CHORUS LIMITED — Interim / Quarterly Report 2019

Jan 16, 2019

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

Email: company.secretary@chorus.co.nz

STOCK EXCHANGE ANNOUNCEMENT

17 January 2019

Chorus Q2 FY19 Connections Update

The Q2 period to 31 December 2018 saw UFB uptake grow to 51%, with fibre demand stronger than the same period in 2017.

Total fixed line connections decreased by 21k to 1,486,000 in Q2 (Q1 FY19: -19k). This was an improvement on the equivalent period in Q2 FY18 (- 23k).

• Broadband connections continued to grow in Chorus fibre areas (+5k).

Total broadband connections decreased by 4k to 1,186,000 (Q1 FY19: +3k), consistent with seasonal Q2 broadband disconnections.

• 517,000 broadband connections are now on fibre, with 38,000 fibre connections added in Q2 (Q1 FY19: 46,000; Q2 FY18: 34,000)

• 1Gbps connections grew 22% to 44,000.

Data consumption continues to grow, with 25 November setting a record of ~11 million gigabytes

• Monthly average household data usage was 235GB in December, up from 221GB in September. Fibre users now average 315GB monthly, up from 307GB in September.

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

Holly Cushen Senior Communications Specialist Mobile: +64 (21) 029 94144 Email: holly.cushen@chorus.co.nz

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Q2 FY19 Connections Update
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17 January 2019

Q2 FY19 overview

UFB uptake grew to 51%, with fibre demand stronger than the same period in 2017

• Total fixed line connections decreased by 21k to 1,486,000 in Q2 (Q1 FY19: -19k)

• this was an improvement on the equivalent period in Q2 FY18 (-23k)

• broadband connections continued to grow in Chorus fibre areas (+5k)

• Total broadband connections decreased by 4k to 1,186,000 (Q1 FY19: +3k) , consistent with seasonal Q2 broadband disconnections

• 517,000 broadband connections now on fibre

• 38,000 fibre connections were added in Q2 (Q1 FY19: 46,000; Q2 FY18: 34,000)

• 1Gbps connections grew 22% to 44,000

• Data consumption continues to grow, with 25 November record of ~11 million gigabytes

• 235GB monthly average household data usage in December, up from 221GB in September

• fibre users now average 315GB monthly, up from 307GB in September

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Q2 connection trends

	31 Dec	31 March	30 June	30 Sept	31 Dec	1600000
	2017	2018	2018	2018	2018
Unbundled	68,000	62,000	53,000	45,000	39,000	1400000		Baseband copper
copper Baseband	290,000	279,000	268,000	255,000	244,000	1200000		Unbundled copper
copper
(no broadband) Fibre broadband	362,000	394,000	433,000	479,000	517,000	1000000		Copper		ADSL
(GPON)
VDSL	320,000	325,000	321,000	309,000	295,000	800000
(includes naked)
Copper ADSL	499,000	465,000	433,000	402,000	374,000	600000
(includes naked)								VDSL
Data services (copper)	7,000	6,000	6,000	5,000	5,000	400000
Fibre premium	13,000	12,000	12,000	12,000	12,000
(P2P)						200000		Fibre (GPON)
Total connections	1,559,000	1,543,000	1,526,000	1,507,000	1,486,000
						0
						30-Jun-17		30-Sep-17		31-Dec-17		31-Mar-18 30-Jun-18			30-Sep-18		31-Dec-18
							Data services (copper) Fibre broadband (GPON) Copper ADSL Baseband copper (no broadband)						Fibre premium (P2P) VDSL Unbundled copper (no broadband)

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Connection movements by Zone - indicative

• Total fixed line connections decreased by 21k to 1,486,000 in Q2 (Q1 FY19: -19k)

▪ broadband connections continued to grow in Chorus UFB areas (+5k), albeit at a slower pace than Q1 (+13k) reflecting seasonal factors (e.g. holidays and student disconnections)

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Q1 and Q2 changes by zone and
No. of service
connections
(‘000s) Chorus UFB Rural LFC UFB
15
Q1
10
Q2
5
0 Q1 Q2 Q1 Q2 Q1 Q2 Q1 Q2 Q1 Q2
-5
-10
-15
-20
Copper (no broadband)
Broadband (fibre or copper)
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CONNECTIONS Chorus UFB zone Rural (non-UFB) zone Local Fibre Company UFB zone TOTAL*	CONNECTIONS Chorus UFB zone Rural (non-UFB) zone Local Fibre Company UFB zone TOTAL*	CONNECTIONS Chorus UFB zone Rural (non-UFB) zone Local Fibre Company UFB zone TOTAL*	CONNECTIONS Chorus UFB zone Rural (non-UFB) zone Local Fibre Company UFB zone TOTAL*	CONNECTIONS Chorus UFB zone Rural (non-UFB) zone Local Fibre Company UFB zone TOTAL*
Broadband: copper + fibre	922,000	153,000	111,000	1,186,000
Copper connections: no broadband	177,000	49,000	57,000	283,000
TOTAL 31 Dec	1,099,000	202,000	168,000	1,469,000**
TOTAL 30 Sept	1,106,000	203,000	181,000	1,490,000**

• Includes planned UFB1, 2 and 2+ coverage

• **Excludes fibre premium and data services (copper) connections

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UFB rollout and uptake

UFB rollout and uptake

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No. of
Uptake
connections
1,400,000 100%
90%
UFB connections UFB available addresses
1,200,000
80%
Planned footprint % Uptake (RHS)
1,000,000 70%
60%
800,000
50%
600,000
40%
30%
400,000
20%
200,000
10%
0 0%
Premises to pass by Dec 2022 ~1,054,000
Customers able to connect ~1.36 million
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• 51% UFB uptake at 31 Dec (30 Sept: 50%)

• 504,000 connections

• 981,000 customers able to connect

• 738,000 premises passed

• strong rate of uptake in UFB2 areas: Horotiu 52%, Hokitika 43%

> Good progress on customer experience initiatives

• customer satisfaction score of 7.8 achieved in November, up from 7.5 in September

• achieved target of connecting 50% of fibre installations within a day

• field crews reduced to 750 vs 770 at 30 Sept

• work in progress reduced to 22k vs 25k at 30 Sept

• weighted average lead times increased to 12 days in December (30 Sept: 8 days)

*Includes estimated 43k greenfields premises for UFB1

5

UFB1 uptake

ROLLOUT COMPLETED IN THESE AREAS

% uptake relative to capable addresses

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60.00%
Mar-18 Jun-18 Sep-18 Dec-18
51%
AVERAGE
50.00%
UPTAKE
40.00%
30.00%
20.00%
10.00%
0.00%
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Note: % uptake can reduce in areas as the fibre rollout passes more addresses in a period

6

Fibre uptake and data demand

• 38,000 mass market fibre connections added in Q2 ▪ 44,000 connections now on gigabit plans (Q1: 36,000)

• ▪ 71% of mass market fibre connections on 100Mbps

Total mass market fibre uptake by plan type

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100
$65 monthly
90
80
70
% of 60
plans 50
$45 monthly
40
30
20
10
$41.50 monthly
0
Jun-16Sep-16Dec-16Mar-17Jun-17Sep-17Dec-17Mar-18 Jun-18Sep-18Dec-18
50Mbps 100Mbps 200Mbps Gigabit Education Business 100Mbps+ Other
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• Monthly average data usage per connection on our network grew to 235GB from 221GB (Sept 2018) ▪ 315GB on fibre (Sept: 307GB) ▪ 174GB on copper (Sept:163GB)

Monthly average data usage per connection on our network

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350
300
Data 250
usage
200
(GB)
150
100
50 Copper Fibre Average
0
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Data usage continues to rise

• Total data usage on Chorus’ network grew strongly through 2018 (see Graph 1)

• weekends (orange columns) typically had the highest data usage, with Sunday 25 November setting the 2018 record at just under 11 million gigabytes of data

• Sunday 1 April (Easter holidays) had the lowest usage with 6 million gigabytes

• data usage on weekends tends to be lowest through December and January

• there was a clear correlation between weekday data usage and school holidays (April, July, October)

• Peak time usage, typically around 9pm in the evening, also grew strongly in 2018 (see Graph 2)

• live streaming of the Commonwealth Games (4-15 April) drove a significant step up in peak time traffic

• new season releases and software updates associated with gaming phenomenon Fortnite drove subsequent record peaks in usage in May, July, September and October

• the lowest peak time usage was recorded on New Year’s Eve

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Graph 1: Daily data usage on Chorus’ network in 2018

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Graph 2: Peak time usage in 2018, by day

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