Chorus Q3 FY24 Connections Update

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

Email: company.secretary@chorus.co.nz


STOCK EXCHANGE ANNOUNCEMENT

10 April 2024

Q3 FY24 Connections Update

Chorus today released its connections update for the Q3 period to 31 March. The quarter
was notable for slower connection activity through January and a general slow-down in
greenfield growth consistent with broader macroeconomic trends.

The ongoing decline in copper connections slowed to 18,000 in Q3, compared to 21,000
in the prior quarter. Just 55,000 copper connections remain in areas where Chorus has
fibre available and about 21,000 of these connections have been notified that copper
services will be withdrawn within six months. To date, copper services have ceased for
about 43,000 notified connections, up 7,000 in the quarter, and almost 1,000 copper
broadband cabinets have been closed.

Copper voice lines reduced by 6,000 in the quarter and this drove the overall reduction in
fixed line connections to 1,250,000
1
, down from 1,256,000 connections in December.

Fibre uptake reaches 71%

Fibre connections grew 12,000 in the quarter, slightly higher than growth of 11,000 fibre
connections in Q2. This more than offset the 8,000 lines reduction of copper broadband
connections within the Chorus fibre footprint. Total broadband connections, including
copper lines, were flat at 1,188,000.

The entry level 50Mbps Home Fibre Starter service continued to gr ow strongly and was
up another 8,000 connections in the quarter to 38,000. Residential plans for speeds of
1Gbps and above grew by 4,000 connections and make up 25% of plans.

Chorus’ fibre footprint, excluding other local fibre company areas, grew to about 1.5
million addresses, an increase of 7,000 addresses in the quarter. Fibre uptake within this
footprint grew by 0.4% to 71%.

Uptake in Dunedin rebounded 1. 5% to 76.3% reflecting the return of seasonal student
demand in the city in the quarter. Fibre uptake in the Auckland urban area increased
0.1% to 76.5% while Wellington’s uptake increased 0.3% to 70.7%.

Recent data published by the FTTH Council Europe shows New Zealand ranked 17
th

globally for fibre penetration across total households, at 69% in September 2023. Eight
markets have passed 80% penetration with the UAE, Singapore and Hong Kong leading
the way.


1
This total includes partly subsidised fibre and copper broadband connections for students.

Average data usage doesn’t reflect household data ‘bursts’

Average monthly data usage on fibre was 598GB in March, in line with 599GB in
December. The proportion of broadband connections using more than 1 terabyte of data
was 15%.

In 2023, Chorus noted a 35 per cent increase in peak data demand, with households
averaging about 20 connected devices. According to the World Broadband Association, the
number of devices is expected to double every five years. The frequent, high-volume data
bursts from activities like video streaming on multiple devices at the same time is fuelling
this rise in peak data demand.

If devices aren’t connected directly to ethernet, an up-to-date, in-home Wi-Fi router is
crucial for optimal broadband performance. Many recently upgraded homes will now use
Wi-Fi 6 routers. However, the latest Wi-Fi 7 standard promises significantly improved
network capacity, the ability to support more devices at higher speeds and improved low-
latency performance.

Upgrading Wi-Fi in the home can significantly enhance internet speed, reduce latency and
support a higher number of devices, ensuring a smoother, more reliable online
experience at home.

Change in timing for fibre pricing adjustments

Chorus is advising retailers that it is shifting the annual timing for pricing adjustments to
fibre services from October to January. This change reflects Chorus’ desire to simplify
processes, by aligning future pricing adjustments with the start of the next regulatory
period from 1 January 2025, and an expectation that regulated fibre revenues will be
constrained by the maximum allowable revenue of about $809 million for calendar year
2024.


Authorised by:
JB Rousselot
Chief Executive Officer

ENDS


For further information:

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

---

Q3 FY24 Connections Update
10 April 2024

>Fibre connections (including non-address points and LFC areas) increased 12k (Q2 FY24: +11k) and now total
1,074,000*
>Chorus’ fibre footprint now covers 1,500,000 addresses (excluding LFC areas)
▪fibre passed another 7,000 addresses in Q3 (Q2: +7k)
▪overall fibre uptake grew 0.4% to 71% in Q3 (Q2: +0.4%)
▪Auckland +0.1%; Wellington +0.3%; Dunedin +1.5%
>Broadband connections were steady at 1,188,000*
▪~12k fibre broadband connections were added in Chorus fibre areas, matching copper broadband disconnections
▪Home Fibre Starter (50Mbps) connections grew 8k to 38k
▪1Gbps and Hyperfibre (2Gbps+) connections grew by 4k to 238k and make up 25% of residential plans
>Total fixed line connections declined by 6k (Q2: -10k) and now total 1,250,000*
▪copper broadband and voice connections declined by 18k (Q2: -21k)
▪voice only disconnections were -6k (Q2: -7k)
▪copper withdrawal: 996 copper broadband cabinets no longer have active customers (Q2: 826 cabinets)
>Average monthly data usage on fibre steady at 598GB in March
▪the proportion of terabyte super users (i.e. consuming 1,000GB+ a month) was 15%
10 April 2024
Q3 FY24 overview
*FY24 totals include fibre and copper DSL broadband connections Chorus is partly subsidising for student households
Q3 FY24 CONNECTIONS UPDATE
2

0
200,000
400,000
600,000
800,000
1,000,000
1,200,000
1,400,000
31-Mar-2330-Jun-2330-Sep-2331-Dec-2331-Mar-24
10 April 2024
31 March
2023
30 June
2023
30 Sept
2023
31 Dec
2023
31 March
2024
Baseband copper
(no broadband)
80,00072,00064,00057,00051,000
Copper ADSL
(includes naked)
94,00084,00075,00068,00062,000
VDSL
(includes naked)
92,00083,00075,00068,00062,000
Fibre broadband
(GPON)
1,002,0001,021,0001,041,0001,052,0001,064,000
Data services
(copper)
1,0001,0001,0001,0001,000
Fibre premium (P2P)10,00010,00010,00010,00010,000
Total connections
1,279,0001,271,0001,266,000*1,256,000*1,250,000*
Fibre (GPON)
VDSL
Copper ADSL
Baseband copper
>1,188,000* broadband connections comprises:
▪1,064,000 fibre (GPON) connections
▪124,000 VDSL/ADSL (copper) connections
Business premium
* Includes DSL and GPON partly subsidised education connections that were previously excluded from broadband totals
Fibre comprises 86% of Chorus connections
Q3 FY24 CONNECTIONS UPDATE
3

10 April 2024
Fibre available to 1.5m addresses; 71% uptake
▪71% fibre uptake across 1,500,000
passed addresses*
ouptake +0.4% in Q3
o+12k active fibre connections**
o+7,000 addresses passed in Q3
▪1,274,000 fibre installed addresses
o~18,000 installations in Q3 (Q2: 23k)
o226,000 addresses passed by fibre, but
fibre socket not yet installed (Q1: 238k)
64.0
65.0
66.0
67.0
68.0
69.0
70.0
71.0
72.0
0
200,000
400,000
600,000
800,000
1,000,000
1,200,000
1,400,000
1,600,000
Fibre connectedInactive fibre sockets***
Fibre socket not yet installedFibre uptake (%)
%
*based on independent address data and Chorus network data for addresses passed by fibre; excludes Chorus fibre in LFC areas
** includes ~7k fibre premium connections to addresses; excludes smart location (GPON) connections and connections in LFC areas
*** not active on 31 March 2024
Q3 FY24 CONNECTIONS UPDATE
4

10 April 2024
Uptake by city
50
55
60
65
70
75
80
AucklandDunedinWellington
Uptake, by urban area, for fibre passed
addresses
Dec-22Mar-23Jun-23Sep-23Dec-2331-Mar-24
Uptake
(%)
>Uptake is measured across “urban areas” as
defined by Statistics NZ, rather than original UFB
rollout area
▪Auckland uptake grew 0.1% to 76.5% in Q3
despite ongoing address growth
▪Dunedin uptake increased 1.5% to 76.3%
reflecting student seasonality
▪Wellington increased 0.3% to 70.7%
Q3 FY24 CONNECTIONS UPDATE
5

>Home Fibre Starter (50Mbps) connections grew by 8k to 38k; plans below 300Mbps are 10% of residential connections
>1Gbps and Hyperfibre (2Gbps+) connections grew by 4k to 238k and make up 25% of residential plans
>77% of mass market business plans are on 500Mbps or above
>3k Hyperfibre connections with 84% on residential 2Gbps+ plans
10 April 2024
Mass market fibre connections
-
100,000
200,000
300,000
400,000
500,000
600,000
700,000
800,000
900,000
1,000,000
Mar-23Jun-23Sep-23Dec-23Mar-24
Residential
2Gbps+1Gbps300mbps200mbps100mbps<100mbpsVoice
-
20,000
40,000
60,000
80,000
100,000
120,000
Mar-23Jun-23Sep-23Dec-23Mar-24
Business
2Gbps+1Gbps500mbps300mbps
200mbps100mbps<100mbpsVoice
Q3 FY24 CONNECTIONS UPDATE
6

10 April 2024
Connection changes by Zone (indicative as at31 March*)
* Excludes ~13k fibre premium and data services (copper) and smart location connections
-4
-4
-5
-6
-1
-1
-1
-1
-2
-1
-1
-8
-8
-10
-11
-2
-4
-5
-6
-2
-2
-2
-2
12
11
18
19
0
0
-20020
Q3 FY24
Q2 FY24
Q1 FY24
Q4 FY23
Q3 FY24
Q2 FY24
Q1 FY24
Q4 FY23
Q3 FY24
Q2 FY24
Q1 FY24
Q4 FY23
Copper line only
Copper broadband
Fibre broadband
Quarterly change (’000s) by zone
Other fibre
company (LFC)
zone
Copper lines (no broadband)9,000Local Fibre Company and fixed wireless provider
activity is driving a gradual decline in copper
connections.
Copper broadband lines13,000
Fibre broadband lines (GPON)3,000
TOTAL25,000
Non-fibre
addresses (i.e.
Chorus fibre not
available)
Copper lines (no broadband)20,000Ongoing decline in copper connections due to
mobile/fixed wireless/satellite footprint
expansion.
Copper broadband lines79,000
TOTAL99,000
Chorus fibre zoneCopper lines (no broadband)23,000Covers all addresses outside of LFC UFB rollout
zone where Chorus fibre is available. Fibre
footprint is growing as a result ofnew property
development. Copper connections are reducing
as Chorus retires its copper network.
Copper broadband lines32,000
Fibre broadband lines (GPON)1,059,000
TOTAL1,114,000
Q3 FY24 CONNECTIONS UPDATE
7

10 April 2024
0
20
40
60
80
100
120
Copper voice
Copper broadband
Connections
(thousands)
Chorus fibre
zone
LFC fibre zone
Non fibre
zone
Copper connections able to be withdrawn with 6
months’ notice where fibre is available
>~64,000 copper withdrawal notifications
issued (cumulative) in fibre areas
▪copper service ceased for ~43,000 notified
connections; ~21k currently under notice
▪996 copper broadband cabinets closed (Q2:
826); 1,479 under closure notice
▪broadband retention rate of 83% across
closed cabinets
>managed migration initiatives: activation
of installed fibre sockets (ONTs)
▪~6k sockets activated in Q3 (Q2: ~7k)
▪58% of activations were offnet addresses
(Q2: 57%)
Copper withdrawal: 21k connections under notice
Q3 FY24 CONNECTIONS UPDATE
8

Monthly average data usage on fibre 598gigabytes
>monthly average data usage on fibre was stable at just
under 600GB in March
>the proportion of broadband connections using more
than 1 terabyte of data was 15%
>copper usage decreased from 282GB in December to
273GB in March


10 April 2024
598
273
0
100
200
300
400
500
600
Jun-20
Sep-20
Dec-20
Mar-21
Jun-21
Sep-21
Dec-21
Mar-22
Jun-22
Sep-22
Dec-22
Mar-23
Jun-23
Sep-23
Dec-23
Mar-24
CopperFibre
Data
usage
(GB)
Monthly average data usage per connection*
* includes upstream traffic
Q3 FY24 CONNECTIONS UPDATE
9

10 April 2024
Average usage doesn’t reflect household ‘bursts’
1
World Broadband Association, 2023
>35% increase in peak traffic demand in 2023, despite post-COVID slowdown
▪driven by high simultaneous data use in households - on average 20 connected devices, with devices expected
to double every five-years
1
, and increasing levels of video streaming intensifying data demand bursts
>graph (below) shows 15 minutes of shared family usage with data bursting up to 1 Gbps, above a theoretical
100Mbps plan maximum


>decisions on fibre plan speed
should therefore be based on:
•peak throughput demand for
family
•the needs of all the household,
rather than a single device


Q3 FY24 CONNECTIONS UPDATE
10

10 April 2024
Importance of quality Wi-Fi in the home
>Wi-Fi 6 is currently the most widely available technology, but many households may be using outdated or poor
performing Wi-Fi routers
>new Wi-Fi 7 standard will provide a substantial lift in performance with more efficient sharing of spectrum among
devices
•five times more shared capacity than Wi-Fi 6
•up to 100 times lower latency in the home
•throughput of 46Gbps (Wi-Fi 6: 9.6Gbps)


Q3 FY24 CONNECTIONS UPDATE
11

10 April 2024
New Zealand ranked 17
th
for fibre penetration
0
10
20
30
40
50
60
70
80
90
100
Fibre penetration % (subscribers/households)
>Recent FTTH Council
Europe data for global
FTTH/B uptake shows New
Zealand at 69%
penetration
(subscribers/total
households) as at Sept
2023
Q3 FY24 CONNECTIONS UPDATE
12