CHORUS LIMITED — Interim / Quarterly Report 2021

Jul 11, 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

12 July 2021

Q4 FY21 overview

Total fixed line connections declined by 16k to 1,340,000*

Copper broadband and voice connections declined by 44k (Q3 FY21: -42k)

• fixed wireless providers continued targeted sales campaigns to their fixed line customers

• voice only disconnections increased to 14k (Q3: -11k)

Total broadband connections declined by 1k to 1,180,000 * (Q3 FY21: -2k)

• COVID-19 impact on net migration continues to constrain broadband growth below historic rate

• increase of 5k connections in Chorus UFB zone driven by Chorus incentive and migration campaigns

• market reports indicate smaller retailers continue to grow broadband market share

• Vodafone and Skinny introduced $55 and $50 4G unlimited fixed wireless plans; 5G plans in some areas

Fibre broadband connections increased by 29k (Q3 FY21: +29k)

• fibre uptake across the completed UFB footprint grew from 64% to 65%

• strongest quarterly fibre growth was in the Queenstown and Wellington-Kapiti regions

• 1Gbps connections increased 14k and are now 19% of GPON connections

• average monthly data usage on fibre increased to 500GB, up from 491GB in March (including upstream traffic)

• streaming traffic continues to grow with highest June throughput of 2.97Tbps on Queen’s Birthday

*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 Mobile +64 (27) 258 6257 Email: Steve.Pettigrew@chorus.co.nz

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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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Q4 FY21 Connections Update
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Q4 FY21 CONNECTIONS UPDATE

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12 July 2021

Q4 FY21 overview

Total fixed line connections declined by 16k to 1,340,000* (Q3 FY21: -13k)

> Copper broadband and voice connections declined by 44k (Q3 FY21: -42k)

• fixed wireless providers continued targeted sales campaigns to their fixed line customers

• voice only disconnections increased to 14k (Q3: -11k)

> Total broadband connections reduced 1k to 1,180,000 * (Q3 FY21: -2k)

• COVID-19 impact on net migration continues to constrain broadband growth below historic rate

• increase of 5k connections in Chorus UFB zone driven by Chorus incentive and migration campaigns

• market reports indicate smaller retailers continue to grow broadband market share

• Vodafone and Skinny introduced $55 and $50 4G unlimited fixed wireless plans; 5G plans in some areas

> Fibre broadband connections increased by 29k (Q3 FY21: +29k)

• fibre uptake across the completed UFB footprint grew from 64% to 65%

• strongest quarterly fibre growth was in the Queenstown and Wellington-Kapiti regions

• 1Gbps connections increased 14k and are now 19% of GPON connections

• average monthly data usage on fibre increased to 500GB, up from 491GB in March (including upstream traffic)

• streaming traffic continues to grow with highest June throughput of 2.97Tbps on Queen’s Birthday

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

2

Connection changes by Zone (indicative)

• Chorus UFB zone: continued broadband growth driven by Chorus incentives and migration campaigns. Increased rate of copper voice disconnections reflects targeted fixed wireless sales campaigns.

• LFC zone : disconnections continue at consistent rate reflecting Local Fibre Company and fixed wireless provider activity

• Non-UFB zone : increasing rural wireless competition as mobile providers expand wireless coverage and capacity

	Chorus UFB zone*	Non-UFB zone	Local Fibre Company UFB zone
Total connections at 30 June**	1,069,000	185,000	73,000
Broadband connections	985,000	150,000	45,000
Copper (no broadband) connections	84,000	35,000	28,000

• Includes planned Chorus UFB1, 2 and 2+ coverage

**Excludes 13k fibre premium and data services (copper) connections

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

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-15 -5 5 15
LFC
Q4 FY20 -2 -4 Zone
Q1 FY21 -2 -9
Q2 FY21 -3 -6
Q3 FY21 -2 -6
Q4 FY21 -2 -5
Non-
Q4 FY20 -1
Q1 FY21 -1-2 UFB
Q2 FY21 -1 Zone
Q3 FY21 -1-2
Q4 FY21 -2-1
Q4 FY20 -5 8
Chorus
Q1 FY21 -8 -2
Q2 FY21 -7 -4 UFB Zone
Q3 FY21 -8 6
Q4 FY21 -10 5
Broadband connections
Copper (no broadband) connections
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3

Fibre comprises 65% of Chorus connections

	30 June	30 Sept	31 Dec	31 March	30 June
Unbundled copper	2020 15,000	2020 14,000	2020 13,000	2021 11,000	2021 10,000	1,400,000	Baseband copper
(no broadband) Baseband copper	179,000	169,000	159,000	150,000	137,000	1,200,000	Unbundled copper
(no broadband) Copper ADSL	245,000	218,000	197,000	180,000	163,000	1,000,000	Copper ADSL
(includes naked)
VDSL	221,000	202,000	184,000	170,000	157,000	800,000	VDSL
(includes naked)
Fibre broadband (GPON)	740,000	773,000	802,000	831,000	860,000	600,000
Data services (copper)	4,000	3,000	3,000	3,000	2,000	400,000
Fibre premium	11,000	11,000	11,000	11,000	11,000		Fibre (GPON)
(P2P) Total connections	1,415,000	1,390,000	1,369,000	1,356,000	1,340,000	200,000
						0	~~Business premium~~
						30-Jun-20 30-Sep-20			31-Dec-20		31-Mar-21		30-Jun-21

> 1,180,000 broadband connections comprises:

• 860,000 fibre (GPON) connections

• 320,000 VDSL/ADSL (copper) connections

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

4

1Gbps uptake grew by 14k connections to 19%

Total mass market fibre uptake by plan type*

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100
Small business/Education plans
90 $56 p.m.
from 1 July 1Gbps
80 $56.38 p.m.
from 1 Oct 200Mbps
70
60 $47.15 p.m. 100Mbps
% of from 1 Oct
plans 50
40
30
20
10
$43.56 p.m. 50Mbps
from 1 Oct
0
Jun-20 Sep-20 Dec-20 Mar-21 Jun-21
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> 29,000 mass market fibre connections added

• 1Gbps connections grew from 152k (including business) to 166k and comprise 19% of GPON connections

• small business connections grew from 24k to 26k

• 50Mbps connections reduced to 9% of GPON connections

> consumer pricing/CPI changes from 1 October 2021

• 1Gbps – no change

• 200Mbps – reducing to $56.00

• ▪ 100Mbps – increasing to $47.87

• ▪ 50Mbps – increasing to $44.22

*excludes ~6k secondary and voice connections

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5 12 July 2021 Q4 FY21 CONNECTIONS UPDATE
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UFB uptake reaches 65%

• UFB uptake increased from 64% to 65% within completed footprint in Q4*

• uptake in UFB1 areas grew from 68% to 69%

• uptake in UFB2 areas grew from 40% to 42%

• 837,000 connections (Q3: 810,000) now within completed footprint, including business premium connections

• 1,282,000 customers able to connect (Q3: 1,268,000)

• 999,000 premises passed** (Q3: 986,000) out of 1,054,000 target = UFB rollout 95% complete

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

> 41,000 fibre installations completed in Q4 (Q3: 40k)

• customer satisfaction steady at 8.2

• WIP reduced to 13k from ~15k

• field crews remained steady ~650

• includes ~3k partly subsidised education connections

Fibre now 84% 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

6

UFB1 uptake: 69%

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

Average uptake

7

Managed migration activity lifts fibre connections

16k installations completed in Q4

• strongest quarter yet for managed migration installations (i.e. ONT only without active service)

• 8k ONT activations

• ~4k 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
Installations Connections
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8

Monthly average data usage on fibre 500 gigabytes

Monthly average data usage per connection on our network*

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500
500
432
400
Data 300
254
usage
(GB)
200
100
Copper Fibre Average
0
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• includes upstream traffic from June 2020 onwards

• monthly average data usage per connection on our network grew to 432GB in June, up from 416GB (March) ▪ 500GB on fibre (March:491GB) ▪ 254GB on copper (March:241GB)

• Average peak throughput on our network at peak time (~9pm) was 2.81Tbps in June, up from 2.75Tbps in March

• highest peak of 2.97Tbps on Queen’s Birthday

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9

Commerce Commission broadband testing report

▪ The Commerce Commission’s Measuring Broadband New Zealand , Autumn Report (June 2021) continues to show fixed line services outperform fixed wireless significantly on key measures such as download speeds and latency

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Source: Commerce Commission
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10 12 July 2021 Q4 FY21 CONNECTIONS UPDATE
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