CHORUS LIMITED — Investor Presentation 2017

Oct 15, 2017

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Chorus Limited Level 10, 1 Willis Street P O Box 632 Wellington 6140 New Zealand Email: company.secretary@chorus.co.nz

STOCK EXCHANGE ANNOUNCEMENT

16 October 2017

Chorus Investor Roadshow

The attached presentation has been prepared by Chorus for an international roadshow.

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

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Chorus Roadshow Presentation October 2017

TABLE OF CONTENTS

1. Introducing Chorus 3-7 2. A fibre future 8-13 3. New Zealand’s Broadband Market 14-23 4. FY18: What we’re focused on 24-28 5. Financial Highlights 29-34 6. Appendices 35-41

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Chorus Investor Roadshow - October 2017

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NEW ZEALAND

> Land mass of 268,000 square kilometres

• 1,600 kilometres long; 400 kilometres wide

> NZ population approximately 4.79 million

• ~87% live in urban areas

• 100,000 record population growth in FY17

• half of population growth in 15-39 age group

> Market orientated economy

• real economic growth, as measured by changes in Gross Domestic Product, has increased annually between 2% to 4% since 1993.

• official cash rate 1.75%

• 1Euro = 1.66NZD

• 1GBP =1.86NZD

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Chorus Investor Roadshow - October 2017

KEY CHORUS HIGHLIGHTS

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Leading provider of fixed line communications infrastructure in N.Z. with significant network build experience

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Cornerstone partner in the Government’s Ultra-Fast Broadband initiative, with UFB capex supported by Government financing

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Broadband emerging as 4[th] utility, supported by growing bandwidth demand and streaming video trends

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Majority of revenues regulated or contracted to the Crown to 2020, with an expected shift to a building block regulatory framework thereafter

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Highly competitive retail broadband market driving fibre uptake, supported by population/premises growth

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Commitment to maintaining a BBB credit rating (S&P, or equivalent)

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Experienced management team with proven ability in rolling out and operating fixed line communications networks

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Chorus Investor Roadshow - October 2017

AN OVERVIEW OF CHORUS

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• New Zealand’s largest fixed line communications infrastructure business

• established in Dec 2011 following demerger from Telecom NZ

• listed on NZX and ASX: CNU

• ~NZ$1.6 billion market capitalisation (at 30 Sept 2017)

• S&P “BBB” stable; Moody’s “Baa2” stable

• A nationwide copper and growing fibre network

• ~1.58m connections, including ~1.18m broadband

• halfway through 11-year fibre to the premises rollout

• streaming video services driving significant data consumption

• average NZ household consumed 162GB in Sept 2017

• ~1,000 employees, 80%+ engagement since 2012

• supported by ~4,000 contractors and subcontractors

• first NZ employer to win supreme award in Aon Hewitt Best Employers awards

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Chorus Investor Roadshow October 2017

Chorus-owned

THE CHORUS NETWORK

• We operate a nationwide wholesale access network of fibre optic and copper cables connecting homes and businesses

• cables typically connect back to our local telephone exchanges, often via broadband cabinets

• our fibre also provides backhaul to many mobile network sites/towers and retail service provider networks

Common network assets

Our copper network

• ~600 local exchanges

• ~130,000km copper

• FTTN broadband footprint to ~90% of lines

• ~11,000 cabinets

• VDSL broadband to ~80% of lines

• ~280,000 poles

• ~30,000km duct network  Vectoring upgrade outside Chorus UFB areas

Our fibre network

• ~46,000km fibre

• FTTP available to ~1.36m customers by Dec 22

• point-to-point fibre in CBD areas

• fibre to multiple mobile provider cellsites

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Chorus Investor Roadshow - October 2017

TRANSITION TO A REGULATED UTILITY MODEL

• Existing copper regulatory framework uses benchmarking and Total Service Long Run Incremental Cost

• Government policy preference to introduce a utility-style building block methodology for fibre networks

• Draft legislation introduced to Parliament in August suggests the following regulatory framework from 2020:

87% of population where fibre will be available by end of 2022

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Fibre – post 2020 utility framework

Remaining 13% of population

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Note: Legislative process subject to new Government, followed by the Commerce Commission process to set input methodologies

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Chorus Investor Roadshow - October 2017

Our public private partnership to deploy ultra-fast broadband

8

NEW ZEALAND IS TAKING FIBRE FURTHER…

> Ultra-fast broadband (UFB): a Government objective

• original objective (UFB1): fibre to premises covering 75% of population by 2020

• subsequent agreements have extended coverage goal to 87% of population by the end of 2022

• From Auckland, New Zealand’s largest city ▪ population: 1.495m (2016)

• To Ahaura, in the South Island’s West Coast ▪ population: 370 (2013)

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Chorus Investor Roadshow - October 2017

A PUBLIC PRIVATE PARTNERSHIP

• Chorus is a cornerstone partner in the UFB rollout

• requirement that Chorus split from Telecom NZ to participate: demerger in December 2011

• Crown partnerships with four fibre companies: Chorus, Enable, Northpower, Ultrafast Fibre

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UFB1: to be completed by Dec 2019

Crown investment: $1.345b Premises* covered: ~1.174m Homes and businesses covered: ~1.526m Population covered: 75%

Chorus’ UFB1 role

• ~830,900 premises to pass (includes ~44k greenfields)

• estimated communal capex of $1.75b to $1.8b

• Crown funding of up to $929m (50:50 equity/debt)

• connection capex subject to demand: ~1.1m homes and businesses

• FY18 average cost to connect: $1,050 - $1,200 (excluding layer 2 and including standard installations and some non-standard single dwellings and service desk costs)

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10
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Chorus Investor Roadshow - October 2017

FIBRE EXTENDED TO 87% OF POPULATION

> The Government announced extensions to the UFB1 rollout in January and September 2017

• fibre to reach another ~12% of population across ~370 towns and rural communities

• Chorus has increased its share of these additional UFB phases

Chorus rollout schedule – indicative only*

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140,000
120,000
Premises 100,000
passed
80,000
60,000
40,000
20,000
-
FY12 FY13 FY14 FY15 FY16 FY17 FY18 FY19 FY20 FY21 FY22 FY23
UFB1 UFB2 & UFB2+
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Premises to be passed by ~1,054,000* Chorus by Dec 2022 Customers able to connect by ~1.36 million rollout end Estimated communal capex to $2.26 to 2.37 billion pass premises Crown funding Up to 1.33 billion (57:43 equity/debt)

• Includes estimated 43k greenfields premises for UFB1

• UFB1 build ends Dec 2019 and UFB2 build ends Dec 2022. Detailed scheduling for UFB2 & UFB2+ to be completed by end 2017.

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Chorus Investor Roadshow - October 2017

UFB ROLLOUT STAGES

• The fibre rollout currently occurs in two stages

• Stage 1: communal network deployment

  • the fibre network is built along the street to enable future connections from each property boundary

  • the cost of this work is reported as cost per premises* passed (CPPP)

  • Government funding is received for premises passed

• Stage 2: connection from boundary to premises

Stage 1: Communal

• the connection to the home is built from the street to the premises when a request is received from the customer, via their retailer

• this is fully funded by Chorus and is reported as cost per premises connected (CPPC)

• A “premises” for the purposes of UFB contracts includes office buildings or multi-dwelling units that may have multiple tenants

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Stage 2 : Connection
2 fibre pairs fully ducted
from the street to an
Optical Network Terminal
inside the home
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Chorus Investor Roadshow - October 2017

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UFB COSTS

Fibre: average cost per premises

Total fibre capex: communal vs connections

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$NZ
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5000
4000
3000
$NZm
2000
1000
0
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FY13 FY14 FY15 FY16 FY17 Cost per premises connected Cost per premises passed

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500 Fibre connections + layer 2 UFB communal UFB communal - Crown financing
450
400
350
300
250
200
150
100
50
0
FY12 FY13 FY14 FY15 FY16 FY17
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• FY17 cost per premises passed (CPPP): $1,651 vs $1,550 - $1,650 guidance ($41m W.I.P)

• $640m received as Crown financing to 30 June 2017 ($1,118 per premises passed x 572,000 premises)

• Communal capex has reduced as build transitioned to less costly suburban areas

> FY17 cost per premises connected (CPPC) of $1,122* vs $1,100 - $1,250 guidance

• *excludes layer 2; includes standard installations and some non-standard single dwellings and service desk costs

Connection capex subject to demand and connection type

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Includes capitalised service desk costs

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Chorus Investor Roadshow - October 2017

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BROADBAND MARKET OVERVIEW

Demand for broadband continues to grow, helped by continued premises/population growth > The fibre rollout is a churn event with smaller retailers growing their share of overall market IDC – Broadband market share by technology IDC -- Broadband market share by retailer

IDC -- Broadband market share by retailer

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1,600,000
1,400,000
1,200,000
1,000,000
800,000
600,000
400,000
200,000
-
Chorus xDSL Chorus mass market fibre
Chorus premium fibre Local fibre companies (UFB)Source: Source:
Other fibre networks Other xDSL
Vodafone cable Fixed (mobile) wireless
Legacy fixed wireless, satellite
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Chorus mass market fibre Local fibre companies (UFB)Source: Source: IDC Other xDSL Fixed (mobile) wireless

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1,600,000
1,400,000
1,200,000
1,000,000
800,000
600,000
400,000
200,000
-
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15 Spark Vodafone Orcon Vocus 2degrees Trustpower ROM

Chorus Investor Roadshow - October 2017

Source: IDC

MARKET DYNAMICS

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>

Strong retail competition

• 100Mbps fibre as entry level plan

• bundled content (e.g. Netflix, Sky TV) and/or electricity (e.g. Trustpower, Vocus, Contact)

• ▪ differentiation based on unlimited data and product giveaways (e.g. smart TV, Netflix)

>

Our network competes with:

• Vodafone’s HFC network in Christchurch, Wellington and Kapiti

• local fibre companies

• other fibre networks typically focused on the backhaul and business markets

• mobile and fixed wireless networks

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Chorus Investor Roadshow - October 2017

CHORUS CONNECTION TRENDS

• Total connections 1,582,000 at 30 September

• copper lines with no broadband declining (baseband copper and unbundled copper)

• Q1 slowdown in decline of broadband connections to 1,184,000

			30 Sept	31 Dec	31 March	30 June	30 Sept
			2016	2016	2017	2017	2017	1800000
	Unbundled copper		105,000	99,000	90,000	82,000	76,000	1600000				Baseband copper
	Baseband copper (no broadband) Fibre broadband (GPON)		354,000 203,000	343,000 231,000	328,000 259,000	313,000 292,000	302,000 328,000	1000000 1200000 1400000				UCLL
	VDSL (includes naked)		179,000	199,000	224,000	244,000	294,000	800000				Copper	ADSL
	Copper ADSL		847,000	784,000	716,000	650,000	562,000	600000
	(includes naked)
	Data services		10,000	9,000	9,000	8,000	7,000	400000				VDSL
	(copper)
	Fibre premium		13,000	13,000	13,000	13,000	13,000	200000				Fibre (GPON)
	(P2P)							0
	Total fixed line		1,711,000	1,678,000	1,639,000	1,602,000	1,582,000	30-Jun-16		30-Sep-16		31-Dec-16		31-Mar-17		30-Jun-17		30-Sep-17
	connections							Data services (copper) Fibre broadband (GPON) Copper ADSL Baseband copper (no broadband)						Fibre premium (P2P) VDSL Unbundled copper (no				broadband)

CONNECTIONS DRIVERS

CONNECTIONS DRIVERS
INDICATIVE CONNECTIONS BY ZONE AT 30 SEPT	Chorus	Non-UFB1 & 2 areas	Local Fibre Company	TOTAL
(note: zones not yet defined to reflect UFB2+ areas)	UFB1 & 2 areas		UFB 1 & 2 areas
Copper connections – no broadband	241,000	62,000	75,000	378,000
Broadband – copper and fibre	866,000	170,000	148,000	1,184,000
TOTAL	1,107,000	232,000	223,000	1,562,000*

*Excludes the 20k business fibre/copper data connections

Growing connections

Reducing connections

Broadband penetration at an estimated 85% and continues to grow. Fibre established as the premium product and our expanding fibre footprint is expected to help win customers from wireless and HFC networks.

Growing network competition as local fibre companies (LFCs) expand their fibre footprint: ~140k connections at 30 June 2017 (~85k FY16) out of planned footprint of ~450k customers.

Intense retail competition is helping broaden the market by providing customers with attractive plans and pricing (e.g. free smart TV; free Netflix).

Fixed wireless (mobile) retailers actively encouraged their existing low data customers onto their own networks in FY17. Government funded Rural Broadband Initiative will extend wireless coverage to a further ~70k rural addresses.

Population and premises growth is providing underlying market growth: Auckland city is projected to account for over half of NZ’s expected population growth to 2040 with 400,000 new homes.

Continued migration of voice only lines to mobile/wireless and consolidation of multiple voice lines as technology options become more mainstream and population ages.

Chorus Investor Roadshow - October 2017

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FIBRE UPTAKE HAS EXCEEDED EXPECTATIONS

• 39% uptake with 309,000 connections within UFB deployed footprint at 30 September

• 73% of mass market fibre plans now 100Mbpsor higher (FY16:54%)

Total mass market fibre uptake by plan type

- UFB uptake FY13 FY17

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35%
300000 35%
250000 30%
24%
25%
200000
20%
150000 14%
15%
100000 8%
10%
3%
50000 5%
0 0%
Jun-13 Jun-14 Jun-15 Jun-16 Jun-17
Customers connected % Uptake
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% of 100
plans 90
80
70
60
50 100/20Mbps
40 $43 / month
30
20 50/10Mbps
10 $40.50/month
0
Jun-16 Sep-16 Dec-16 Mar-17 Jun-17 Sep-17
<100Mbps 100Mbps 200Mbps
Gigabit Education Business 100Mbps+
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Chorus Investor Roadshow - October 2017

DEMAND HAS INCREASED EACH YEAR

First time fibre orders received as a % of fibre capable addresses (by rollout year)

40,000 new fibre connections built in Q1 , our highest ever quarter for build

Chorus fibre connection activity - all NZ

25000

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60
50
40
30
20
10
0
FY12 FY13 FY14 FY15 FY16
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20000
15000
10000
5000
0
Connections built and activated Additional connections completed
Orders (net of cancellations and rejections in the month)
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Chorus Investor Roadshow - October 2017

UFB1 UPTAKE BY REGION

ROLLOUT COMPLETED IN THESE AREAS

% uptake relative to capable addresses

50.00% 45.00% 40.00% 35.00% 30.00% 25.00% 20.00% 15.00% 10.00% 5.00% 0.00%

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39% AVERAGE UPTAKE

Sep-16 Dec-16 Mar-17 Jun-17 Sep-17

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Chorus Investor Roadshow - October 2017

DATA DEMAND IS GROWING RAPIDLY

• Streaming video is becoming mainstream

Monthly average data usage per connection on our network grew 52% in FY17 to 162GB

• 1 in 4 NZers using a streaming service in 2016

• ~50% of Sky TV set-top boxes are now internet capable

• we’re forecasting ~680GB monthly average by 2020

• 4K TVs use 7GB per hour

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300
GB Copper Fibre Average
250
200
150
100
50
0
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• ~62% households on unlimited data plans

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Share of residential connections by data cap
100%
6% 5% 8% Unlimited
33%
80% 100GB or
51%
62% more
60% 50GB to
100GB
20GB to
40%
50GB
5GB to 20GB
20%
Under 5GB
0%
2012 2013 2014 2015 2016 2017
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Source: St atistics NZ ISP Survey June 2017

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Chorus Investor Roadshow - October 2017

FIXED LINE NETWORKS DELIVER LOWEST COST PER GB

51% increase in Chorus network traffic at ~9pm between June 2016 and June 2017

Chorus network traffic by time of day

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BETTER BROADBAND

> Driving broadband uptake and retention

• Ask for better campaign continues to raise awareness of VDSL and fibre availability

• targeted incentives for retailers to migrate ADSL/UCLL connections to better broadband and win back off-net connections

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> Providing customers with a network that is fast, reliable and congestion free

• ~$20m investment in vectored VDSL in FY18 in areas outside our planned UFB footprint

• will significantly improve VDSL speed (e.g. ~100Mbps at 600m; 50Mbps at 1km)

• indicative footprint (outside UFB1 & 2 areas) is:

• ~40% would get >30Mbps

• ~30% would get >50Mbps

• ~20% would get >100Mbps

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Chorus Investor Roadshow - October 2017

TRANSFORMING CUSTOMER EXPERIENCE & COST

• We’re reshaping Chorus to lift customer experience and reduce cost

• new executive structure

• emphasis on end-to-end customer experience to simplify systems and processes

• trialling new fibre migration methods with the aim of reducing customer effort to <1 day

• preparing for new regulatory framework and a post UFB rollout environment

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Chorus Investor Roadshow - October 2017

DELIVERING THE FUTURE BROADBAND NETWORK

• Ongoing operational focus on delivering our contracted UFB rollout on time and on budget

• Continue to work towards a new regulatory framework that supports efficient private sector investment to meet network upgrades and increasing consumer demands

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Opex
ANNUAL MAXIMUM
Initial RAB
ALLOWABLE
value
Regulatory Return on REVENUE
WACC capital
RAB Anchor and price
capped products:
Depreciation Return of  voice
capital  100/20Mbps fibre
Capex  direct fibre
NB. Symmetrical wash-
Regulatory
up for unders or overs
Asset lives tax allowance
Building block 27
cost stack
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CREATING OPPORTUNITIES TO GROW

Identifying new open access business opportunities ▪ fixed line and 5G: we see a complementary future

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• strong demand for trial data centre; more sites planned

• national backhaul contract with 2degrees

• emerging demand for smart locations (non-broadband access points)

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Chorus Investor Roadshow - October 2017

Financial overview and capital management

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FINANCIAL SNAPSHOT

Revenue ($m)

EBITDA ($m)[#]

Senior ND/EBITDA

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1,073 1,067
1,050 1,057 1,058 1,006 1,008 1,040
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669
653
3.1x 3.1x 3.0x
2.9x
2.7x 2.7x
662 663 649 652
602 594
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FY12 FY13 FY14 FY15 FY16 FY17 FY12 FY13 FY14 FY15 FY16 FY17 FY12 FY13 FY14 FY15 FY16 FY17

Build of UFB network will increase leverage metrics through to completion of UFB1 in 2019 > FY12 results pro-forma post demerger

• *FY15 and FY16 earnings impacted by benchmarked pricing (effective 1 Dec. 2014 to 15 Dec. 2015). ‘Dotted’ bars reflect the FY revenue / EBITDA that would have been recorded if the FPP pricing was applied to these financial reporting periods.

• EBITDA is a non-GAAP financial measure

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Chorus Investor Roadshow - October 2017

FY18 GUIDANCE SUMMARY

	FY18guidance	FY17 result
UFB1 Cost Per Premises Passed(CPPP)	$1,500 - $1,600	$1,651
UFB2 communal capex	$50m - $70m (based on estimated starting premises of 30,000 to 40,000 and premises handed over of 5,000 to 15,000)
UFB1 Cost Per Premises Connected (CPPC)	$1,050 - $1,200 (excluding layer 2 and including standard installations and some non- standard single dwellings and service desk costs)	$1,122
Fibre connections & layer 2 capex	$260 – $290m(based on mass market 152,000 fibre connections, 12,000 backbone builds and 2,500 premium business fibre connections and including service desk costs)	$258m
FY18 Gross capex	$780 – $820m	$639m
FY18 EBITDA	$625 – 650m	$652m
	UFBprogrammeguidance
UFB1 Communal guidance: $1.75 - $1.8 billion	Tracking toward the top half of this programme guidance, excluding additional splitter investment. As a result of higher than anticipated fibre uptake, Chorus is bringing forward the investment of additional splitters prior to 2020, and expects to spend up to $30 million on this capability by 2020. This additional expenditure is growth related.

Chorus Investor Roadshow - October 2017

31

CAPEX SUMMARY

> FY18 GUIDANCE : $ 780m - $820m

 Fibre $590m-$625m

• ~$10m capitalisation (IFRS 15)

• ~$10m pole replacement programme in Chorus UFB areas

• $50-70m spend forecast for UFB2 communal

• Growth in forecast fibre connections

• Copper $125m-$145m

• ~$50m capitalisation of items previously expensed (IFRS 15)

• ~$20m VDSL vectoring investment

• ~$10m pole replacement programme across the balance of the network

 Common : $50m-$65m

Historical gross capex and illustrative FY18 profile

Common Copper Fibre $780 - $820m

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$679m
$639m
$597m $593m
590-625
566 503
504 486
79 125-145
61 60 67
52 33 40 57 50-65
FY14 FY15 FY16 FY17 FY18
GUIDANCE
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Chorus Investor Roadshow - October 2017

CAPITAL MANAGEMENT

cps

• The Chorus Board considers that a ‘BBB’ credit rating or equivalent credit rating is appropriate for a company such as Chorus. It intends to maintain capital management and financial policies consistent with these credit ratings.

Chorus dividend profile

30 25 20 ▪ 15  Dividend 10 suspended during copper  5 pricing review 0 FY12 FY13 FY14 FY15 FY16 FY17 FY18 FY12: prorated for the post During the UFB build programme to 2020, the Board demerger period of seven months expects to be able to provide shareholders with modest dividend growth from a base of 20cps per annum, subject to no material adverse changes in circumstances or outlook.

• FY18 dividend guidance of 22cps, subject to no material adverse changes in circumstances or outlook.

• A Dividend Reinvestment Plan has been available to NZ and Australian resident shareholders with a 3% discount to prevailing market price.

• The FY17 final dividend was underwritten with 54% DRP uptake.

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Chorus Investor Roadshow - October 2017

DEBT PROFILE

As at 30 June 2017	$m
Borrowings	1,862
+ PV of CFH debt securities(senior)	99
+ Net Finance leases	154
Sub total	2,115
- Cash	(170)
Total net debt	1,945
Net debt/EBITDA	2.98 times

• Financial covenants require senior debt ratio to be no greater than 4.75 times

NZ $M 0 200 400 600 800	677 400 785 59 59 89 113 27 46 78 96 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 2036 CFH debt securities available Face value of CFH debt securities issued EUR EMTN NZ Bond GBP EMTN Term debt profile at 30 June 2017 (NZ$m)

• At 30 June, debt of $1,862m comprised:

• Long term bank facilities $350m undrawn

• NZ bond $400m

• Euro Medium Term Notes $1,462m (NZ$ equivalent at hedged rates)

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Chorus Investor Roadshow - October 2017

Appendices

35

UFB2 & UFB2+ DETAILS

> The Government announced extensions to the UFB1 rollout in 2017

• UFB2 announced January 2017

• UFB2+ announced September 2017

Government UFB rollout

UFB2: to be completed by Dec 2022 Crown investment: $307m Premises* covered: ~200k Homes and businesses covered: ~216k Population covered: 9%

Chorus’ UFB2 role

• to pass ~ 168,000 premises = estimated communal capex of $370m to $410m*

• Crown funding of up to $298m (65:35 equity/debt)

• connection capex subject to demand: ~203,000 homes and businesses  estimated cost of $1,500-$1,700 per connection (in 2017 dollars and including layer 2, backbone costs for MDUs and rights of way with 10 or fewer premises)

Chorus’ UFB2+ role

UFB2+: to be completed by Dec 2022  to pass 54,500 premises = estimated communal capex of $135m to $155m Crown investment: $130m  Crown funding of up to $109m (100% equity) Premises covered: ~60k  connection capex subject to demand: ~60,000 homes and businesses Homes and businesses covered: ~60k  estimated cost of $1,500-$1,700 per connection (in 2017 dollars and including Population covered 2% layer 2, backbone costs for MDUs and rights of way with 10 or fewer premises)

*includes rights of way with more than 10 premises

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Chorus Investor Roadshow - October 2017

INCOME STATEMENT

	FY17 $m	FY16 $m
Operatingrevenue	1,040	1,008
Operatingexpenses	(388)	(414)
Earnings before interest, tax, depreciation and amortisation(EBITDA)	652	594
Depreciation and amortisation	(339)	(327)
Earnings before interest and income tax	313	267
Net interest expense	(154)	(140)
Net earnings before income tax	159	127
Income tax expense	(46)	(36)
Net earnings for theyear	113	91

FY16 EBITDA was impacted by five and a half months of benchmark copper pricing

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Chorus Investor Roadshow - October 2017

REVENUE	FY17 $m	FY16 $m
Basic copper	450	489*
Enhanced copper	248	242*
Fibre	198	133
Value Added	36	35
Network Services
Field Services	76	83*
Infrastructure	23	20
Other	9	6
Total	1,040	1,008

• included ~6 months of the final copper pricing determination

Note: simplifying revenue categories for FY18

EXPENSES	FY17 $m	FY16 $m
Labour costs	74**	78
Provisioning	43	60
Network maintenance	87	89
Other network costs	27	34
IT costs	60**	65
Rents, rates and property maintenance	30	28
Regulatory levies	13	13
Electricity	14	14
Consultants	10	4
Insurance	3	3
Other	27	26
Total	388	414

** These costs are impacted by a changed capitalisation approach in FY17

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Chorus Investor Roadshow - October 2017

FY18 REVISED REVENUE REPORTING CATEGORIES

Category	Description	FY17 $m
Copper line (no broadband)	Revenues received for copper lines where no broadband service is provided by Chorus (i.e. ‘voice only’ UCLL, SLU, SLES, Baseband IP, UCLFS lines).	163
Copper based broadband	Revenues received for copper lines where an ADSL or VDSL broadband service is provided by Chorus, including the backhaul (tail extension services) relating to these services.	501
Data services (copper)	Revenues received for the ~8,000 data services connections on copper.	32
Fibre broadband (GPON)	Revenues for business and residential fibre connections on GPON.	123
Fibre premium (P2P)	Revenues for enterprise/network grade bandwidth and direct (dark) fibre point-to-point (P2P) connections. Note: Includes regional backhaul previously included in Value Added Network Services and fibre backhaul for copper connections previously included in Basic Copper.	79
Value added network services	Revenues for carrier grade data transport services and aggregation handover links.	34
Infrastructure	No change	23
Field services	No change	76
Other revenue	No change	9
Total revenue		1,040

Chorus Investor Roadshow - October 2017

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CHORUS WHOLESALE PRICING – KEY SERVICES

Regulated copperpricing: effective 16 December 2015	Regulated copperpricing: effective 16 December 2015	Key mass market(GPON) fibreproductpricing as at 01 July 2017	Key mass market(GPON) fibreproductpricing as at 01 July 2017	Key mass market(GPON) fibreproductpricing as at 01 July 2017
Copper line only	Year 1 - $29.75 Year 2 - $30.22 Year 3 - $30.70 Year 4 - $31.19 Year 5 - $31.68	Voice only	$25.00	UFB contracted products. FY19 pricing applies until end of 2019 with subsequent pricing subject to regulatory framework.
		50/10Mbps	FY17: $40.50 FY18: $41.50 FY19:$42.50
		100/20Mbps	FY17: $43 FY18: $44 FY19:$45	Commercial products. Prices subject to change on notice, but must be within UFB contracted price cap in Chorus UFB areas.
Copper line with broadband	Year 1 - $41.19 Year 2 - $41.44 Year 3 - $41.71 Year 4 - $42.02 Year 5 -$42.35
		200/20Mbps	FY17-FY19: $55
		1Gbps residential	FY17-FY19: $65
		1Gbps business (SME)	FY17-FY19: $75
		Business 100/100Mbps to 1G/1G	FY17-FY19: $175+	UFB contracted product. FY19 pricing applies until end of 2019 with subsequent pricing subject to regulatory framework.

Fibrepremiumpoint-to-pointproducts	Fibrepremiumpoint-to-pointproducts
High Speed Network Service Premium/Bitstream 4	100Mbps to 1Gbps over Ethernet.	$380+	Price capped in Chorus UFB areas until end of 2019 with subsequent pricing subject to regulatory framework.
Direct Fibre Access	Layer 1 (unmanaged) dark fibre.	$355
Bandwidth Fibre Access	Layer 1 bandwidth managed fibre. 100Mbps, 1Gbps or 10Gbps.	$380+	40 Commercial products. Prices subject to change on notice, but must be within UFB contracted price cap in Chorus UFB areas.
Intra Candidate Area Backhaul	Layer 1 or 2 fibre backhaul, used between local exchanges within UFB areas.	$450+
Chorus Regional Transport	Connecting New Zealand's major UFB centres with 10Gbps and 100GE bandwidth options.	various

Chorus Investor Roadshow - October 2017

Disclaimer

This presentation:

• Is provided for general information purposes and does not constitute investment advice or an offer of or invitation to purchase Chorus securities.

• Includes forward-looking statements. These statements are not guarantees or predictions of future performance. They involve known and unknown risks, uncertainties and other factors, many of which are beyond Chorus’ control, and which may cause actual results to differ materially from those contained in this presentation.

• Includes statements relating to past performance which should not be regarded as reliable indicators of future performance.

• Is current at the date of this presentation, unless otherwise stated. Except as required by law or the NZX Main Board and ASX listing rules, Chorus is not under any obligation to update this presentation, whether as a result of new information, future events or otherwise.

• Should be read in conjunction with Chorus’ audited consolidated financial statements for the year to 30 June 2017 and NZX and ASX market releases.

• Includes non-GAAP financial measures including "EBITDA”. These measures do not have a standardised meaning prescribed by GAAP and therefore may not be comparable to similar financial information presented by other entities. However, they should not be used in substitution for, or isolation of, Chorus' audited consolidated financial statements. The EBITDA information used in this presentation has been subject to audit. We monitor EBITDA as a key performance indicator and we believe it assists investors in assessing the performance of the core operations of our business. Refer to the appendices of Chorus’ 2017 annual results investor presentation for further detail relating to EBITDA measures.

• Has been prepared with due care and attention. However, Chorus and its directors and employees accept no liability for any errors or omissions.

• Contains information from third parties Chorus believes reliable. However, no representations or warranties are made as to the accuracy or completeness of such information.

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