CHORUS LIMITED — Interim / Quarterly Report 2021

Oct 13, 2021

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

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Email: company.secretary@chorus.co.nz

STOCK EXCHANGE ANNOUNCEMENT

14 October 2021

Q1 FY22 overview

Total fibre connections increased by 23k to 894,000 (Q4 FY21: +29k)

Fibre uptake across the completed UFB footprint grew from 65% to 66%

• fibre broadband connections increased by 23k despite cessation of installation activity during COVID alert level 4 lockdowns and reduced volumes under alert level 3 across major centres in the latter half of the quarter

• uptake in UFB1 areas reached 71% (+2%) with Auckland reaching 76% (+1%)

• uptake in UFB2 areas now averages 44% with the fibre rollout recently completed in Whangamata, Rakaia, Haast and Ranfurly

• COVID lockdowns have driven increased demand for higher speed plans with strong momentum in 1Gbps upgrades and demand for Hyperfibre during the quarter

Total broadband connections increased 3k to 1,183,000 * (Q4 FY21: -1k)

• first three months of FY22 delivered positive net monthly broadband connections

Copper broadband and voice connections declined by 32k (Q4 FY21: -44k)

• COVID lockdowns in Aug-Sept reduced the number of copper broadband disconnections in all geographies

• voice only disconnections also slowed slightly to 12k (Q4 FY21: -14k)

• total fixed line connections declined by 9k to 1,331,000* (Q4 FY21: -16k)

Average monthly data usage grew 25% from June, boosted by COVID lockdown demand

• average fibre usage was 621GB in September, up from 500GB in June

• average monthly usage on copper was 297GB, up from 254GB in June

*totals exclude 10,000 broadband connections Chorus is partly subsidising for student households

Authorised by: JB Rousselot Chief Executive Officer

ENDS

For further information:

Steve Pettigrew

Head of External Communications

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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

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Q1 FY22 Connections Update
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14 October 2021

Q1 FY22 overview

Total fibre connections increased by 23k to 894,000 (Q4 FY21: +29k)

• Fibre uptake across the completed UFB footprint grew from 65% to 66%

• fibre broadband connections increased by 23k despite cessation of installation activity during COVID alert level 4 lockdowns and reduced volumes under alert level 3 across major centres in the latter half of the quarter

• uptake in UFB1 areas reached 71% (+2%) with Auckland reaching 76% (+1%)

• uptake in UFB2 areas now averages 44% with the fibre rollout recently completed in Whangamata, Rakaia, Haast and Ranfurly

• COVID lockdowns have driven increased demand for higher speed plans with strong momentum in 1Gbps upgrades and demand for Hyperfibre during the quarter

> Total broadband connections increased 3k to 1,183,000 * (Q4 FY21: -1k)

• first three months of FY22 delivered positive net monthly broadband connections

> Copper broadband and voice connections declined by 32k (Q4 FY21: -44k)

• COVID lockdowns in Aug-Sept reduced the number of copper broadband disconnections in all geographies

• voice only disconnections also slowed slightly to 12k (Q4 FY21: -14k)

• total fixed line connections declined by 9k to 1,331,000* (Q4 FY21: -16k)

> Average monthly data usage grew 25% from June, boosted by COVID lockdown demand

• average fibre usage was 621GB in September, up from 500GB in June

• average monthly usage on copper was 297GB, up from 254GB in June

• *totals exclude ~10,000 broadband connections Chorus is partly subsidising for student households

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Connection changes by Zone (indicative)

• Chorus UFB zone: continued broadband growth driven by Chorus incentives and migration campaigns. Copper voice disconnections reflect migration to fibre and targeted fixed wireless activities. COVID19 restrictions slowed market activity in Q1 and broadband growth has been constrained by COVID-19 limits on net migration.

Change in connections (‘000s) by zone**

Chorus UFB zone Non-UFB zone Local Fibre Company UFB zone Total connections at 30 September 1,068,000 183,000 67,000 Broadband connections 992,000 149,000 42,000 Copper (no broadband) connections 76,000 34,000 25,000 7 5 6 -4 -2 -1 -1 -2 -2 -3 -5 -6 -6 -9 -8 -10 -8 -7 -8 -1 -2 -1 -1 -1 -3 -2 -2 -3 -2 -15 -5 5 15 Q1 FY22 Q4 FY21 Q3 FY21 Q2 FY21 Q1 FY21 Q1 FY22 Q4 FY21 Q3 FY21 Q2 FY21 Q1 FY21 Q1 FY22 Q4 FY21 Q3 FY21 Q2 FY21 Q1 FY21 LFC Zone Non- UFB Zone Chorus UFB Zone N/C been constrained by COVID-19 limits on net migration. > LFC zone: disconnections continue due to Local Fibre Company and fixed wireless provider activity, with some slowdown due to COVID-19 restrictions. > Non-UFB zone*: continuation of existing voice and broadband trends	Chorus UFB zone Non-UFB zone Local Fibre Company UFB zone Total connections at 30 September 1,068,000 183,000 67,000 Broadband connections 992,000 149,000 42,000 Copper (no broadband) connections 76,000 34,000 25,000 7 5 6 -4 -2 -1 -1 -2 -2 -3 -5 -6 -6 -9 -8 -10 -8 -7 -8 -1 -2 -1 -1 -1 -3 -2 -2 -3 -2 -15 -5 5 15 Q1 FY22 Q4 FY21 Q3 FY21 Q2 FY21 Q1 FY21 Q1 FY22 Q4 FY21 Q3 FY21 Q2 FY21 Q1 FY21 Q1 FY22 Q4 FY21 Q3 FY21 Q2 FY21 Q1 FY21 LFC Zone Non- UFB Zone Chorus UFB Zone N/C been constrained by COVID-19 limits on net migration. > LFC zone: disconnections continue due to Local Fibre Company and fixed wireless provider activity, with some slowdown due to COVID-19 restrictions. > Non-UFB zone*: continuation of existing voice and broadband trends	Chorus UFB zone Non-UFB zone Local Fibre Company UFB zone Total connections at 30 September 1,068,000 183,000 67,000 Broadband connections 992,000 149,000 42,000 Copper (no broadband) connections 76,000 34,000 25,000 7 5 6 -4 -2 -1 -1 -2 -2 -3 -5 -6 -6 -9 -8 -10 -8 -7 -8 -1 -2 -1 -1 -1 -3 -2 -2 -3 -2 -15 -5 5 15 Q1 FY22 Q4 FY21 Q3 FY21 Q2 FY21 Q1 FY21 Q1 FY22 Q4 FY21 Q3 FY21 Q2 FY21 Q1 FY21 Q1 FY22 Q4 FY21 Q3 FY21 Q2 FY21 Q1 FY21 LFC Zone Non- UFB Zone Chorus UFB Zone N/C been constrained by COVID-19 limits on net migration. > LFC zone: disconnections continue due to Local Fibre Company and fixed wireless provider activity, with some slowdown due to COVID-19 restrictions. > Non-UFB zone*: continuation of existing voice and broadband trends	Chorus UFB zone Non-UFB zone Local Fibre Company UFB zone Total connections at 30 September 1,068,000 183,000 67,000 Broadband connections 992,000 149,000 42,000 Copper (no broadband) connections 76,000 34,000 25,000 7 5 6 -4 -2 -1 -1 -2 -2 -3 -5 -6 -6 -9 -8 -10 -8 -7 -8 -1 -2 -1 -1 -1 -3 -2 -2 -3 -2 -15 -5 5 15 Q1 FY22 Q4 FY21 Q3 FY21 Q2 FY21 Q1 FY21 Q1 FY22 Q4 FY21 Q3 FY21 Q2 FY21 Q1 FY21 Q1 FY22 Q4 FY21 Q3 FY21 Q2 FY21 Q1 FY21 LFC Zone Non- UFB Zone Chorus UFB Zone N/C been constrained by COVID-19 limits on net migration. > LFC zone: disconnections continue due to Local Fibre Company and fixed wireless provider activity, with some slowdown due to COVID-19 restrictions. > Non-UFB zone*: continuation of existing voice and broadband trends
	Chorus UFB zone*	Non-UFB zone	Local Fibre Company UFB zone
Total connections at 30 September	1,068,000	183,000	67,000
Broadband connections	992,000	149,000	42,000
Copper (no broadband) connections	76,000	34,000	25,000

Broadband connections Copper (no broadband) connections

• Includes planned Chorus UFB1, 2 and 2+ coverage

• **Excludes 10k partly subsidised education connections and 13k fibre premium and data services (copper) connections

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Fibre comprises 67% of Chorus connections

	30 Sept	31 Dec	31 March	30 June	30 Sept
Unbundled copper	2020 14,000	2020 13,000	2021 11,000	2021 10,000	2021 8,000	1,400,000	Baseband copper
(no broadband) Baseband copper	169,000	159,000	150,000	137,000	127,000	1,200,000	Unbundled copper
(no broadband)							Copper ADSL
Copper ADSL	218,000	197,000	180,000	163,000	152,000	1,000,000
(includes naked)							VDSL
VDSL	202,000	184,000	170,000	157,000	148,000	800,000
(includes naked)
Fibre broadband (GPON)	773,000	802,000	831,000	860,000	883,000	600,000	Fibre (GPON)
Data services (copper)	3,000	3,000	3,000	2,000	2,000	400,000
Fibre premium	11,000	11,000	11,000	11,000	11,000
(P2P) Total connections	1,390,000	1,369,000	1,356,000	1,340,000	1,331,000	200,000
						0	~~Business premium~~
						30-Sep-20 31-Dec-20			31-Mar-21		30-Jun-21		30-Sep-21

> 1,183,000 broadband connections comprises:

• 883,000 fibre (GPON) connections

• 300,000 VDSL/ADSL (copper) connections

Note : 10,000 partly subsidised education connections are excluded from this data

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1 Gigabit plans now 20% of mass market

1Gbps connections (consumer + business) grew by 15k connections to 181,000

Residential

Business

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800,000
$43.56
700,000
600,000
500,000
$47.15
400,000
300,000
200,000
100,000
$56
0
June 2021 September 2021
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1Gbps 200Mbps 100Mbps 50Mbps Voice

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80,000
$51.20+
70,000
60,000
$51.25+
50,000
40,000
30,000
$56.38+
20,000
10,000 $65+
0
June 2021 Sep-21
1Gbps 200-300Mbps 100Mbps <100Mbps Voice
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Note: business plan pricing shown is indicative entry level option for each speed tier

5

UFB uptake grows to 66%

> UFB uptake increased from 65% to 66% within completed footprint in Q1*

• uptake in UFB1 areas grew from 69% to 71%

• uptake in UFB2 areas grew from 42% to 44%

• 858,000 connections (Q4 FY21: 837,000) now within completed footprint, including business premium connections

• 1,295,000 customers able to connect (Q4 FY21: 1,282,000)

• 1,011,000 premises passed** (Q4 FY21: 999,000) out of 1,054,000 target = UFB rollout 96% complete

• (note: data includes some UFB2 areas that have been partially built, but not yet submitted for Crown sign-off)

> 30,000 fibre installations completed in Q1 (Q4 FY21: 41k)

• customer satisfaction increased to 8.3 from 8.2

• WIP increased to 15k from ~13k

• field crews remained steady ~650

• includes ~3k partly subsidised education connections

Fibre now 86% of Chorus broadband connections in planned UFB zone

No. of

connections

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1,000,000
900,000
800,000
700,000
600,000
500,000
400,000
300,000
200,000
100,000
0
ADSL VDSL Fibre
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• **under the UFB contract, a multi-dwelling unit or single office block is one premises

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UFB1 uptake: 71%

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80.00%
Sep-20 Dec-20 Mar-21 Jun-21 Sep-21
70.00% Average uptake
60.00%
50.00%
% uptake
relative to 40.00%
capable
addresses
30.00%
20.00%
10.00%
0.00%
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7

Managed migration activity slowed by lockdown

~12k managed migration installations completed in Q1 (Q4 FY21: 16k)

• installations were slowed by restrictions on technician activity during the COVID alert level 4 lockdown period

• activations of installed fibre sockets (ONTs) don’t require technician visits and were less affected at ~7k

• ~3k activations were at offnet addresses

Managed migration programme

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18,000
16,000
14,000
12,000
10,000
8,000
6,000
4,000
2,000
0
Q1 FY21 Q2 FY21 Q3 FY21 Q4 FY21 Q1 FY22
Installations Connections
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Monthly average data usage on fibre 621 gigabytes

Monthly average data usage per connection on our network*

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621
600
539
500
400
Data
usage 297
300
(GB)
200
100
Copper Fibre Average
0
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• heightened COVID-19 alert levels drove substantial increases in monthly data usage

• 621GB on fibre (June:500GB)

• 297GB on copper (June:254GB)

• 539GB average (June:432GB)

• Average peak throughput on our network at peak time (~9pm) was 3.34Tbps in September, up from 2.81Tbps in June

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• includes upstream traffic from June 2020 onwards

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Commerce Commission broadband testing report

• The Commerce Commission’s Measuring Broadband New Zealand , Winter Report (August 2021) showed latency is a key area in which fixed line services outperform fixed wireless significantly. Particularly for online gaming.

Source: Commerce Commission

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