Chorus considers Retail Bond offer

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

Email: company.secretary@chorus.co.nz





STOCK EXCHANGE ANNOUNCEMENT

9 November 2020

Chorus considers retail bond offer and provides an investor presentation

Chorus is considering making an offer, subject to market conditions, of up to
NZ$200,000,000 (with the ability to accept oversubscriptions at Chorus’ discretion) of
unsecured, unsubordinated, fixed rate bonds (Bonds) to New Zealand retail and
institutional investors and certain overseas institutional investors.
The offer may comprise two Series of Bonds, which are expected to have terms of seven
years and/or ten years. The proceeds of any offer will be used to refinance Chorus’
NZ$400m bond maturing in May 2021.
A copy of the investor presentation in relation to the intended offer is attached.
The offer is expected to open, subject to market conditions, the week beginning 16
November 2020 and full details will be available then.
Chorus has appointed ANZ Bank New Zealand Limited (ANZ) as Arranger and ANZ, Craigs
Investment Partners Limited, Forsyth Barr Limited and Westpac Banking Corporation (ABN
33 007 457 141) (acting through its New Zealand branch) as Joint Lead Managers in
relation to the Bond offer.
Investors can register their interest in the offer by contacting a Joint Lead Manager as
detailed below, or their financial adviser. Indications of interest will not constitute an
obligation or commitment of any kind.
No money is currently being sought and applications for the Bonds cannot currently be
made. If Chorus offers the Bonds, the offer will be made in accordance with the Financial
Markets Conduct Act 2013 as an offer of debt securities of the same class as existing
quoted debt securities. The Bonds are expected to be quoted on the NZX Debt Market.

Joint Lead Managers





0800 269 476

0800 226 263



0800 367 227 0800 942 822

Authorised by:

David Collins
Chief Financial Officer

ENDS

For further information:

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

Brett Jackson
Investor Relations Manager
Phone: +64 4 896 4039
Mobile: +64 (27) 488 7808
Email: brett.jackson@chorus.co.nz

---

ChorusLimited -Debt Investor Presentation
November 2020
DEBT INVESTOR PRESENTATION

November 2020
DEBT INVESTOR PRESENTATION
Important notice
Chorus Limited (Chorus) is considering making an offer of fixed rate bonds (Bonds) in reliance upon the exclusion set out in clause 19 of schedule 1 of the
Financial Markets Conduct Act 2013 (FMCA).
No money is currently being sought and no Bonds can be applied for or acquired until the offer opens and the investor has received a copy of the offer
documents in relation to the Bonds. If Chorus offers the Bonds, the offer will be made in accordance with the FMCA as an offer of debt securities of the same
class as existing quoted debt securities. The Bonds are expected to be quoted on the NZX Debt Market.
Except for the interest rate and maturity date, the Bonds will have identical rights, privileges, limitations and conditions as:
•Chorus’ bonds maturing on 6 May 2021, which have a fixed interest rate of 4.12% per annum and are currently quoted on the NZXDebt Market under the
ticker code CNU010; and
•Chorus’ bonds maturing on 6 December 2028, which have a fixed interest rate until 6 December 2023 of 4.35% per annum (and will then re-set until the
maturity date) and are currently quoted on the NZX Debt Market under the ticker code CNU020;
(together the Existing Bonds).
Chorus is subject to a disclosure obligation that requires it to notify certain material information to NZX Limited (NZX) for the purpose of that information being
made available to participants in the market and that information can be found by visiting www.nzx.com/companies/CNU.
The Existing Bonds are the only debt securities of Chorus that are currently quoted and in the same class as the Bonds.
Investors should look to the market price of the Existing Bonds referred to above to find out how the market assesses the returns and risk premium for those
bonds.
2

November 2020
DEBT INVESTOR PRESENTATION
Disclaimer
This presentation:
▪Includes forward-looking statements. These statements are not guarantees or predictions of future performance. They involve known and unknown risks,
uncertainties and other factors, many of which are beyond Chorus’ control, and which may cause actual results to differ materially from those contained in
this presentation.
▪Includes statements relating to past performance which should not be regarded as reliable indicators of future performance.
▪Is current at the date of this presentation, unless otherwise stated. Except as required by law or the NZX and ASX listing rules, Chorus is not under any
obligation to update this presentation, whether as a result of new information, future events or otherwise.
▪Should be read in conjunction with Chorus’ audited consolidated financial statements for the year to 30 June 2020 and NZX andASX market releases.
▪Includes non-GAAP financial measures including "EBITDA”. These measures do not have a standardised meaning prescribed by GAAP and therefore may
not be comparable to similar financial information presented by other entities. They should not be used in substitution for, or isolation of, Chorus' audited
consolidated financial statements. Chorus monitors EBITDA as a key performance indicator and believes it assists investors inassessing the performance
of the core operations of Chorus’ business. Refer to Chorus’ FY20 results investor presentation for further detail relating to EBITDA measures.
▪Has been prepared with due care and attention. However, Chorus and its directors and employees accept no liability for any errors or omissions.
▪Contains information from third parties Chorus believes reliable. However, no representations or warranties (express or implied)are made as to the
accuracy or completeness of such information.
▪This presentation does not constitute investment advice or a securities recommendation and has not taken into account any particular investor’s
investment objectives or other circumstances. Investors are encouraged to make an independent assessment of Chorus.
▪Note that references made to $ within this presentation refer to New Zealand dollars (NZD).
▪To the extent permitted by law, the Joint Lead Managers and their respective related bodies corporate, officers, employees, agents, advisers, contractors
and members: (a) disclaim any and all liability relating to this information, including, without limitation, any express or implied representation for
statements and conclusions contained in and omissions from this presentation; and (b) accept no liability (whether in negligenceor otherwise) for any
loss, damage, costs or expenses of any nature which may be suffered or incurred by any person relying on any information or statement contained herein
or otherwise arising in connection with any such information or statement. The recipient should not rely upon the contents ofthis presentation but should
make its own assessment and evaluation, undertake an investigation and enquire and seek advice to enable it to make any decisionconcerning its own
risks.
3

November 2020
DEBT INVESTOR PRESENTATION
Presenters
DavidjoinedChorusinDecember2018after
9yearswithAurizon,Australia’slargestrail
freightoperator.
DavidisresponsibleforensuringChorus’
strongfinancialperformanceandcreatinga
stableandsustainablebusiness.Thisincludes
buildingrelationshipswithshareholders,debt
holders,andthewiderinvestment
community.
AndrewjoinedChorusafter17yearswith
Telecomwhereheheldanumberofrolesin
finance,beforebeingappointedTreasurerin
2005.
Andrewworkedonthedebtmanagement
aspectsoftheTelecom/Chorusdemerger.
PriortojoiningTelecom,Andrewworkedat
theReserveBankofNewZealandinthe
financialmarketsgroup.
BretthasrunChorus’investorrelations
programmesincethedemergerfromTelecom
inlate2011.
BrettjoinedChoruswhenitwasfirst
establishedasanoperationallyseparate
businessunitwithinTelecomin2008andwas
involvedinmarketingcommunications,
industryconsultationandnetworkbid
projects.
David Collins
Chief Financial Officer
Andrew Hopkinson
Treasurer
Brett Jackson
IR Manager
4

Table of Contents
1.Key bond terms
2.Introducing Chorus
3.Business overview
4.Financial highlights
5.Appendices
November 2020
DEBT INVESTOR PRESENTATION
5

November 2020
DEBT INVESTOR PRESENTATION
6
Key Bond Terms
Bond issue objectives: Refinance NZ$400m May 2021 Bond and general corporate purposes
IssuerChorus Limited
DescriptionUnsecured, unsubordinated, fixed rate bonds. The Trust Deed contains a negative pledge which ensures no security interest can be
given, except in limited circumstances (refer to the Trust Deed for further detail)
Credit rating
Rating AgencyIssuerCreditRatingExpectedIssueCreditRating
S&P Global RatingsBBB(Stable)BBB
Moody’sBaa2(Stable)Baa2
Offer Amount Up to NZ$200 million of Bonds with the ability to accept oversubscriptions at Chorus’ discretion across two Seriesof Bonds. The
minimum Issue Amount in each series is NZ$100 million. Chorus may choose not to proceed with the offer or a particular Seriesof
Bonds.
Tenor7 year10 year
Offer Open DateThe offer is expected to open, subject to market conditions, the week beginning 16 November 2020
ListingBonds are expected to be listed on the NZX Debt Market
BrokerageBrokerage of 0.50% and firm fee 0.25%
Interest Rate Step-UpIf a Downgrade Event exists on the first day of an Interest Period, the interest payable on the Interest Payment Date will bethe
applicable Interest Rate plus the Step-up Margin. Downgrade Event means the credit rating of the Bonds (or if the bonds are not
rated) is BB+ or below on the S&P credit rating scale (or the equivalent). The Step-up Margin is 1.00 per cent per annum.
Joint Lead ManagersANZ, Craigs Investment Partners, Forsyth Barr and Westpac Banking Corporation

Introducing Chorus
New Zealand’s largest fixed line
communications infrastructure business
7November 2020
DEBT INVESTOR PRESENTATION

New Zealand’s largest fixed line communications infrastructure company
Building and operating 75% of NZ’s planned fibre to the premises footprint
Fibre partnership with NZ Government: pre-committed, low cost, long-term funding
Regulated utility framework to underpin financial profile from 2022
Strong demand for fibre broadband, and population/premises growth
Strong operating cash flows and financial performance
Financial flexibility via $550m bank facility, multi-currency EMTN and NZ dollar retail bond programmes
Proven commitment to maintaining a BBB credit rating (S&P or equivalent)
November 2020
DEBT INVESTOR PRESENTATION
Key Credit Highlights
8

An Overview Of Chorus
November 2020
DEBT INVESTOR PRESENTATION
AgencyRatingOutlook
S&PBBBStable
Moody’sBaa2Stable
New Zealand’s largest fixed line communications infrastructure business
▪Established in December 2011 following demerger from Telecom NZ
▪~870 employees, supported by service company contractors and subcontractors
▪Listed on NZX and ASX: CNU
▪~$3.7 billion market capitalisation (as at 31/10/20)
A nationwide copper and growing fibre network
▪Wholesale network operator with ~100 retailer customers
▪~1.4m connections, including ~1.2m broadband
▪90% of way through 11-year fibre to premises rollout
▪62% fibre uptake, well ahead of initial rollout target of 20% by 2020
▪Streaming video services and working from home driving significant data
consumption
9

The Ultra-fast Broadband Initiative
▪Ultra-fastbroadband(UFB):aGovernmentobjective
▪Originalobjective(UFB1):fibretopremisescovering75%
ofpopulationby2020
▪Subsequentagreements(UFB2andUFB2+)extended
coveragegoalto87%ofpopulationbytheendof
2022
▪Choruswasawarded~75%ofthefibrerollout.The
remaining25%includesgovernmentpartnershipswith
threeotherfibrecompanies:Enable,Northpower,
UltrafastFibre
DEBT INVESTOR PRESENTATION
10November 2020
UFB rollout rapidly nearing completion
0
10000
20000
30000
40000
50000
60000
70000
FY21FY22FY23
UFB2 rollout (premises)
ULTRAFAST FIBRE

November 2020
Our Network Infrastructure
Fibre to pass ~1.36m end customers by end 2022
~40,000km duct network
~600
exchanges
~12,000 cabinets
~300,000 poles
Exchange co-location:
wireless co-location and
network edge computing
Offices and apartments
Fibre to smart locations:
CCTV, traffic lights
Fibre backhaul:to
mobile towers,
small cells
FTTP: enabling unlimited
data, enhanced Wi-Fi and
TV broadcast capability
Bridging the digital divide:
providing free broadband
connections to 12,000 student
households
IoT: pole and
cabinet assets
provide coverage and
power infrastructure
DEBT INVESTOR PRESENTATION
~54,000km fibre; ~130,000km copper cable
11

Business Overview
Chorus’ role within the New Zealand
fixed line market
12November 2020
DEBT INVESTOR PRESENTATION

November 2020
An Open Access Wholesale Network
DEBT INVESTOR PRESENTATION
13

November 202014
Fibrenow 76% of Chorus broadband connections in
planned UFB zone
85
8
7
Auckland: broadband connections by
type (%)
FibreVDSLADSL
DEBT INVESTOR PRESENTATION
0
100,000
200,000
300,000
400,000
500,000
600,000
700,000
800,000
900,000
1,000,000
Sep-19Dec-19Mar-20Jun-20Sep-20
ADSLVDSLFibre
No. of
connections
As at 30 Sept 2020

November 2020
DEBT INVESTOR PRESENTATION
15
0%
10%
20%
30%
40%
50%
60%
70%
80%
Dec-19Mar-20Jun-20Sep-20
% uptake
relative to
capable
addresses
UFB1 uptake: 65%
Average uptake

November 202016
Making New Zealand better
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. Chorus is included in the Dow Jones Sustainability
Australia Index.
>Environment
▪Target of 80% reduction in scope 1 and 2 emissions, from our FY12 base year, by
2030. Achieved 37% reduction against target in FY20.
▪B-rating from CDP for FY19 reporting.
▪Extensive waste minimisation: 195 tonnes of waste ducting and 37 tonnes metal
network components recycled in FY20.
>Social
▪FTTH estimated (2012) to contribute $32 billion in economic benefits to NZ over 20
years. Social benefits estimated (2017) at $2 billion annually.
▪Winner of Broadband World Forum’s Broadband delivering social impact award2018
for rural broadband rollout.
▪Employee engagement 8.5 out of 10 in June 2020 (7.6 in FY19).
>Governance
▪Director gender ratio of 43% women, 57% men at 31 October 2020.
▪Target of 40:40:20 (male:female:any/either) gender ratio achieved for Chorus’
people leader community in FY20. Largest gender pay gap by career level is 4.1%.
Objective to achieve 0% gender career level pay gap.
▪Minimum Shareholding Policy for directors and executives introduced in 2019.
▪Total Recordable Injury Frequency Rate decreased from 2.67 to 2.43 in FY20 with an
overall reduction in injuries requiring medical treatment.
DEBT INVESTOR PRESENTATION

Broadband: the 4
th
utility
November 202017
DEBT INVESTOR PRESENTATION

November 2020
DEBT INVESTOR PRESENTATION
18
A new world of data demand
0
0.5
1
1.5
2
2.5
3
Mar-16Sep-16Mar-17Sep-17Mar-18Sep-18Mar-19Sep-19Mar-20Sep-20
Peak Traffic (Tbps)
Fibre
Network
Copper
Network
FortniteSeason 5
Rugby World Cup
COVID-19 Lockdowns

Forecasting 1,000 Gigabytes per month by 2023...
November 2020
Monthly average data usage per connection on
our network
19
DEBT INVESTOR PRESENTATION
0
200
400
600
800
1,000
1,200
1,400
J U N E 2 0 2 0J U N E 2 0 2 1J U N E 2 0 2 2J U N E 2 0 2 3J U N E 2 0 2 4
CopperFibre
Chorus Forecast: Average Monthly Broadband Usage
ActualForecast
<<>>

November 2020
DEBT INVESTOR PRESENTATION
20
The shift to remote working
Reliable broadband becomes a necessity
85
74
56
54
53
48
40
31
16
13
8
7
2
Laptop or desktop PC
High-speed connectivity to internet
Computer monitors
Smartphone
Video conferencing
Wi-Fi router
Headset
Virtual network access
Dedicated camera
Wi-Fi expander/extender
VOIP
Tablet
Other
Which of the following workplace technologies do you
consider as ‘must have’ when working from home or
remotely in general?
>Commerce Commission report (May 2020) noted
reliability of fixed line services through lockdown vs fixed
wireless (average download speeds decreased by around
25% and 96% of latency tests were above 30ms)
Source: Measuring Broadband New Zealand, Winter Report, August 2020

33,000mass market fibre connections added in
Q1 2020
▪1Gbps connections grew from 115k to 128k
(i.e. 40% of 33k increase in total fibre
connections in Q1 2020)
▪1Gbps demand represents ~20% of new fibre
connection orders in recent weeks
▪Small business connections grew from 3k to 4k
▪UFB prices capped to 2022 with annual CPI
adjustment
▪New Hyperfibreproducts 2 & 4 Gbps services
launched early 2020
Total mass market fibre uptake by plan type
50Mbps
100Mbps
1Gbps
November 2020
Active wholesaler campaigns driving ARPU growth
200Mbps
DEBT INVESTOR PRESENTATION
21

November 2020
DEBT INVESTOR PRESENTATION
22
Our strategic
focus in FY21
Our strategic
focus in FY21

November 2020
DEBT INVESTOR PRESENTATION
23
Winning in our core fibre business
We’re lifting our connections intensity in FY21
~420,000
UFB1 + 2
addresses
already
passed, with
no ONT
installed
~80,000
UFB1 + 2
addresses
passed and
ONT already
installed
~80,000
UFB2
addresses
to pass in
FY21
25,000
greenfield
properties
under
contract
▪Growth strongest in Auckland, good demand outside UFB zone
▪Uptake continues to track at ~30% within 6 months of network build;
stronger in some UFB2 areas (e.g. Whatawhata80%)
▪~50% of fibre orders are now from intact addresses as our migration/incentive
programmes generate new uptake and consumers move premises
▪COVID-19 driving awareness of fibre reliability and capacity
▪New marketing and incentive campaigns launching
▪Uplift in managed migration volumes

Regulatory Framework
November 202024
DEBT INVESTOR PRESENTATION

87%of population where fibre will be available by end of 2022 →Remaining 13% of population →
Fibre accessnetwork –in Chorus UFB
areas
▪Revenue cap determined by Commission based on
regulated asset base (RAB) and regulatory rate of
return (WACC)
▪Accumulated unrecovered returns on investment
between 2011 and 2022 capitalisedinto initial RAB
and recoverable in future prices
▪Contracted price caps on fibreproducts to continue
until 2022, with annual inflation adjustment. Price
caps then only apply to specified ‘anchor services’;
fibrevoice service, entry level fibrebroadband
service and direct fibreaccess services
▪Unbundled fibre(commercial price) 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 December
2020
Copper –where fibre is notavailable:
▪Copper remains regulated and TSO applies
▪Copper pricing capped at 2019 levels with CPI
adjustments
▪Commission required to review pricing framework
no later than 31 December 2025
November 202025
Legislation passed in November 2018
DEBT INVESTOR PRESENTATION

November 2020
Overview of current RAB implementation
On 13 October and 3 November 2020, the Commerce
Commission released its final Input Methodology
determinations, following extensive submissions from
Chorus and investors.
The determinations establish the rules that will apply to
how the Maximum Allowable Revenue (MAR) will be
derived.
Chorus will continue to work with the Commission through
the next stage of the process where the MAR for the 3
year period from 1 January 2022 will be set.
These decisions, referred to as ‘price-quality’ decisions are
expected in the 2nd half of 2021.
DEBT INVESTOR PRESENTATION
26

November 2020
Regulated Asset Base implementation
Building block
cost stack
▪Commerce Commission will determine the starting value of the RAB, regulatory WACC, cost allocations, expenditure
allowances and maximum allowable revenue
DEBT INVESTOR PRESENTATION
27
Illustrative Only

FINANCIAL HIGHLIGHTS
Financial overview and
capital management
28November 2020
DEBT INVESTOR PRESENTATION

November 2020
DEBT INVESTOR PRESENTATION
29
Financial snapshot
▪Revenue has reduced due to:
▪copper line loss in areas where Chorus is not
building the fibre network
▪fixed wireless competition
▪Revenue loss partially offset by:
▪strong fibre uptake
▪customers moving to higher priced plans
(e.g. 1Gbps, enhanced business plans)
* New accounting standards IFRS 9, 15 and 16 were adopted from FY18
▪Expect continued Fibre ARPU growth
▪Ongoing focus on cost reduction
1,040
990
970
959
-
200
400
600
800
1,000
1,200
FY17FY18*FY19FY20
Revenue ($m)
652
653
636
648
500
520
540
560
580
600
620
640
660
680
FY17FY18*FY19FY20FY21
EBITDA ($m)
FY21guidance
$640m -$660m

November 2020
DEBT INVESTOR PRESENTATION
▪Capex peaked in FY18 & FY19, leverage
peaked in FY20
▪UFB1 completed in November 2019
▪UFB2 scheduled to complete in CY22
▪Leverage will reduce in line with lower
capex/growing free cash flow in future
years
▪FY21 gross capex guidance:
▪$630-670m
▪FY21 EBITDA guidance:
▪$640-660m
* Mid guidance
Key Financial ratios:
▪Bank covenant -Net Senior Debt/EBITDA 4.75x
▪Credit rating downdriver -Net Senior Debt/EBITDA on a sustained basis
▪> 4.25x (S&P)
▪> 4.20x (Moody’s)
30
681
679
597
593
689
810
804
663
650
2.9
2.7
3.13.1
2.98
3.43
3.92
4.14
4.11
FY13FY14FY15FY16FY17FY18FY19FY20FY21*
Capex & Leverage
CapexSenior ND/EBITDA
* FY21 valuescalculated at
mid guidance levels
We’ve passed our capex peak
Net senior debt/EBITDA

▪Chorus Limited is rated BBB (stable)by S&P and Baa2 (stable) by Moody’s
▪The Chorus Board considers that a ‘BBB’ credit rating or equivalent is appropriate for a company such as
Chorus. We maintain capital management and financial policies consistent with these ratings
▪Chorus maintains ready access to ample liquidity across cash balances and availability under its bank facilities, as
well as remaining capacity under the arrangement with Crown Infrastructure Partners (CIP) with respect to UFB fibre
rollout capex
▪Chorus can issue debt securities to CIP up to a total face value of $567m. These securities are non –interest
bearing, repayable in tranches between 2025 and 2036, and rank equally with all other unsecured,
unsubordinated creditors of Chorus
▪Chorus can issue equity securities to CIP up to a total face value of $767m, which pay no dividends until 2025 –
at which point dividends are phased in between 2025 and 2036, and are deferrable (optional and mandatory) on
a non-cumulative basis
▪To date $1,089m of securities have been issued to the Crown, leaving $245m of crown funding available
▪Chorus’ bank facility covenants require its net senior debt to EBITDA ratio to be no greater than 4.75 times
Capital management
November 2020
DEBT INVESTOR PRESENTATION
31

November 2020
Debt and Liquidity
As at 31 Oct 2020, borrowings of $2,343m
comprised of:
$145m Drawn from bank facilities
$400m NZD bond due May 2021
$784m equivalent at hedged rates
EUR500m due October 2023
$514m equivalent at hedged rates
EUR300m due December 2026
$500m NZD bond due December 2028
$2,343m
Bank Facilities
$ 60m May 2022
$290m April 2023
$200mApril 2025
$550m
•Purpose of proposed offer is to refinance the
NZ$400m May 2021 Bond
•No plans to issue further NZD bonds in 2021
DEBT INVESTOR PRESENTATION
Crown Financing ($m) at 31
October 2020
DrawnAvailableTotal
Face Value CIP Debt Securities
UFB1
UFB2/2+
462
-
-
105
462
105
Face Value CIP Equity Securities
UFB1
UFB2/2+
462
165
-
140
462
305
Total Crown Financing1,0892451,334
32
500
60
290
-
200
514
85
85
128
163
400
785
19
39
47
0
100
200
300
400
500
600
700
800
900
1000
1100
1200
2021202220232024202520262027202820292030203120322033203420352036
(
NZ$m
)
Calendar Years
NZD Bond (CNU020)
Bank Facility
EUR EMTN
Face Value of CIP Debt securities issued
NZD Bond (CNU010)
EUR EMTN
Face Value of CIP Debt securities available
Total gross debt

Thank you
November 202033
DEBT INVESTOR PRESENTATION