CHORUS LIMITED — Interim / Quarterly Report 2021

Jan 26, 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

26 January 2021

Q2 FY21 overview

Fibre uptake increased to 63% with the UFB rollout now 92% complete

Fibre broadband connections increased by 29k (Q1 FY21: +33k; Q2 FY20: +36k)

• 1Gbps connections increased 8k

• fibre uptake across the completed UFB footprint grew from 62% to 63%

• fibre uptake in UFB1 areas is at 66%, with growth strongest in Kapiti/Wellington and Waiheke Island

• recently completed UFB2 townships include Matapouri, Taipa Bay Mangonui, Taumarunui, Karapiro, Hunterville, Cheviot, Amberley, Lawrence

• average monthly data usage on fibre increased to 460GB, up from 456GB in Sept (including upstream traffic)

Copper broadband and voice connections declined by 50k (Q1 FY21: -57k; Q2 FY20: -48k)

Total broadband connections declined by 10k to 1,183,000* (Q1 FY21: -13k; Q2 FY20: no change)

• Q2 reduction in broadband reflects combined seasonal effect of student holiday disconnections (e.g. fibre uptake reduced in Dunedin), inertia selling campaigns by fixed wireless providers and COVID-19 impact on net migration

• Statistics NZ notes COVID border restrictions have reduced population growth significantly, with the gain from migration reducing from 6,000 a month pre-COVID to ~600 a month

Total fixed line connections declined by 21k to 1,369,000* (Q1 FY21: -25k; Q2 FY20: -12k)

*totals exclude the 11,000 broadband connections Chorus is currently providing free to student households

For more detail, please see the Q2 FY21 Connections Update presentation attached.

Authorised by: David Collins Chief Financial 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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Q2 FY21 Connections Update
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26 January 2021

Q2 FY21 overview

Fibre uptake increased to 63% with the UFB rollout now 92% complete

> Fibre broadband connections increased by 29k (Q1 FY21: +33k; Q2 FY20: +36k)

• 1Gbps connections increased 8k

• fibre uptake across the completed UFB footprint grew from 62% to 63%

• fibre uptake in UFB1 areas is at 66%, with growth strongest in Kapiti/Wellington and Waiheke Island

• recently completed UFB2 townships include Matapouri, Taipa Bay-Mangonui, Taumarunui, Karapiro, Hunterville, Cheviot, Amberley, Lawrence

• average monthly data usage on fibre increased to 460GB, up from 456GB in Sept (including upstream traffic)

> Copper broadband and voice connections declined by 50k (Q1 FY21: -57k; Q2 FY20: -48k)

> Total broadband connections declined by 10k to 1,183,000 * (Q1 FY21: -13k; Q2 FY20: no change)

• Q2 reduction in broadband reflects combined seasonal effect of student holiday disconnections (e.g. fibre uptake reduced in Dunedin), inertia selling campaigns by fixed wireless providers and COVID-19 impact on net migration

• Statistics NZ notes COVID border restrictions have reduced population growth significantly, with the gain from migration reducing from 6,000 a month pre-COVID to ~600 a month

> Total fixed line connections declined by 21k to 1,369,000 * (Q1 FY21: -25k; Q2 FY20: -12k)

*totals exclude the 11,000 broadband connections Chorus is currently providing free to student households

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1Gbps uptake grew by 8k connections

Total mass market fibre uptake by plan type

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100
Business/Education plans
1Gbps $60 p.m. $56 p.m.
90 from 1 July
200Mbps
80 $55 p.m. $56.38 p.m.
from 1 Oct
70
60 100Mbps $46 p.m. $47.15 p.m.
from 1 Oct
% of
plans 50
40
30
20
10
50Mbps $42.50 p.m. $43.56 p.m.
from 1 Oct
0
Dec-19 Mar-20 Jun-20 Sep-20 Dec-20
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29,000 mass market fibre connections added

• 1Gbps connections grew from 128k to 136k (i.e. 28% of 29k increase in fibre GPON connections in Q2)

• small business connections grew from 4k to 11k

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Managed migration activity lifts fibre connections

15.5k installations completed in Q2

Managed migration programme

• managed migration installations (i.e. ONT only without active service) were higher again in Q2 at 15.5k, including 9k offnet addresses

• migration activity driving positive momentum in connections with more than 7k ONT activations in Q2

• 3k of activations were at offnet addresses, with ~20% of these in HFC cable areas

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16,000
14,000
12,000
10,000
8,000
6,000
4,000
2,000
0
Q3 FY20 Q4 FY20 Q1 FY21 Q2 FY21
Installations Connections
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UFB uptake reaches 63%

> UFB uptake increased from 62% to 63% within completed footprint in Q2*

• uptake in UFB1 areas grew from 65% to 66%

• uptake in UFB2 areas grew from 38% to 39%

• 783,000 connections (Q1: 757,000) now within completed footprint, including business premium connections

• 1,246,000 customers able to connect (Q1: 1,226,000)

• 966,000 premises passed** (Q1: 947,000) out of 1,054,000 target = UFB rollout 92% complete

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

> 44,000 fibre installations completed in Q2 (Q1: 47k)

• customer satisfaction steady at 8.2

• WIP reduced to 13k from 15k (Sept)

• field crews increased from 646 (Sept) to 689

• includes ~3k free education connections

Fibre now 79% of Chorus broadband connections in planned UFB zone

No. of

connections

1,000,000 900,000 800,000 700,000 600,000 500,000 400,000 300,000 200,000 100,000 0 Dec-19 Mar-20 Jun-20 Sep-20 Dec-20 ADSL VDSL Fibre

**under the UFB contract, a multi-dwelling unit or single office block is one premises

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UFB1 uptake: 66%

% uptake relative to capable addresses

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80.00%
Dec-19 Mar-20 Jun-20 Sep-20 Dec-20
70.00%
Average uptake
60.00%
50.00%
40.00%
30.00%
20.00%
10.00%
0.00%
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Connection changes by Zone (indicative)

• Chorus UFB zone: reduction in broadband reflects combined effects of university holiday disconnections, COVID-19 effect on net migration and inertia selling campaigns by fixed wireless providers

• LFC zone : disconnections consistent with pre-COVID levels

• Non-UFB zone N/C : fibre connection growth helping offset rural wireless competition

	Chorus UFB zone*	Non-UFB zone	Local Fibre Company UFB zone
Total connections at 31 December**	1,076,000	191,000	88,000
Broadband connections	974,000	153,000	56,000
Copper (no broadband) connections	102,000	38,000	32,000

• Includes planned Chorus UFB1, 2 and 2+ coverage

• **Excludes 14k fibre premium and data services (copper) connections

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

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-15 -5 5 15
LFC
Q2 FY20 -2 -7
Q3 FY20 -2 -8 Zone
Q4 FY20 -2 -4
Q1 FY21 -2 -9
Q2 FY21 -3 -6
Q2 FY20 -2 Non-
Q3 FY20 -11 UFB
Q4 FY20 -1
Zone
Q1 FY21 -1-2
Q2 FY21 -1
Q2 FY20 -8 7
Q3 FY20 -5 3 Chorus
Q4 FY20 -5 8 UFB Zone
Q1 FY21 -8 -2
Q2 FY21 -7 -4
Broadband connections
Copper (no broadband) connections
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Fibre comprises 59% of Chorus connections

	31 Dec	31 March	30 June	30 Sept	31 Dec
	2019	2020	2020	2020	2020	1,400,000	Baseband copper
Unbundled copper (no broadband)	18,000	17,000	15,000	14,000	13,000	1,200,000	Unbundled copper
Baseband copper (no broadband)	192,000	185,000	179,000	169,000	159,000	1,000,000	Copper ADSL
Copper ADSL	283,000	261,000	245,000	218,000	197,000
(includes naked)						800,000	VDSL
VDSL	242,000	228,000	221,000	202,000	184,000
(includes naked)
Fibre broadband	681,000	713,000	740,000	773,000	802,000	600,000
(GPON)
Data services	4,000	4,000	4,000	3,000	3,000	400,000
(copper)							Fibre (GPON)
Fibre premium (P2P)	12,000	11,000	11,000	11,000	11,000	200,000
Total connections	1,432,000	1,419,000	1,415,000	1,390,000	1,369,000	0	~~Business premium~~
						31-Dec-19 31-Mar-20			30-Jun-20		30-Sep-20		31-Dec-20

> 1,183,000 broadband connections comprises:

▪ 802,000 fibre (GPON) connections

• 381,000 VDSL/ADSL (copper) connections

Note : 11,000 free education connections are excluded from this data

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Monthly average data usage on fibre 460 gigabytes

Monthly average data usage per connection on our network*

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500
460
450
400 390
350
300
Data
241
250
usage
(GB) 200
150
100
50
Copper Fibre Average
0
Dec-14 Mar-15 Jun-15 Sep-15 Dec-15 Mar-16 Jun-16 Sep-16 Dec-16 Mar-17 Jun-17 Sep-17 Dec-17 Mar-18 Jun-18 Sep-18 Dec-18 Mar-19 Jun-19 Sep-19 Dec-19 Mar-20 Jun-20 Sep-20 Dec 20
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• includes upstream traffic from June 2020 onwards

• monthly average data usage per connection on our network grew to 390GB in December, up from 380GB (Sept)

• 460GB on fibre (Sept:456GB)

• 241GB on copper (Sept:236GB)

• Average peak throughput on our network at peak time (~9pm) was 2.44Tbps, up from 1.96Tbps in December 2019

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9

Commission report: VDSL outperforms fixed wireless

• The Commerce Commission’s Measuring Broadband New Zealand , Spring Report (December 2020) showed copper VDSL services outperformed fixed wireless on key measures such as download speeds and latency

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