
from FY19 is due to the re-introduction of building
depreciation for tax, which resulted in a one-off reduction
to tax expense of $5 million. This was a government initiative
to provide tax relief in response to the COVID-19 pandemic,
refer to the taxation note in the FY20 financial statements
(note 14) for further details. The effective tax rate is higher
than the NZ company tax rate of 28% due to permanent
differences between tax and accounting. Ongoing permanent
differences arise from the tax treatment of CIP securities and
Crown funding for the Rural Broadband Initiative (RBI).
The accounting interest and depreciation credit recognised
in the Income statement in relation to CIP securities are
non-taxable, as confirmed via binding rulings issued by
Inland Revenue. RBI assets were funded by non-taxable
government grants. The accounting amortisation of RBI
government grants and RBI accounting depreciation
recognised in the Income statement are non-taxable and
tax depreciation is not claimed.

Annual Report 202028
Capital expenditure commentary
2020
$M
2019
$M
Fibre548664
Copper5581
Common6059
Gross capital expenditure663804
Gross capital expenditure for FY20 was $663 million. This
was $141 million lower than FY19 gross capital expenditure
spend. Fibre spend reduced significantly following the
conclusion of the UFB1 rollout in December 2019 and
the cessation of field work due to COVID-19 lockdown
restrictions. Copper-related expenditure reduced by 32% year
on year.
Fibre capital expenditure
2020
$M
2019
$M
UFB communal170245
Fibre connections and fibre layer 2
1
282308
Fibre products and systems1417
Other fibre connections and growth6265
Customer retention2029
Total fibre capital expenditure548664
Fibre capital expenditure included spend specifically focused
on fibre assets and represented approximately 83% of our
FY20 gross capital expenditure, consistent with FY19.
The cost of the deployment of the UFB communal network
for FY20 was $170 million, including about $145 million for
the UFB2 rollout (FY19: $105 million).
The average cost per UFB1 brownfields premises passed
during the year was $1,558, within FY20 guidance of $1,500
to $1,600.
Fibre connections and layer 2 spend was $282 million. About
167,000 fibre installations were completed nationwide, with
27,000 for UFB2 customers. This activity was a reduction
from 186,000 installations in FY19, largely due to COVID-19
lockdown restrictions.
About $60 million was provided in upfront investment for
‘backbone’ network to enable the connection of multiple
customers located along rights of way and multi-dwelling
units.
The average cost per premises connected (CPPC) in UFB1
areas was $1,022
2
, which was at the lower end of the FY20
guidance range of $1,000 to $1,150. The CPPC in UFB2
areas was $1,190
2
. This was in line with the lower end of UFB2
programme guidance, which includes layer 2 and service desk
costs, and backbone costs for multi-dwelling units and rights
of way with 10 or fewer premises.
Customer retention costs decreased by $9 million because
of COVID-19 restrictions on connection activity which
impacted planned targeted incentive campaigns.
1 Layer 2 equipment, such as gigabit capable passive optical network ports, is installed ahead of demand as the UFB footprint expands.
2 Excluding layer 2 and backbone costs for multi-dwelling units and rights of way, and including standard installations and some non-standard single
dwellings and service desk costs.
Copper capital expenditure
2020
$M
2019
$M
Network sustain3144
Copper connections12
Copper layer 2712
Product fixed–1
Customer retention1622
Total copper capital expenditure5581

Annual Report 202029
Copper capital expenditure decreased by $26 million
from FY19 reflecting the lower spend required as customer
numbers on our copper network reduce.
Network sustain spend decreased by $13 million as we
realigned proactive copper network spend to reflect fibre
uptake and weather-driven network replacement reduced.
Copper layer 2 spend reduced year on year because FY19
included additional investment in network capacity for the
Rugby World Cup.
Customer retention costs reduced by $6 million in line with
declining uptake of copper broadband.
Common capital expenditure
2020
$M
2019
$M
Information technology4334
Building and engineering services1722
Other–3
Total common capital expenditure6059
Information technology increased by $9 million as we
developed integrated provisioning and assure platforms to
support simplification and better customer outcomes.
Building and engineering services decreased by $5 million as
COVID-19 restrictions delayed planned work.
Contributions to capital expenditure
We received $7 million in contributions towards our gross
capital expenditure. These contributions are included as part
of Crown funding and represent instances where central or
local government authorities asked us to relocate or rebuild
existing network.
Long term capital management
We will pay a final dividend of 14 cents per share on
12 October 2020 to all holders registered at 5.00pm
15 September 2020. The shares will be quoted on an
ex-dividend basis from 14 September 2020. The dividends
paid will be fully imputed, at a ratio of 28/72, in line with
the corporate income tax rate. In addition, a supplementary
dividend of 2.47 cents per share will be payable to
shareholders who are not resident in New Zealand.
The dividend reinvestment plan will remain in place for
the final dividend at a discount rate of 2%. Shareholders
who have previously elected to participate in the dividend
reinvestment plan do not need to take any further action.
For those shareholders who wish to participate, election
notices to participate must be received by 5.00pm (NZ time)
on 16 September 2020.
For FY21, Chorus expects to pay a dividend of 25 cents
per share, subject to no material adverse changes in
circumstance or outlook.
The Board’s expectation is that, from FY22, Chorus will
transition to a dividend policy based on a pay-out range of
free cash flow.
The NZD Bond $400 million is due for repayment in
May 2021, and is therefore a current liability. Refinancing
of this bond is planned for FY21. If refinancing was not
achievable for any reason, bank debt facilities of $550 million
are available as an alternative option to use for repayment
($30 million drawn down at 30 June 2020).
The Board considers that a ‘BBB’ or equivalent credit rating
is appropriate for a company such as Chorus. It intends
to maintain capital management and financial policies
consistent with these credit ratings. At 30 June 2020, we had
a long term credit rating of BBB/stable outlook by Standard &
Poor’s and Baa2/stable by Moody’s Investors Service.

Annual Report 202030

Annual Report 202031
Financial
statements
32 Independent auditor’s report
35 Income statement
35 Statement of comprehensive income
36 Statement of financial position
37 Statement of changes in equity
38 Statement of cash flows
40 Notes to the financial statements

Annual Report 202032
Independent auditor’s report
To the shareholders of Chorus Limited
Report on the consolidated financial statements
Basis for opinion
We conducted our audit in accordance with International
Standards on Auditing (New Zealand) (‘ISAs (NZ)’). We believe
that the audit evidence we have obtained is sufficient and
appropriate to provide a basis for our opinion.
We are independent of the Group in accordance with
Professional and Ethical Standard 1 (Revised) Code of
Ethics for Assurance Practitioners issued by the New
Zealand Auditing and Assurance Standards Board and the
International Ethics Standards Board for Accountants’ Code
of Ethics for Professional Accountants (‘IESBA Code’), and we
have fulfilled our other ethical responsibilities in accordance
with these requirements and the IESBA Code.
Our responsibilities under ISAs (NZ) are further described in
the Auditor’s responsibilities for the audit of the consolidated
financial statements section of our report.
Our firm has also provided other services to the Group in
relation to regulatory audit services, tax compliance services
and other assurance and advisory services. Subject to certain
restrictions, partners and employees of our firm may also
deal with the Group on normal terms within the ordinary
course of trading activities of the business of the Group.
These matters have not impaired our independence as
auditor of the Group. The firm has no other relationship with,
or interest in, the Group.
Materiality
The scope of our audit was influenced by our application of
materiality. Materiality helped us to determine the nature,
timing and extent of our audit procedures and to evaluate
the effect of misstatements, both individually and on the
consolidated financial statements as a whole. The materiality
for the consolidated financial statements as a whole was set
at $8.7 million, determined with reference to a benchmark
of Group revenue. We chose the benchmark because, in our
view, this is a key measure of the Group’s performance.
Key audit matters
Key audit matters are those matters that, in our professional
judgement, were of most significance in our audit of the
consolidated financial statements in the current period.
We summarise below those matters and our key audit
procedures to address those matters in order that the
shareholders as a body may better understand the process
by which we arrived at our audit opinion. Our procedures
were undertaken in the context of and solely for the purpose
of our statutory audit opinion on the consolidated financial
statements as a whole and we do not express discrete
opinions on separate elements of the consolidated financial
statements.
The key audit matterHow the matter was addressed in our audit
Capitalisation of assets
Refer to Note 1 to the Financial Statements.
During the year ended 30 June 2020 the Group has
$620 million in network asset additions as it continues
with its purpose of bringing better broadband to New
Zealanders. Capitalisation of these costs and useful lives
assigned to these assets are a key audit matter due to the
significance of network assets to the Group’s business, and
due to the judgement involved in the:
Our audit procedures included:
—Examining that the controls to recognise capital projects in the fixed
asset register and the approval of the asset life annual review are
effective.
—Assessing the nature of costs incurred in capital projects by checking
a sample of costs to invoice to determine whether the description of
the expenditure met the capitalisation criteria.
Opinion
In our opinion, the accompanying consolidated financial
statements of Chorus Limited (the ’company’) and its
subsidiaries (the ‘Group’) on pages 35 to 67:
i. present fairly in all material respects the Group’s financial
position as at 30 June 2020, its financial performance
and cash flows for the year ended on that date; and
ii. comply with New Zealand Equivalents to International
Financial Reporting Standards (NZ IFRS) and International
Financial Reporting Standards.
We have audited the accompanying consolidated financial
statements which comprise:
— the consolidated statement of financial position as at
30 June 2020;
— the consolidated income statement, statements of other
comprehensive income, changes in equity and cash
flows for the year then ended; and
— notes, including a summary of significant accounting
policies and other explanatory information.

Annual Report 202033
The key audit matterHow the matter was addressed in our audit
Capitalisation of assets (continued)
—decision to capitalise or expense costs relating to
the network. This decision depends on whether
the expenditure is considered to enhance network
capability (and therefore capital), or to maintain the
current operating capability of the network (and
therefore an expense);
—estimation of the stage of completion of assets under
construction; and
—estimation of the useful life of the asset once the costs
are capitalised. There is also judgment when estimating
asset lives due to the uncertainty of the impact of
technological change .
—Evaluating a sample of assets under construction in which no costs
had been incurred in the final three months of the financial reporting
period. We challenged the status of those assets under construction
to determine whether they remained appropriately capitalised.
—Assessing, on a sample basis, whether the accruals recorded
for assets under construction were calculated in accordance
with the progress of construction and the arrangements with
external suppliers.
—Assessing the useful economic lives of the assets, by comparing
to our knowledge of the business and its operations and industry
benchmarks.
Chorus funding
Refer to Notes 4, 6, 7 and 19 to the Financial Statements.
The CIP securities and interest rate derivatives are a key
audit matter due to their significance to the Group’s
consolidated statement of financial position. There is
complexity and judgement involved in determining the
appropriate valuation and accounting treatment for the
interest rate derivatives and the CIP securities.
Our audit procedures to assess the valuation and accounting treatment
for the Group’s interest rate derivatives and CIP securities included:
—Our financial instrument specialists re-valuing all interest rate
derivatives using valuation models and inputs independent from
those utilised by management.
—Evaluating the hedge effectiveness of the interest rate derivatives
hedging the GBP and EUR denominated Euro Medium Term Notes.
In both instances, our financial instrument specialists assessed the
effectiveness of these hedges by independently modelling the future
changes in the value of these instruments to assess whether the
underlying derivatives were effective.
—Assessing the accounting treatment of the CIP securities. We read
the underlying loan agreement and analysed the various features of
the loan agreement to determine whether the CIP securities were a
debt or equity instrument.
—Evaluating the valuation of the CIP securities. Our valuation
specialists assessed the methodology used by management for
determining the amounts allocated to debt and government grant.
—Assessing the inputs used in the valuation of the CIP securities. On
a sample basis we compared interest rates and credit spreads to
independent sources of information to determine an acceptable
range of valuation inputs.
Revenue recognition
Refer to Note 9 to the Financial Statements.
Accuracy of revenue is considered to be a key audit matter
due to the nature of the underlying billing processes that
existed following the Chorus demerger from Spark in 2011.
There are certain legacy products where the billing is based
on network consumption which cannot be easily linked to
a physical end user connection. There is a risk that revenue
billed on this basis may be disputed by Chorus’ customers
who have a different view of their consumption of the
Chorus network.
Our audit procedures included:
—Evaluating the Group’s recognition of revenue by assessing any
revenue disputes recorded in the industry’s dispute reporting tool
by Chorus customers. We compared the disputes raised by Chorus
customers to the revenue recorded by Chorus and checked a
sample of settled disputes to the final settlement agreements.
—Independently confirming the accuracy of a sample of outstanding
debtor balances with Chorus customers.
—Agreeing a sample of revenue adjustments recorded during the year
to authorised credit notes.
Other information
The Directors, on behalf of the Group, are responsible for
the other information included in the entity’s Annual Report.
Other information includes Chorus’ operating, market
and regulatory overviews, management commentary and
disclosures relating to corporate governance and statutory
information. Our opinion on the consolidated financial
statements does not cover any other information and we
do not express any form of assurance conclusion thereon.
In connection with our audit of the consolidated financial
statements our responsibility is to read the other information
and, in doing so, consider whether the other information
is materially inconsistent with the consolidated financial
statements or our knowledge obtained in the audit or
otherwise appears materially misstated. If, based on the work
we have performed, we conclude that there is a material
misstatement of this other information, we are required to
report that fact. We have nothing to report in this regard.

Annual Report 202034
Use of this independent auditor’s report
This independent auditor’s report is made solely to the
shareholders as a body. Our audit work has been undertaken
so that we might state to the shareholders those matters we
are required to state to them in the independent auditor’s
report and for no other purpose. To the fullest extent
permitted by law, we do not accept or assume responsibility
to anyone other than the shareholders as a body for our
audit work, this independent auditor’s report, or any of the
opinions we have formed.
Responsibilities of the Directors for the
consolidated financial statements
The Directors, on behalf of the Group, are responsible for:
— the preparation and fair presentation of the consolidated
financial statements in accordance with generally
accepted accounting practice in New Zealand (being New
Zealand Equivalents to International Financial Reporting
Standards);
— implementing necessary internal control to enable
the preparation of a consolidated set of financial
statements that is fairly presented and free from material
misstatement, whether due to fraud or error; and
—
assessing the ability to continue as a going concern. This
includes disclosing, as applicable, matters related to going
concern and using the going concern basis of accounting
unless they either intend to liquidate or to cease operations,
or have no realistic alternative but to do so.
Auditor’s responsibilities for the audit of
the consolidated financial statements
Our objective is:
— to obtain reasonable assurance about whether the
consolidated financial statements as a whole are free from
material misstatement, whether due to fraud or error; and
— to issue an independent auditor’s report that includes
our opinion.
Reasonable assurance is a high level of assurance, but is not
a guarantee that an audit conducted in accordance with ISAs
NZ will always detect a material misstatement when it exists.
Misstatements can arise from fraud or error. They are
considered material if, individually or in the aggregate, they
could reasonably be expected to influence the economic
decisions of users taken on the basis of these consolidated
financial statements.
A further description of our responsibilities for the audit of
these consolidated financial statements is located at the
External Reporting Board (XRB) website at:
http://www.xrb.govt.nz/standards-for-assurance-
practitioners/auditors-responsibilities/audit-report-1/
This description forms part of our independent auditor’s report.
The engagement partner on the audit resulting in this
independent auditor’s report is Ed Louden.
For and on behalf of
KPMG
Wellington
24 August 2020

Annual Report 202035
Income statement
For the year ended 30 June 2020
(Dollars in millions)Notes
2020
$M
2019
$M
Operating revenue9959 970
Operating expenses10(311)(334)
Earnings before interest, income tax, depreciation and amortisation648 636
Depreciation1(319)(303)
Amortisation2(83)(90)
Earnings before interest and income tax246 243
Finance income12 10
Finance expense4(185)(175)
Net earnings before income tax73 78
Income tax expense14(21)(25)
Net earnings for the year52 53
Earnings per share
Basic earnings per share (dollars)
170.12 0.12
Diluted earnings per share (dollars)170.10 0.10
Statement of comprehensive income
For the year ended 30 June 2020
(Dollars in millions)Note
2020
$M
2019
$M
Net earnings for the year52 53
Other comprehensive income
Items that will be reclassified subsequently to Income statement
when specific conditions are met net of tax
Movements in effective cash flow hedges
19(28)(45)
Amortisation of de-designated cash flow hedges transferred to Income statement19(3) (2)
Movement in cost of hedging reserve193 –
Other comprehensive income net of tax(28)(47)
Total comprehensive income for the year net of tax24 6
The accompanying notes are an integral part of these financial statements.

Annual Report 202036
Statement of financial position
As at 30 June 2020
(Dollars in millions)Notes
2020
$M
2019
$M
Current assets
Cash and call deposits
15–273
Income tax receivable20 11
Trade and other receivables11140 140
Derivative financial instruments192 3
Finance lease receivable53 6
Total current assets165 433
Non-current assets
Derivative financial instruments
1993 56
Trade and other receivables111 7
Deferred tax receivable14116 101
Customer retention assets356 61
Software and other intangible assets2159 137
Network assets15,052 4,823
Total non-current assets5,477 5,185
Total assets5,642 5,618
Current liabilities
Cash overdraft
155 –
Trade and other payables12279 360
Income tax payable–2
Lease payable59 8
Derivative financial instruments19–197
Debt4430 491
Total current liabilities excluding Crown funding723 1,058
Crown funding726 25
Total current liabilities749 1,083
Non-current liabilities
Trade and other payables
123 –
Deferred tax payable14350 326
Derivative financial instruments19148 91
Lease payable5257 246
Debt41,892 1,741
Total non-current liabilities excluding CIP and Crown funding2,650 2,404
Crown Infrastructure Partners (CIP) securities6461 355
Crown funding7855 797
Total non-current liabilities3,966 3,556
Total liabilities4,715 4,639
Equity
Share capital
16666 638
Reserves19(111)(83)
Retained earnings372 424
Tot al e quit y 927 979
Total liabilities and equity5,642 5,618
The accompanying notes are an integral part of these financial statements.
The financial statements are approved and signed on behalf of the Board.
Patrick Strange
Chair
Authorised for issue on 24 August 2020
Mark Cross
Chair, Audit and Risk Management Committee

Annual Report 202037
Statement of changes in equity
For the year ended 30 June 2020
(Dollars in millions)Notes
Share capital
$M
Retained
earnings
$M
Hedging-related
reserves
$M
Total
$M
Balance at 1 July 2018590 468 (36)1,022
Comprehensive income
Net earnings for the year
–53 –53
Other comprehensive income
Movement in cash flow hedge reserve
19––(45)(45)
Amortisation of de-designated cash flow hedges transferred to
income statement
19––(2)(2)
Total comprehensive income–53 (47)6
Contributions by and (distributions to) owners:
Dividends
16–(97)–(97)
Supplementary dividends–(12)–(12)
Tax credit on supplementary dividends–12 –12
Dividend reinvestment plan1648 ––48
Total transactions with owners48 (97)–(49)
Balance at 30 June 2019638 424 (83)979
Comprehensive income
Net earnings for the year
–52 –52
Other comprehensive income
Movement in cash flow hedge reserve
19––(28)(28)
Amortisation of de-designated cash flow hedges transferred to
income statement
19––(3) (3)
Movement in cost of hedging reserve19––3 3
Total comprehensive income–52 (28)24
Contributions by and (distributions to) owners:
Dividends
16–(104)–(104)
Supplementary dividends–(12)–(12)
Tax credit on supplementary dividends–12 –12
Dividend reinvestment plan1628 ––28
Total transactions with owners28 (104)–(76)
Balance at 30 June 2020666 372 (111)927
The accompanying notes are an integral part of these financial statements.

Annual Report 202038
Statement of cash flows
For the year ended 30 June 2020
(Dollars in millions)Notes
2020
$M
2019
$M
Cash flows from operating activities
Cash was provided from/(applied to):
Cash received from customers
940 966
Finance income12 1
Payment to suppliers and employees(329)(339)
Taxation paid (12)(3)
Interest paid(137)(129)
Net cash flows provided from operating activities474 496
Cash flows applied to investing activities
Cash was applied to:
Purchase of network and intangible assets
(679)(806)
Capitalised interest paid(3)(4)
Net cash flows applied to investing activities(682)(810)
Cash flows from financing activities
Cash was provided from/(applied to):
Net outflow from leases
(23)(21)
Crown funding (including CIP securities)162 167
Proceeds from debt 544 500
Repayment of debt(677)(60)
Dividends paid(76)(49)
Net cash flows applied to financing activities(70)537
Net cash flows(278)223
Cash at the beginning of the year273 50
Cash at the end of the year15(5)273
Reconciliation of net earnings to net cash flows from operating activities
(Dollars in millions)Notes
2020
$M
2019
$M
Net earnings for the year52 53
Adjustment for:
Depreciation charged on network assets
1346 328
Amortisation of Crown funding1(27)(25)
Amortisation of software and other intangible assets249 56
Amortisation of customer retention assets340 35
Deferred income tax 1411 18
Ineffective portion of changes in fair value of cash flow hedges43 6
Amortisation of non cash finance expenses(5)(3)
CIP securities (notional) interest429 22
Other(7)2
491 492
Change in current assets and liabilities:
Decrease/(increase) in trade and other receivables
116 (4)
(Decrease)/increase in trade payables12(12)5
(Increase) / decrease in tax receivable(9)4
Decrease in tax liability(2)(1)
(17)4
Net cash flows from operating activities474 496
The accompanying notes are an integral part of these financial statements.

Annual Report 202039
Reconciliation of movements of liabilities to cash flows arising from financing activities
(Dollars in millions)
Debt
$M
Crown funding
$M
CIP securities
$M
Lease payable (net)
$M
Share capital
$M
Retained earnings
$M
Balance at 1 July 20181,807758273238590468
Movements from cash flows
Payment of lease liabilities
–––(21)––
Proceeds from funding5009572–––
Proceeds from repayment of borrowings(60)–––––
Dividends paid–––––(49)
Total changes from financing cash flows4409572(21)–(49)
Non-cash movements
Movements in fair value
(including foreign exchange rates)
(10)–––––
Transaction costs and amortisation
related to financing
(5)(25)22–––
Accruals–(6)(12)–––
Dividend reinvestment plan––––48(48)
Lease additions–––31––
Net earnings for the year ended 30 June 2019–––––53
Balance at 30 June 20192,232822355248638424
Movements from cash flows
Payment of lease liabilities
–––(23)––
Proceeds from funding5448577–––
Repayment of borrowings(677)–––––
Dividends paid–––––(76)
Total changes from financing cash flows(133)8577(23)–(76)
Non-cash movements
Movements in fair value
(including foreign exchange rates)
224–––––
Transaction costs and amortisation
related to financing
(1)(29)29–––
Accruals–3––––
Dividend reinvestment plan––––28(28)
Lease additions–––38––
Net earnings for the year ended 30 June 2020–––––52
Balance at 30 June 20202,322881461263666372
The accompanying notes are an integral part of these financial statements.

Annual Report 202040
Notes to the financial statements
Reporting entity and statutory base
Chorus includes Chorus Limited together with its subsidiaries.
Chorus is New Zealand’s largest fixed line communications
infrastructure business. It maintains and builds a network
predominantly made up of fibre and copper cables, local
telephone exchanges and cabinets.
Chorus Limited is a profit-oriented company registered in
New Zealand under the Companies Act 1993 and is a
FMC Reporting Entity for the purposes of the Financial Markets
Conduct Act 2013. Chorus Limited was established as a
standalone, publicly listed entity on 1 December 2011, upon its
demerger from Spark New Zealand Limited (Spark, previously
Telecom Corporation of New Zealand Limited). The demerger
was a condition of an agreement with Crown Infrastructure
Partners Limited (previously Crown Fibre Holdings) to enable
Chorus Limited to provide the majority of the Crown’s Ultra-Fast
Broadband (UFB). Chorus Limited is listed and its ordinary shares
are quoted on the NZX main board equity security market
(NZX Main Board) and on the Australian Stock Exchange (ASX)
and has bonds quoted on the NZX and ASX debt markets.
American Depositary Shares, each representing five ordinary
shares (and evidenced by American Depositary Receipts), are
not listed but are traded on the over-the-counter market in the
United States.
These financial statements have been prepared in accordance
with Generally Accepted Accounting Practice in New Zealand
(NZ GAAP) and Part 7 of the Financial Markets Conduct Act 2013.
They comply with New Zealand equivalents to International
Financial Reporting Standards (NZ IFRS) as appropriate for
profit-oriented entities, and with International Financial
Reporting Standards.
These financial statements are expressed in New Zealand dollars.
All financial information has been rounded to the nearest million,
unless otherwise stated.
The measurement basis adopted in the preparation of
these financial statements is historical cost, modified by the
revaluation of financial instruments as identified in the specific
accounting policies below and the accompanying notes.
The Directors have considered the impact of the COVID-19
pandemic on these financial statements and note no material
impact to the going concern basis on which they are prepared.
Accounting policies and standards
Accounting policies that summarise the measurement basis
used which are relevant to the understanding of the financial
statements are provided throughout the accompanying notes.
The accounting policies adopted and methods of computation
have been applied consistently throughout the periods
presented in these financial statements.
Reclassification and re-statement of comparatives
Where management have reclassified items in the financial
statements, the related comparative disclosures have been
adjusted to provide a like-for-like comparison.
Accounting estimates and judgements
In preparing the financial statements, management has made
estimates and assumptions about the future that affect the
reported amounts of assets and liabilities at the date of the
financial statements and the reported amounts of revenue and
expenses during the period. Actual results could differ from
those estimates.
Estimates and assumptions are continually evaluated and
are based on experience and other factors, including
macro-economic and market factors, and expectations of future
events that may have an impact on Chorus. All judgements,
estimates, and assumptions are believed to be reasonable based
on the most current set of circumstances available to Chorus.
The principal areas of judgement in preparing these financial
statements are set out below.
Network assets (note 1)
Assessing the carrying value of network assets for impairment
considerations which includes assessing the appropriateness
of useful life and residual value estimates of network assets,
the physical condition of the asset, technological advances,
regulation and expected disposal proceeds from the future sale
of the asset.
Customer retention assets (note 3)
Assessing the carrying value of customer retention assets
for impairment considerations which includes assessing the
appropriateness of useful life, contract terms, revenue and
customer connections data.
Crown Infrastructure Partners (CIP) securities (note 6)
Determining the fair value of the CIP securities requires
assumptions on expected future cash flows and discount rates
based on future long dated swap curves.
Financial risk management (note 19 & 20)
Accounting judgements have been made in determining hedge
designation and the fair value of derivatives and borrowings. The
fair value of derivatives and borrowing are determined based on
valuation models that use forward-looking estimates and market
observable data, to the extent that it is available.

Annual Report 202041
Note 1 – Network assets
In the Statement of financial position, network assets are stated
at cost less accumulated depreciation and any accumulated
impairment losses. The cost of additions to network assets
and work in progress constructed by Chorus includes the
cost of all materials used in construction, direct labour costs
specifically associated with construction, interest costs that are
attributable to the asset, resource management consent costs
and attributable overheads.
Repairs and maintenance costs are recognised in the Income
statement as incurred. If the useful life of the asset is extended or
the asset is enhanced then the associated costs are capitalised.
Estimating useful lives and residual values of network assets
The determination of the appropriate useful life for a particular
asset requires management to make judgements about,
amongst other factors, the expected period of service potential
of the asset, the likelihood of the asset becoming obsolete as a
result of technological advances, and the likelihood of Chorus
ceasing to use the asset in business operations.
Where an item of network assets comprises major components
having different useful lives, the components are accounted for
as separate items of network assets.
Where the remaining useful lives or recoverable values have
diminished due to technological, regulatory or market condition
changes, depreciation is accelerated. The assets’ residual values,
useful lives, and methods of depreciation are reviewed annually
and adjusted prospectively, if appropriate.
Depreciation is charged on a straight-line basis to write down
the cost of network assets to their estimated residual value over
their estimated useful life.
Estimated useful lives are as follows:
Fibre cables20 years
Ducts, manholes and poles20–50 years
Copper cables10–30 years
Cabinets5–20 years
Property5–50 years
Network electronics2–25 years
Right of use (leases)10–50 years
Other2–10 years
Other network assets include motor vehicles, test instruments
and tools and plant.
Any future adverse impacts arising from assessing the carrying
value or lives of network assets could lead to future impairment
losses or increases in depreciation charges that could affect
future earnings.
An item of network assets and any significant part is
derecognised upon disposal or when no future economic
benefits are expected from its use or disposal. Where network
assets are disposed of, the profit or loss recognised in the
Income statement is calculated as the difference between the
sale price and the carrying value of the asset.
Leased assets and corresponding liabilities are recognised as
‘right of use’ assets and depreciated over the life of the lease.
Non-monetary items that are measured in terms of historical
cost in a foreign currency are translated using the exchange
rates as at the dates of the initial transactions.
Land and work in progress are not depreciated. Work in progress
is reviewed on a regular basis to ensure that costs represent
future assets.

Annual Report 202042
Note 1 – Network assets (cont.)
30 June 2020
Fibre
cables
$M
Ducts,
manholes,
and poles
$M
Copper
cables
$M
Cabinets
$M
Property
$M
Network
electronics
$M
Right of
use assets
$M
Other
$M
Work in
progress
$M
Total
$M
Cost
Balance at 1 July 2019
2,0442,4982,3946614201,778275521510,290
Additions2312561532175613–248868
Disposals––––(2)(23)–––(25)
Transfers from work in progress––––––––(297)(297)
Other1–––––4––5
Balance at 30 June 20202,2762,7542,4096934351,811292516610,841
Accumulated depreciation
Balance at 1 July 2019
(627)(605)(1,988)(436)(262)(1,497)(50)(2)–(5,467)
Depreciation(103)(54)(60)(37)(15)(62)(14)(1)–(346)
Disposals––––222–––24
Other1––––––(1)––
Balance at 30 June 2020(729)(659)(2,048)(473)(275)(1,537)(64)(4)–(5,789)
Net carrying amount1 ,5472,09536122016027422811665,052
30 June 2019
Fibre
cables
$M
Ducts,
manholes,
and poles
$M
Copper
cables
$M
Cabinets
$M
Property
$M
Network
electronics
$M
Right of
use assets
$M
Other
$M
Work in
progress
$M
Total
$M
Cost
Balance at 1 July 2018
1,7822,2282,3846204041,73526152079,626
Additions2632701741208116–7111,419
Disposals(1)–(7)–(6)(38)(2)––(54)
Transfers from work in progress––––––––(708)(708)
Other––––2–––57
Balance at 30 June 20192,0442,4982,3946614201,778275521510,290
Accumulated depreciation
Balance at 1 July 2018
(538)(557)(1,934)(395)(251)(1,475)(35)(2)–(5,187)
Depreciation(90)(48)(61)(41)(15)(60)(13)––(328)
Disposals1–7–538(2)––49
Other––––(1)––––(1)
Balance at 30 June 2019(627)(605)(1,988)(436)(262)(1,497)(50)(2)–(5,467)
Net carrying amount1,4171,89340622515828122532154,823
There are no restrictions on Chorus’ network assets or any network assets pledged as securities for liabilities. At 30 June 2020 the
contractual commitments for acquisition and construction of the network assets was $196 million (30 June 2019: $300 million).

Annual Report 202043
Note 1 – Network assets (cont.)
Depreciation
2020
$M
2019
$M
Depreciation charged on network assets346328
Crown funding(27)(25)
Total depreciation319303
Chorus receives funding from the Crown to finance the
capital expenditure associated with the development of the
UFB network, rural broadband services and other services.
Where funding is used to construct assets, it is offset against
depreciation over the life of the assets constructed.
Refer to note 7 for information on Crown funding.
Property exchanges
Chorus has leased exchange space and commercial co-location
space owned by Spark which is subject to lease arrangements
(included within right of use assets). Chorus in turn leases
exchange space and commercial co-location space owned by
Chorus to Spark under a finance lease arrangement. 
For sites that it does not own, Chorus recognises its share of
the assets based on occupancy percentage, as well as a liability
for the future payments due. For sites that it does own, Chorus
derecognises the share of the asset used by Spark, as well as
recognising a receivable for the future receipts due.
Impairment
The carrying amounts of non-financial assets including network
assets, software and other intangibles and customer retention
assets are reviewed at the end of each reporting period for any
indicators of impairment.
If any such indication exists, the recoverable amount of the
asset is estimated. An impairment loss is recognised in earnings
whenever the carrying amount of an asset exceeds its estimated
recoverable amount. Should the conditions that gave rise to the
impairment loss no longer exist, and the assets are no longer
considered to be impaired, a reversal of an impairment loss
would be recognised immediately in earnings. In the period to
30 June 2020, there was no impairment in relation to the costs
capitalised (30 June 2019: no impairment).
The recoverable amount is the greater of an assets value in use
and fair value less costs to sell. Chorus’ assets do not generate
independent cash flows and are therefore assessed from a single
cash-generating unit perspective. In assessing the recoverable
amount, the estimates of future cash flows are discounted to
their net present value using a discount rate that reflects current
market assessments of the time value of money and the risks
specific to the business.
Capitalised interest
Finance costs are capitalised on qualifying items of network
assets and software assets at an annualised rate of 5.8%
(30 June 2019: 6.0%). Interest is capitalised over the period
required to complete the assets and prepare them for their
intended use. In the current year finance costs totalling
$3 million (30 June 2019: $4 million) have been capitalised
against network assets and software assets.
Right of use assets
Fibre cables
$M
Ducts, manholes,
and poles
$M
Property
$M
Total
$M
Balance 1 July 2018 (net)9 26 191 226
Additions1 10 516
Relinquishments––(4)(4)
Depreciation charge(1)(2)(10)(13)
Balance at 30 June 20199 34 182 225
Additions–10 7 17
Depreciation charge–(2)(12)(14)
Balance at 30 June 20209 42 177 228
Right of use assets are the present value of leases held by Chorus
as a lessee, as defined in the accounting policies. Leases are
capitalised at the present value of the minimum lease payments
at inception of the lease.

Chorus has applied a single discount rate to a portfolio of leases
across the two main portfolios of leases (‘Property’ and ‘Ducts,
manholes, and poles’) due to the long term usage nature of
the underlying assets used to service the same network. This is
reflective of the longer term nature of infrastructure assets.
The nature of these assets are similar enough that borrowing
rates on commercial debt would not change asset to asset.
The incremental borrowing rate is reviewed annually.

Annual Report 202044
Note 2 – Software and other intangible assets
Software and other intangible assets are initially measured
at cost. The direct costs associated with the development of
network and business software for internal use are capitalised
where project success is probable and the capitalisation
criteria is met. Following initial recognition, software and
other intangible assets are stated at cost less accumulated
amortisation and impairment losses. Software and other
intangible assets with a finite life are amortised from the date the
asset is ready for use on a straight-line basis over its estimated
useful life which is as follows:
Software2–10 years
Other intangibles 6–35 years
Other intangibles mainly consist of land easements.
Where estimated useful lives or recoverable values have
diminished due to technological change or market conditions,
amortisation is accelerated.
There are no restrictions on software and other intangible assets,
or any intangible assets pledged as securities for liabilities.
30 June 2020
Software
$M
Other intangibles
$M
Work in progress
$M
Total
$M
Cost
Balance at 1 July 2019
752623781
Additions52–69121
Disposals(16)––(16)
Transfers from work in progress––(50)(50)
Balance at 30 June 2020788642836
Accumulated amortisation
Balance at 1 July 2019
(643)(1)–(644)
Amortisation(49)––(49)
Disposals16––16
Balance at 30 June 2020(676)(1)–(677)
Net carrying amount112542159
30 June 2019
Software
$M
Other intangibles
$M
Work in progress
$M
Total
$M
Cost
Balance at 1 July 2018
694628728
Additions58–53111
Disposals––––
Transfers from work in progress––(58)(58)
Balance at 30 June 2019752623781
Accumulated amortisation
Balance at 1 July 2018
(587)(1)–(588)
Amortisation(56)––(56)
Disposals––––
Balance at 30 June 2019(643)(1)–(644)
Net carrying amount109523137
At 30 June 2020 the contractual commitment for acquisition of software and other intangible assets was $8 million (30 June 2019:
$9 million).
Amortisation
Note
2020
$M
2019
$M
Amortisation charged on software and intangible assets49 56
Amortisation charged on customer retention assets334 34
Total amortisation83 90

Annual Report 202045
Note 3 – Customer retention assets
Customer retention costs are incremental costs incurred in
acquiring new contracts with new and existing customers
that Chorus expects are recoverable and are capitalised
as customer retention assets. Following initial recognition,
customer retention assets are stated at cost less accumulated
amortisation and impairment losses. Customer retention
assets have a finite life and are amortised from the month that
costs are capitalised on a straight-line basis over the average
connection life which is as follows:
New connections and migrations0–4 years
Customer incentives1 year
30 June 2020
New connections
and migrations
$M
Customer
incentives
$M
Total
$M
Cost
Balance at 1 July 2019
145 5 150
Additions31 4 35
Balance at 30 June 2020176 9 185
Accumulated amortisation
Balance at 1 July 2019
(88)(1)(89)
Amortisation(34)(6)(40)
Balance at 30 June 2020(122)(7)(129)
Net carrying amount54 2 56
30 June 2019
New connections
and migrations
$M
Customer
incentives
$M
Total
$M
Cost
Balance at 1 July 2018
96 –96
Additions49 5 54
Balance at 30 June 2019145 5 150
Accumulated amortisation
Balance at 1 July 2018
(54)–(54)
Amortisation(34)(1)(35)
Balance at 30 June 2019(88)(1)(89)
Net carrying amount57 4 61
Amortisation of customer retention assets
Customer retention assets are amortised to the Income statement, either as amortisation expense or operating revenue, based on
the nature of the specific costs capitalised.
Note
2020
$M
2019
$M
Amortised to amortisation expense234 34
Amortised to operating revenue6 1
Total customer retention assets amortisation40 35

Annual Report 202046
Note 4 – Debt
Debt is classified as non-current liabilities except for those with
maturities less than 12 months from the reporting date, which
are classified as current liabilities.
Debt is initially measured at fair value, less any transaction costs
that are directly attributable to the issue of the instruments.
Debt is subsequently measured at amortised cost using the
effective interest method. Some borrowings are designated in
fair value hedge relationships, which means that any change in
market interest and foreign exchange rates result in a change in
the fair value adjustment on that debt.
The weighted effective interest rate on debt including the effect of
derivative financial instruments was 5.16% (30 June 2019: 5.75%).
Due date
2020
$M
2019
$M
Syndicated bank facilitiesSep 202030 –
Euro medium term notes GBPApr 2020–491
Euro medium term notes EUROct 2023883 858
Euro medium term notes EURDec 2026527 –
Fixed rate NZD BondsMay 2021400 400
Fixed rate NZD BondsDec 2028500 500
Less: facility fees(18)(17)
Total Debt2,322 2,232
Current430 491
Non-current1,892 1 ,741
Syndicated bank facilities
As at 30 June 2020 Chorus had $550 million committed
syndicated facilities on market standard terms and conditions
(30 June 2019: $550 million). In April 2020, $490 million of
facilities were extended by a year.
The facilities are split into 3 tranches:
• $60 million which expires in May 2022. At 30 June 2020 there
was $5 million drawn down on this tranche.
• $290 million which now expires in May 2023. At 30 June 2020
there was $25 million drawn down on this tranche.
• $200 million which now expires in May 2025.
The amount undrawn of the syndicated bank facilities that
are available for future operating activities is $520 million
(30 June 2019: $550 million). The syndicated bank facilities are
held with bank and institutional counterparties rated - A to AAA,
based on rating agency Standard & Poor’s ratings.
Euro Medium Term Notes (EMTN)
Face valueInterest rate
2020
$M
2019
$M
GBP 260 million6.75%–491
EUR 500 million1.13%883 858
EUR 300 million0.88%527 –
Chorus has in place cross currency interest rate swaps to hedge
the foreign currency exposure to the EMTN. The cross currency
interest rate swaps entitle Chorus to receive EUR principal and
EUR fixed coupon payments for NZD principal and NZD floating
interest payments. The EUR cross currency interest rate swaps
are partially hedged for the NZD interest payments using interest
rate swaps (notional amount $800 million).
For the GBP EMTN cross currency interest rate swaps, the
floating interest rate exposure on the NZD interest payments
were hedged using interest rate swaps. The EUR 500 EMTN cross
currency interest rate swaps are partially hedged for the
NZD interest payments using interest rate swaps (notional
amount $500 million). The EUR 300 cross currency interest rate
swaps are also partially hedged for the NZD interest payments
using an interest rate swap (notional amount $300 million).
The following table reconciles EMTN at hedged rates to EMTN
carrying value based on spot rates, as reported under NZ IFRS.
EMTN at hedged rates is a non-GAAP measure and is not defined
by NZ IFRS:
2020
EUR 300
$M
2019
EUR 300
$M
2020
EUR 500
$M
2019
EUR 500
$M
2020
GBP
$M
2019
GBP
$M
EMTN (at carrying value)527–883858–491
Impact of fair value hedge(5)–(12)(12)––
Impact of hedged rates used(8)–(86)(61)–186
EMTN at hedged rates514–785785–677

Annual Report 202047
Note 4 – Debt (cont.)
The fair value of EMTN, calculated based on the present value
of future principal and interest cash flows, discounted at market
interest rates at balance date, was $881 million (30 June 2019:
$882 million) compared to a carrying value of $883 million
(30 June 2019: $858 million) for the EUR 500 EMTN; $539 million
(30 June 2019: nil) compared to a carrying value of $527 million
(30 June 2019: nil) for the EUR 300 EMTN; and nil fair value and
carrying value (30 June 2019: $518 million, $491 million) for the
GBP EMTN at balance date. This fair value has been determined
using Level 2 of the fair value hierarchy as described in note 20.
Fixed rate NZD bonds
Due dateInterest rate
2020
$M
2019
$M
Fixed rate NZD Bonds May 20214.12%400 400
Fixed rate NZD Bonds Dec 20284.35%500 500
Total fixed rate NZD bonds900 900
At 30 June 2020, Chorus had $900 million of unsecured, unsubordinated debt securities (30 June 2019: $900 million).
Schedule of maturities
2020
$M
2019
$M
Current430 491
Due one to two years–400
Due two to three years––
Due three to four years883 –
Due four to five years–858
Due over five years1,027 500
Total due 2,340 2,249
Less: facility fees(18)(17)
2,322 2,232
No debt has been secured against assets. However, there are
financial covenants and event of default triggers, as defined
in the various debt agreements. During the current year
Chorus complied with the requirements set out in its financing
agreements (30 June 2019: complied).
Refer to note 20 for information on financial risk management.
Finance expense
2020
$M
2019
$M
Interest on syndicated bank facility5 5
Interest on EMTN - GBP40 53
Interest on EMTN - EUR44 39
Interest on fixed rate NZD bonds40 31
Fair value adjustment on interest rate swap not in hedge relationship–(3)
Ineffective portion of changes in fair value of cash flow hedges3 6
Other interest expense27 26
Capitalised interest(3)(4)
Total finance expense excluding CIP securities (notional) interest156 153
CIP securities (notional) interest29 22
Total finance expense185 175
Other interest expense includes $21 million lease interest expense
(30 June 2019: $20 million), $5 million of amortisation arising
from the difference between fair value and proceeds realised
from the swaps reset (30 June 2019: $3 million), $1 million cost to
restructure interest rate swaps (30 June 2019: $2 million).
The GBP EMTN hedging relationship was reset with a fair value
of $49 million on 9 December 2013 following the close out of
the interest rate swaps relating to the EMTN. Ineffectiveness of
$2 million (30 June 2019: $6 million) flowed through interest
expense relating to the amortisation of this reset. The GBP EMTN
was repaid and settled on 6 April 2020 and all related amounts held
in the cash flow hedge reserve flowed to the Income statement
over the life of the debt (30 June 2019: $2 million remained).

Annual Report 202048
Note 4 – Debt (cont.)
As long as the existing hedge relationships remain effective,
any future gains or losses will be processed through the hedge
equity reserves. Minor differences in the hedged values will flow
to finance expense in the income statement over the life of the
derivatives as ineffectiveness. Neither the direction, nor the rate
of the impact on the income statement can be predicted as it is
influenced by external market factors. Ineffectiveness was
$1 million (30 June 2019: nil) across the other hedge
relationships (refer note 19).
Note 5 – Leases
Chorus is a lessee and lessor of certain network assets under
lease arrangements. For all leases Chorus recognises assets and
liabilities in the Statement of financial position, except those
determined to be short-term or low value. On inception of a new
lease, the lease payable is measured at the present value of the
remaining lease payments, discounted at Chorus’ incremental
borrowing rate at that date. Practical expedients within
NZ IFRS 16 Leases have been applied to allow a single discount
rate to a portfolio of leases with similar characteristics. Lease
costs are recognised through interest expense over the life of the
lease. The corresponding right of use asset incurs depreciation
over the estimated useful life of the asset.
Lease Liabilities
2020
$M
2019
$M
Liabilities
Maturity analysis - contractual discounted cash flows
Less than one year
98
Between one and five years3630
More than five years221216
Total lease payable266254
Current98
Non-current257246
2020
$M
2019
$M
Amounts recognised in Income statement:
Interest on lease payable
2120
Amounts recognised in Statement of cash flows:
Principal payments (net)
(8)(2)
Lease interest (net)(15)(19)
Extension options
Most leases contain extension options exercisable by Chorus
up to one year before the end of the non-cancellable contract
period. Where practicable, Chorus seeks to include extension
options in new leases to provide operational flexibility.
The extension options held are exercisable only by Chorus and
not by the lessors. Chorus assesses at lease commencement
whether it is reasonably certain the extension options will be
exercised, and where it is reasonably certain, the extension
period has been included in the lease liability calculation.
Chorus reassesses whether it is reasonably certain to exercise
the options if there is a significant event or significant change in
circumstances within its control.
Lease liabilities recognised
(discounted)
2020
$M
Potential future lease
payments not included in
lease liabilities (discounted)
2020
$M
Lease liabilities recognised
(discounted)
2019
$M
Potential future lease
payments not included in
lease liabilities (discounted)
2019
$M
Fibre cables9–10–
Ducts, manholes and poles451351
Property212–209–
Total Lease Payable266254
Other leases
Chorus also leases IT equipment with contract terms of one to
three years. These leases are of low value. Chorus has elected not
to recognise right of use assets and lease liabilities for these leases.
Lease receivable
Chorus has leased exchange space and commercial co-location
space owned by Spark. Chorus in turn leases exchange space
and commercial co-location space to Spark under finance lease
arrangements. The term of the leases varies from three to ten
years and include rights of renewal.

Annual Report 202049
The full term has been used in the calculation of finance lease
receivables as it is likely due to the specialised nature of the
buildings that the leases will be renewed to the maximum
term. The payable and receivable under these finance lease
arrangements are net settled in cash.
Lease income from lease contracts in which Chorus acts as a
lessor is as below:
2020
$M
2019
$M
Finance leases
Finance income on the net investment in the lease
38
The following table sets out a maturity analysis of lease payments receivable:
2020
$M
2019
$M
Less than one year36
One to two years–4
Total lease receivable310
Non-current lease payables are shown net of non-current lease receivable.
Note 6 – Crown Infrastructure Partners (CIP) securities
Ultra-Fast Broadband (UFB)
Chorus receives Crown funding to finance construction costs
associated with the development of the UFB network. For the
first phase of the UFB network build (UFB1) Chorus received
funding at a rate of $1,118 for every premises passed (as
certified by CIP), in return Chorus issued CIP equity securities,
CIP debt securities and CIP warrants. The equity and debt
securities had an issue price of $1 and were issued on a 50:50
basis. For each premises passed, $559 of equity securities
and $559 of debt securities were issued and Chorus received
$1,118 funding in return. CIP warrants were issued for nil value.
UFB1 build was completed in December 2019 to a total value
of $924 million funding received. This was slightly below the
$929 million allowed for under the programme, because small
infill developments did not meet the programme criteria for CIP
funding. As at 30 June 2020, there have been 827,000 premises
passed and tested by CIP under UFB1 (30 June 2019: 761,000).
For the second phase of the UFB network build (UFB2 and
UFB2+), there are five different funding rates applied, at an
average rate of $1,828 for every premises passed (as certified by
CIP). In return for the CIP funding, CIP equity and debt securities
will be issued on very similar terms as UFB1 securities. Chorus
can elect the mix of securities to be issued (up to a maximum
of $189 million equity securities for UFB2). There are no CIP
warrants in relation to UFB2 and UFB2+ funding. The total
committed funding available for Chorus for the second phase is
expected to be $409 million. As at 30 June 2020, for UFB2 and
UFB2+ there have been 83,000 premises passed and tested by
CIP (30 June 2019: UFB2 and UFB2+ 36,000).
The CIP equity and debt securities are recognised initially
at fair value plus any directly attributable transaction costs.
Subsequently, they are measured at amortised cost using the
effective interest method. The fair value is derived by discounting
the equity securities and debt securities per premises passed by
the effective rate based on market rates. The difference between
funding received and the fair value of the securities is recognised
as Crown funding. Over time, the CIP debt and equity securities
increase to face value and the Crown funding is released against
depreciation and reduces to nil.
CIP equity securities
CIP equity securities are a class of non-interest bearing security
that carry no right to vote at meetings of holders of Chorus
ordinary shares but entitle the holder to a preferential right to
repayment on liquidation and additional rights that relate to
Chorus’ performance under its construction contract with CIP.
Dividends will become payable on a portion of the CIP equity
securities from 2025 (2030 for UFB2 and UFB2+) onwards,
with the portion of CIP equity securities that attract dividends
increasing over time.
CIP equity securities can be redeemed by Chorus at any time by
payment of the issue price or issue of new ordinary shares (at a
5% discount to the 20-day volume weighted average price) to
the holder. In limited circumstances CIP equity securities may be
converted by the holder into voting preference or ordinary shares.
The CIP equity securities are required to be disclosed as a liability
until the liability component of the compound instrument expires.
Note 5 – Leases (cont.)

Annual Report 202050
CIP debt securities
CIP debt securities are unsecured, non-interest bearing and
carry no voting rights at meetings of holders of Chorus ordinary
shares. Chorus is required to redeem the CIP debt securities
in tranches from 2025 (2030 for UFB2 and UFB2+) to 2036 by
repaying the face value to the holder.
The principal amount of CIP debt securities consists of a senior
portion and a subordinated portion. The senior portion ranks
equally with all other unsecured, unsubordinated creditors of
Chorus, and has the benefit of any negative pledge covenant
that may be contained in any of Chorus’ debt arrangements.
The subordinated portion ranks below all other Chorus
indebtedness but above ordinary shares of Chorus. The initial
value of the senior portion is the present value (using a discount
rate of 8.5%) of the sum repayable on the CIP debt securities, and
the initial subordinated portion will be the difference between
the issue price of the CIP debt security and the value of the
senior portion.
CIP warrants
Chorus issues warrants to CIP for nil consideration along with
each tranche of CIP equity securities. Each CIP warrant gives CIP
the right, on a specified exercise date, to purchase at a set strike
price a Chorus share to be issued by Chorus. The strike price
for a CIP warrant is based on a total shareholder return of 16%
per annum on Chorus shares over the period December 2011 to
June 2036.
At 30 June 2020, Chorus had issued a total 14,216,213 warrants
which had a fair value and carrying value that approximated
zero (30 June 2019: 12,544,286 warrants issued). The number of
fibre connections made by 30 June 2020 impacts the number
of warrants that could be exercised. Because fibre connections
already exceed 20% before 30 June 2020, the number of
warrants that would be able to be exercised is 14,216,213
(30 June 2019: 12,544,286).
At 30 June 2020, the component parts of debt and equity
instruments including notional interest were:
20202019
CIP debt
securities
$M
CIP equity
securities
$M
Total CIP
securities
$M
CIP debt
securities
$M
CIP equity
securities
$M
Total CIP
securities
$M
Fair value on initial recognition
Balance at 1 July
15412928313291223
Additional securities recognised
at fair value
225577223860
Balance at 30 June176184360154129283
Accumulated notional interest
Balance at 1 July
363672262450
Notional interest131629101222
Balance at 30 June4952101363672
Total CIP securities225236461190165355
The fair value of CIP debt securities at balance date was
$287 million (30 June 2019: $248 million) compared to a
carrying value of $225 million (30 June 2019: $190 million).
The fair value of CIP equity securities at balance date was
$291 million (30 June 2019: $235 million) compared to a carrying
value of $236 million (30 June 2019: $165 million). The fair value
has been calculated using discount rates from market rates at
balance date and using Level 2 of the fair value hierarchy as
described in note 20.
Key assumptions in calculations on initial recognition
On initial recognition, the discount rate between 4.49% to 6.90%
(30 June 2019: 4.64% to 8.49%) for the CIP equity securities
and 2.50% to 6.90% (30 June 2019: 3.42% to 6.16%) for the CIP
debt securities used to discount the expected cash flows is
based on the NZ swap curve. The swap rates were adjusted for
Chorus specific credit spreads (based on market observed credit
spreads for debt issued with similar credit ratings and tenure).
The discount rate on the CIP equity securities is capped at
Chorus’ estimated cost of (ordinary) equity.
Note 6 – Crown Infrastructure Partners (CIP) securities (cont.)

Annual Report 202051
Note 7 – Crown funding
Crown funding is recognised at fair value where there is reasonable assurance that the funding is receivable and all attached
conditions will be complied with. Crown funding is then recognised in earnings as a reduction to depreciation expense on a
systematic basis over the useful life of the asset the funding was used to construct.
20202019
UFB
$M
RBI
$M
Other
$M
Total
$M
UFB
$M
RBI
$M
Other
$M
Total
$M
Fair value on initial
recognition
Balance at 1 July
6282426093054824251841
Additional funding
recognised at fair value
79–78680–989
Balance at 30 June707242671,01662824260930
Accumulated
amortisation of funding
Balance at 1 July
(56)(38)(14)(108)(41)(30)(12)(83)
Amortisation(18)(8)(1)(27)(15)(8)(2)(25)
Balance at 30 June(74)(46)(15)(135)(56)(38)(14)(108)
Total Crown funding6331965288157220446822
Current2625
Non-current855797
Ultra-Fast Broadband (UFB)
Chorus receives Crown funding to finance construction costs
associated with the development of the UFB network. During
the period Chorus has recognised funding for 112,438 (UFB1
65,274; UFB2 and UFB2+ 47,164) premises where the premises
was passed and tested by CIP as at 30 June 2020 (30 June 2019:
109,784; UFB1 75,860; UFB2 and UFB2+ 33,924).
This brings the total number of premises passed and tested by
CIP at 30 June 2020 to approximately 910,000 (30 June 2019:
797,000). The total number of premises passed (including those
that have not been tested by CIP) was approximately 917,000 at
30 June 2020 (30 June 2019: 842,000).
Continued recognition of the full amount of the Crown funding
is contingent on certain material performance targets being met
by Chorus. The most significant of these material performance
targets relate to compliance with certain specifications under
user acceptance testing by CIP. Performance targets to date have
been met.
Other
Chorus receives funding towards the cost of relocation of
communications equipment, school lead-ins and extending the
network coverage to rural areas.
Note 8 – Segmental reporting
An operating segment is a component of an entity that engages
in business activities from which it may earn revenues and incur
expenses and for which operating results are regularly reviewed
by the entity’s chief operating decision maker and for which
discrete financial information is available.
Chorus’ Chief Executive Officer (CEO) has been identified
as the chief operating decision maker for the purpose of
segmental reporting.
Chorus has determined that it operates in one segment
providing nationwide fixed line communications infrastructure.
The determination is based on the reports reviewed by the CEO
in assessing performance, allocating resources and making
strategic decisions.
All Chorus’ operations are provided in New Zealand, therefore no
geographic information is provided.
Three Chorus customers met the reporting threshold
of 10 percent of Chorus’ operating revenue in the year
to 30 June 2020. The total revenue for the year ended
30 June 2020 from these customers was $409 million
(30 June 2019: $433 million), $195 million (30 June 2019:
$197 million) and $117 million (30 June 2019: $109 million).

Annual Report 202052
Note 9 – Operating revenue
Revenue is measured based on the consideration specified in a contract with a customer and excludes amounts collected on behalf
of third parties. Chorus recognises revenue when it transfers control of a product or service to a customer.
Chorus services provided to customersNature, performance obligation and timing of revenue
Fibre and copper connectionsProviding access to the Chorus fixed lines network to enable connections to the internet.
Chorus recognises revenue as it provides this service to its customers at a point in time.
Unbilled revenues from the billing cycle date to the end of each month are recognised as
revenue during the month the service is provided. Revenue is deferred in respect of the
portion of fixed monthly charges that have been billed in advance.
Value added network servicesProviding enhanced access to the Chorus fixed line network to enable internet access,
through backhaul and handover link services to connect across wider areas and to higher
quality levels. Recognition is the same as described for fibre and copper connections above.
InfrastructureProviding physical storage and site-sharing rental services for co-location of third party or
shared assets. This is billed and recognised on a monthly basis, based on a point in time.
Field servicesProviding services in the field to protect, strengthen, and increase the available network
– for example, installation services, wiring and consultation services. This is billed and
recognised as the service is provided over time. Revenue from installation of connections is
recognised upon completion of the connection.
Revenue by service
2020
$M
2019
$M
Fibre broadband393294
Fibre premium7374
Copper based voice82106
Copper based broadband271344
Data services copper1618
Value added network services2930
Infrastructure2424
Field services6574
Other66
Total operating revenue959970

Annual Report 202053
Note 10 – Operating expenses
2020
$M
2019
$M
Labour80 74
Network maintenance64 75
Other network costs29 33
Information technology47 50
Rent and rates13 13
Property maintenance12 17
Electricity15 17
Provisioning5 6
Insurance3 3
Consultants9 7
Regulatory levies7 16
Other27 23
Total operating expenses311 334
Labour
Labour of $80 million (30 June 2019: $74 million) represents
employee costs which are not capitalised.
Pension contributions
Included in labour costs are payments to the New Zealand
Government Superannuation Fund of $335,000 (30 June 2019:
$350,000) and contributions to KiwiSaver of $3.2 million
(30 June 2019: $3.1 million). At 30 June 2020 there were
14 employees in New Zealand Government Superannuation Fund
(30 June 2019: 16 employees) and 752 employees in KiwiSaver
(30 June 2019: 840 employees). Chorus has no other obligations
to provide pension benefits in respect of employees.
Charitable and political donations
Other costs include charitable donations to Lifeline, Women’s
Refuge, KidsCan and Porirua E-Learning Trust of $207,295
(30 June 2019: Consumer Foundation of $21,000, other
smaller charities of $20,000). Chorus has not made any political
donations (30 June 2019: nil).
Auditor remuneration
Included in other expenses are fees paid to auditors:
2020
$000's
2019
$000's
Audit and review of statutory financial statements537 537
Regulatory audit and assurance work298 268
Tax compliance services
1
21 50
Other assurance services
2
22 23
Other services
3
10 59
Total other services351 400
Total fees paid to the auditor888 937
1 Includes the tax treatment of the interest rate swap restructure and other sundry tax assistance (30 June 2019: Balance of GST review,
tax treatment of interest rate swaps closed out and other sundry tax assistance).
2 Relates to attendance at the Annual Shareholders Meeting and assurance relating to EMTN refresh comfort letters. (30 June 2019: Same services as
current year).
3 Other services included preparation and presentation of hedge accounting training (30 June 2019: preparation and presentation of hedge
accounting training and assistance in documenting current state process).

Annual Report 202054
Note 11 – Trade and other receivables
Trade and other receivables are initially recognised at the fair value of the amounts to be received, plus transaction costs (if any).
They are subsequently measured at amortised cost (using the effective interest method) less impairment losses.
2020
$M
2019
$M
Trade receivables10796
Other receivables1023
Prepayments2428
Trade and other receivables141147
Current140140
Non-current17
Trade receivables are non-interest bearing and are generally on
terms of 20 working days or less.
Chorus maintains a provision for impairment losses when there
is objective evidence of its customers being unable to make
required payments and makes provision for doubtful debt
where debt is more than 60 days overdue. There have been no
significant individual impairment amounts recognised as an
expense. Trade receivables are net of allowances for disputed
balances with customers.
The ageing profile of trade receivables is as follows:
2020
$M
2019
$M
Not past due9184
Past due 1 – 30 days1612
10796
Chorus has a concentrated customer base consisting
predominantly of a small number of retail service providers.
The concentrated customer base heightens the risk that a dispute
with a customer, or a customer’s failure to pay for services, will
have a material adverse effect on the collectability of receivables.
Any disputes arising that may affect the relationship between
the parties will be raised by relationship managers and follow a
dispute resolution process. Chorus has $16 million of accounts
receivable that are past due but not impaired (30 June 2019:
$12 million). The carrying value of trade and other receivables
approximates the fair value. The maximum credit exposure is
limited to the carrying value of trade and other receivables.
Note 12 – Trade and other payables
Trade and other payables are initially recognised at fair value less transaction costs (if any). They are subsequently measured at
amortised cost using the effective interest method. Trade and other payables are non-interest bearing and are normally settled within
30 day terms. The carrying value of trade and other payables approximates their fair values.
2020
$M
2019
$M
Trade payables8294
Accruals125187
Personnel accrual1620
Revenue billed in advance5959
Trade and other payables282360
Current279360
Non-current3–

Annual Report 202055
Note 13 – Commitments
Network infrastructure project agreement
Chorus is committed to deploying infrastructure for premises in
the UFB2 and UFB2+ candidate areas awarded to Chorus, to be
built according to annual build milestones and to be completed
no later than December 2022. In total it is expected that the
communal infrastructure for UFB2 and UFB2+ will pass an
estimated 223,000 premises. Chorus has estimated it will cost
$548 to $568 million to build the communal UFB2 and UFB2+
network by the end of 2022.
West Coast Southland Network Build (WCSNB) agreement
Chorus has signed a contract with CIP to deploy fibre in the West
Coast area of the South Island. Chorus will be receiving funding
from CIP of $29 million for phase 1 of this project.
Capital expenditure
Refer to note 1 and note 2 for details of capital expenditure
commitments.
Lease commitments
Refer to note 5 for details of lease commitments.
Note 14 – Taxation
This note provides an analysis of Chorus’ income tax expense
and shows which amounts are recognised in the Income
statement, Statement of other comprehensive income or directly
in equity and how income tax expense is affected by non taxable
items. Income tax expense for the current year comprises
current and deferred tax. Income tax expense is recognised in
the Income statement, except to the extent it relates to items
recognised in the Statement of other comprehensive income
or directly in equity. In these cases, income tax expense is
recognised in the Statement of other comprehensive income or
directly in equity.
Deferred tax is recognised in respect of temporary differences
between the carrying amounts of assets and liabilities for
financial reporting purposes and the amount used for taxation
purposes. The amount of the deferred tax is based on the
expected manner of realisation of the carrying amount of
assets and liabilities, using the tax rates enacted or substantially
enacted at reporting year end. A deferred tax asset is recognised
only to the extent it is probable it will be utilised.
On 25 March 2020, Parliament passed legislation that restored
tax depreciation on non-residential buildings. The change
increases the tax base for these assets, giving rise to a reduced
difference between the carrying value and tax base. This results
in a reduction in deferred tax liability and income tax expense of
$5 million.
Income tax expense
2020
$M
2019
$M
Recognised in Income statement
Net earnings before tax
7378
Tax at 28%2122
Tax effect of adjustments
Other non-taxable items
53
Reinstatement of depreciation on buildings(5)–
Tax expense reported in Income statement2125
Comprising:
Current tax expense
16
Deferred tax expense2019
2125
Recognised in other comprehensive income
Net movement in hedging related reserves
3965
Tax at 28%1118
Tax benefit reported in other comprehensive income1118
Comprising:
Deferred tax benefit
1118
1118