Final decisions on new fibre regulatory regime

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

Email: company.secretary@chorus.co.nz






STOCK EXCHANGE ANNOUNCEMENT

16 December 2021

Commerce Commission makes final decisions for new fibre regulatory regime

The Commerce Commission has determined a regulated asset base of $5.425 billion,
compared to $5.427 billion in its August draft decision.

The Commission has determined a maximum allowable revenue (MAR) of $690.2
million to $789.5 million (nominal) for the first regulatory period for fibre (RP1, 2022-
2024) with total revenue of $2.227 billion. This compares to the Commission’s 27th
May draft MAR of $689 million to $786 million with total revenue of $2.219 billion that
was broadly in line with Chorus’ forecast fibre revenues.

Other key elements of today’s decision relative to the earlier draft decisions include:
• depreciation on the financial loss asset using a tilted annuity method at a rate
of -13%
• tax losses of $955 million
• reinstatement of capital expenditure for our incentive payments to RSPs for 2022 of
$18.6 million, with a need to seek approval for 2023-24 payments
• total capital expenditure allowance of $884 million (real) including base and
connection capex
• operating expenditure of $434 million (real) – a modest improvement against the
draft decision
• a core RAB of $4.03 billion and a financial loss asset of $1.39 billion, with some
final transitional adjustments expected in mid-2022 to account for actual values for
2021 and 2022 and further consideration of the allocation of central office space
between copper and fibre.

Chorus CEO JB Rousselot said Chorus is pleased to finally have clarity on how the
regulatory framework will shape investment in fibre broadband over the next three
years.

“We’ve done a substantial amount of work to help develop and implement the new
regulatory regime since it was first approved by Parliament back in 2018.

“The shift to the new regime on 1 January is a major milestone in our transition from
building the fibre network over the last decade to a focus on maintaining what has now
become essential infrastructure.

“For consumers, the benefits of the fibre rollout have made New Zealand the envy of

many other countries and Chorus’ recent 300-megabit speed upgrade means New
Zealand is poised to enter the top 10 global connectivity speed rankings.

“Given some of the final regulatory settings, we’ll need to keep looking for ways to
work with the Government to help meet New Zealand’s increasing connectivity needs
beyond our planned fibre footprint,” he said.

Chorus will review all aspects of today’s decisions closely. As advised at its full year
results, Chorus expects to provide a capital management update at its interim results
on 21 February 2022.



Authorised by:

David Collins
Chief Financial Officer

ENDS

For further information:

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

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