CHORUS LIMITED — Investor Presentation 2018

Oct 14, 2018

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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

15 October 2018

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

Nathan Beaumont Media and PR Manager Phone: +64 4 896 4352 Mobile: +64 (21) 243 8412 Email: Nathan.Beaumont@chorus.co.nz

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INVESTOR ROADSHOW 15 October 2018

Contents

>	Introducing Chorus	3-9
>	Broadband: the 4th utility	10-18
>	Shaping our future: FY20 objective and FY19 focus	19-26
>	Financial performance and capital management	27-34
Appendices
	 A: Pro forma FY17 net earnings	36
	 B: Network maintenance	37
	 C: Broadband market by retailer & technology	38-39
	 D: Chorus mass market products	40

2

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Introducing Chorus
New Zealand’s largest fixed line communications infrastructure business
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INVESTOR ROADSHOW

15 October 2018

An overview of Chorus

> New Zealand’s largest fixed line communications infrastructure business

• established in Dec 2011 following demerger from Telecom NZ

• listed on NZX and ASX: CNU; ADR ticker:CHRYY

• ~NZ$2 billion market capitalisation (at 1 October 2018)

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

> A nationwide copper and growing fibre (FTTH) network

• ~1.5m connections, including ~1.2m broadband

• 2/3 of way through 11-year fibre to the premises rollout

• ~930 employees supported by ~4,000 contractors/subcontractors

• fibre uptake well ahead of expectations

• streaming video services driving significant data consumption

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4

The Chorus network: nationwide wholesale access

Common network assets

• ~600 local exchanges

• ~11,000 cabinets

• ~280,000 poles

• ~30,000km duct network

Our copper network

• ~130,000km copper

• FTTN broadband to ~90% of lines

• VDSL broadband to ~80% of lines

Our fibre network

• ~47,000km fibre

• FTTP to ~1.36m customers by 2023

• point-to-point fibre in CBD areas

• connects multiple cell sites

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5

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 (UFB2 and UFB2+) have extended coverage goal to 87% of population by the end of 2022

• Chorus is a cornerstone partner in the fibre 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 (WEL Networks)

• Chorus was awarded ~75% of UFB rollout

6

FY19 is peak communal build year

• ~120,000 brownfields premises to be passed across UFB1 and UFB2

• expect to claim another ~18k UFB1 greenfields premises already passed in prior years

	Programme guidance	Programme guidance	Programme guidance	Notes		No. of
						premises
	UFB1 communal		$1.75 - $1.8 billion	Tracking towards the top end of guidance
				and excludes growth (e.g. additional splitter
				investment)
	UFB1 cost to		$1,050 - $1,250	For a standard residential connection,
	connect (CPPC)			including layer 2 and service desk costs,
				and in 2011 dollars. Tracking towards the
				top half of the range.
	UFB2* communal		$505 - $565 million	Combined guidance range for UFB2 and 2+
	UFB2* cost to		$1,650 - $1,850	In 2017 dollars and including layer 2,
	connect			backbone costs for MDUs and rights of way
				with 10 or fewer premises and service desk
				costs
	* combined UFB2	and 2+ rollout plans

7

Sur in fibre demand g g

Premises to pass by Dec 2022 ~1,054,000* Customers able to connect ~1.36 million Estimated communal capex to $2.26 to 2.37 billion pass premises (excludes capex to connect premises) Crown funding (57:43 equity/debt) up to $1.33 billion

*Includes estimated 43k greenfields premises for UFB1

• 50% UFB uptake at 30 Sept (30 June: 45%)  472,000 connections

• 950,000 customers able to connect

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No. of UFB rollout and uptake Uptake
connections
1,400,000 100%
90%
1,200,000
80%
UFB connections UFB available addresses
1,000,000 70%
Planned footprint % Uptake (RHS)
60%
800,000
50%
600,000
40%
30%
400,000
20%
200,000
10%
0 0%
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Uptake
100%
90%
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• 714,000 premises passed

8

Connecting customers

20% lift in fibre installations YOY

• 185 installation crews added in FY18

• focus on lifting customer satisfaction

• achieving “fibre in a day” for 25% of regular installations > targeting 50% by Xmas

• working with retailers to reduce reschedules

Migration campaigns

• mix of Chorus-led door knocking and integrated retailer campaigns

• ongoing trials to support fibre in a day and future copper migration

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9

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Broadband: the 4 [th] utility
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INVESTOR ROADSHOW

15 October 2018

Overview of the New Zealand fixed line market

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11

Chorus connection trends

1800000 1600000 Baseband copper 1400000 Unbundled copper 1200000 1000000 Copper ADSL 800000 600000 400000 VDSL 200000 No. of Fibre (GPON) connections 0

Q1 FY19: 1,507,000 connections Voice only connections: 300,000

Broadband connections: 1,190,000  66% of connections on fibre or VDSL Premium business connections: 17,000

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12

Chorus connections drivers

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. Vectoring VDSL upgrade completed in areas outside our fibre footprint.	Growing network competition as local fibre companies (LFCs) expand their fibre footprint: ~190k connections FY18 (~140k FY17).
Intense retail competition is helping broaden the market by providing customers with attractive plans and pricing (e.g. free smart TV; free Netflix; bundled with electricity). Unlimited data plans becoming the norm as streaming video on demand grows.	Fixed wireless (mobile) retailers are encouraging their existing low data customers onto their own networks. 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.

CONNECTIONS BY ZONE Chorus UFB zone Rural (non-UFB) zone Local Fibre Company UFB zone TOTAL*	CONNECTIONS BY ZONE Chorus UFB zone Rural (non-UFB) zone Local Fibre Company UFB zone TOTAL*	CONNECTIONS BY ZONE Chorus UFB zone Rural (non-UFB) zone Local Fibre Company UFB zone TOTAL*	CONNECTIONS BY ZONE Chorus UFB zone Rural (non-UFB) zone Local Fibre Company UFB zone TOTAL*	CONNECTIONS BY ZONE Chorus UFB zone Rural (non-UFB) zone Local Fibre Company UFB zone TOTAL*
At 30 June 2018	1,108,000	206,000	194,000	1,508,000**
At 30 Sept 2018	1,106,000	203,000	181,000	1,490,000**
Copper connections: no broadband	189,000	50,000	61,000	300,000
Broadband: copper + fibre	917,000	153,000	120,000	1,190,000

* Includes planned UFB1, 2 and 2+ coverage

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

13

Growing our broadband base

MBIE National Construction Pipeline Report forecasts 39% growth in consents

Strong premises growth

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• government forecasts suggest 39% growth in consents

• we’ve redesigned processes for property developers

• ~3,000 premises pre-connected with fibre in FY18

Competitive network effects ebbing

• LFC UFB1 rollouts complete

• wireless customers returning as fibre rollout expands, data demands grow

• Wellington rollout entering significant off-net HFC suburbs

• leveraging our vectoring VDSL rollout in LFC and rural areas

14

Fibre uptake and data demand

Monthly average data usage per household connection on our network grew to 221GB (Sept 2018) from 210GB (June 2018)

• 46,000 mass market fibre connections added in Q1 ▪ 36,000 connections now on gigabit plans (Q4: 30,000)

• 70% of mass market fibre connections on 100Mbps

• 307GB on fibre (June: 297GB)

• 163GB on copper (June:160GB) Monthly average data usage per connection on our network

Total mass market fibre uptake by plan type

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100
$65 monthly Monthly average data usage
90 per connection on our network
350
80
70 Data 300
usage
% of 60 (GB) 250
plans 50
200
40
$45 monthly
150
30
100
20
10 $41.50 monthly 50 Copper Fibre Average
0 0
Jun-16 Sep-16 Dec-16 Mar-17 Jun-17 Sep-17 Dec-17 Mar-18 Jun-18 Sep-18
50Mbps 100Mbps 200Mbps Gigabit Education Business 100Mbps+ Other
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15

40% growth in traffic peak: Sept 2017-2018

Network throughput (Tbps)

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Average Peak Throughput - September
1.8 Fortnite effect: record
peak traffic 1,792Gbps
1.6 on 12 July 2018
2018 2017
1.4
1.2
1
0.8
0.6
0.4
0.2
0
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Time of day

16

Live sports to drive streaming uptake

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www.chorus.co.nz/streambig

17

Streaming is driving shift to unlimited data plans

71% of NZ broadband connections have no data cap

Share of connections by data cap

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100%
5% 8% > ~1.3m broadband connections are
90% believed to be on unlimited data
Unlimited
33% plans, up from ~130k in 2014
80%
50%
70% 62% 100GB or more
71%
60%
50GB to 100GB
50%
40% 20GB to 50GB
30%
5GB to 20GB
20%
10%
Under 5GB
0%
Source: Statistics NZ ISP Survey June 2018
2013 2014 2015 2016 2017 2018
18 15 October 2018 INVESTOR ROADSHOW
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Shaping our future
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INVESTOR ROADSHOW

15 October 2018

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Shaping our future

Our aspiration is to return to modest EBITDA growth in FY20, subject to no material changes in expected regulatory environment or competitive outlook

• utility style framework expected soon

• copper>fibre migration

• refining our product portfolio

• review of service company model

• evolving company culture

• the rise of wholesale only networks

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20

21

Transition to a regulated utility framework

• draft legislation currently before Parliament would implement a utility-style building block methodology for fibre networks from 2020

• fibre RAB will include unrecovered losses incurred before 2020

• pre 2011 assets to be valued at depreciated historical cost; post 2011 assets at depreciated actual cost

• price cap for 100/20Mbps anchor product to start at 2019 level with annual CPI adjustment for the first regulatory period – currently 2023

• unbundling of the fibre network to be made available on a commercial basis from 2020

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

Remaining 13% of population

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Note: existing copper regulatory framework uses benchmarking and Total Service Long Run Incremental Cost, with pricing last set in late 2015 for a 5-year period (see Appendix D – Chorus mass market products)

22

Regulated Asset Base implementation

• Commerce Commission will determine the starting value of the RAB, regulatory WACC, cost allocations, expenditure allowances and maximum allowable revenue

• if this process extends beyond 1 January 2020, key fibre and copper prices will be frozen, adjusted for inflation, for up to 24 months

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Building block
cost stack
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23

Proposed RAB framework similar to NZ electricity sector

Growing number of wholesale communication network comparators

Country	Company	Business type	Market cap	EV/EBITDA	Net Debt /EBITDA	Credit rating	WACC
New Zealand	Vector	Electricity distribution network	NZ$3.4b	10.7x	4.42x	BBB – S&P Baa1 – Moody’s	In April 2018 the NZ Commerce Commission determined a FY19 WACC of 5.19% (post tax, 67th percentile) for electricity distribution businesses
New Zealand	Chorus	Wholesale communications network (copper + fibre)	NZ$2.1b	6.1x	3.43x	BBB – S&P Baa2 – Moody’s 1	Fibre WACC yet to be determined under new regulatory framework. In Dec 2015, the NZ Commerce Commission determined WACC of 5.56% (post tax, 50th percentile) for Chorus’ legacy network
Singapore	Netlink NBN Trust	Wholesale communications network (fibre only)	NZ$2.8b	14x 2	2.1x 2	Not rated	In 2017, IMDA - the Singapore regulator - determined WACC of 7% (pre-tax) under a RAB framework for the Jan 2018 to Dec 2022 period
Czech Republic	CETIN	Wholesale communications network (fixed + mobile)	Not listed			BBB – Fitch Baa2 – Moody’s	In 2015, CTU - the Czech regulator - determined WACC (post tax) of 9.07% for NGA network and 6.39% for legacy network 3

Source: Financial metrics based on Bloomberg data as at 1 October

1. Moody’s Investor Services has noted Chorus’ transition to a regulated utility model could support a higher leverage profile within the Baa2 credit rating. 2. Based on trailing 12 month financials.

3. In 2016, a European Commission report recommended higher WACCs be applied to Next Generation Access networks to reflect different characteristics from legacy networks, including systematic demand risks, intensive capital leverage and long-term pay-offs.

24

Innovation focus

Pipeline of opportunities identified

• infrastructure re-use trialled for IoT delivery and moving to commercialisation

• school trials proving wi-fi potential to bridge digital divide

• network edge computing : clear global trend favouring exchange co-location; Wellington and Christchurch sites under development for Q3 FY19

• 4K TV trial: clear medium term potential for broadcasting role; pathway to other opportunities as streaming accelerates data demands

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25

Planning for copper to fibre migration

• average UFB uptake of 50% understates actual penetration given ongoing network expansion and off-net connections

• fibre penetration is >70% across 1,000 nodes when exclude off-net connections

• draft legislation contemplates copper withdrawal in areas where fibre is available

• withdrawal code to be developed in consultation with industry and Commission

Fibre uptake by fibre node area (brownfields at 30 June 2018), excluding off-net addresses

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800
50% uptake across
700 our UFB area,
including off-net
600
500
400
300
200
100
0
# nodes
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% penetration – pre 2018 areas

26

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Financial performance and
capital management
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INVESTOR ROADSHOW

15 October 2018

Income statement

	FY18 $m	FY17 (adjusted) $m	
Operatingrevenue	990	1,048
Operatingexpenses	(337)	(338)
Earnings before interest, tax, depreciation and amortisation(EBITDA)	653	710
Depreciation and amortisation	(387)	(379)
Earnings before interest and income tax	266	331
Net interest expense	(144)	(147)
Net earnings before income tax	122	184
Income tax expense	(37)	(39)
Net earnings for theyear	85	145

FY17 adjusted to show the illustrative impact if NZ IFRS 9, 15 and 16 had applied

FY19 EBITDA guidance of $625m to $645m reflects:

• expectations of market growth in broadband, plus continued slowing in overall line loss

• incremental spend (above FY18 levels) of $10 - $15 million on innovation activity, regulatory processes, branding and other transformation-related oneoff costs. Excluding this, we expect total costs to be broadly consistent with FY18.

28

Revenue

	FY18	FY17		FY17 adjusted to show the illustrative im
	$m	(adjusted)		applied
		$m
Fibre broadband (GPON)	198	123	>	Revenue growing as fibre uptake increases
Fibre premium (P2P)	78	79	>	Movement from legacy services to lower pr
Copper based voice	133	163
Copper based broadband	421	501		Copper revenues declining as customers m competing fibre/wireless networks
Data services copper	27	32
Field Services	70	84	>	Decline in copper installation, subdivision a
Value added network	33	34
services
Infrastructure	23	23
Other	7	9
Total	990	1,048

FY17 adjusted to show the illustrative impact if NZ IFRS 15 and 16 had applied

Movement from legacy services to lower price UFB services

Copper revenues declining as customers migrate to Chorus fibre or competing fibre/wireless networks

Decline in copper installation, subdivision and 3[rd] party maintenance revenues

29

Expenses

	FY18 $m	FY17 (adjusted) $m
Labour	73	69
Provisioning	6	11
Network maintenance	87	87
Other network costs	34	27
IT	54	55
Rents, rates and propertymaintenance	24	22
Regulatorylevies	13	13
Electricity	15	14
Consultants	5	10
Insurance	3	3
Other	23	27
Total	337	338

• FY17 adjusted to show the illustrative impact if NZ IFRS 15 and 16 had applied



• 12% reduction in staff from Aug 2017 peak but most impact in capex. Labour includes $5m of one-off costs

• Provisioning reflects a smaller scope of activity and cessation of FY17 install support costs

• Proactive maintenance and weather events offset volume reduction and changed copper/fibre mix

• Increases in network costs reflects increased focus on proactive maintenance and cost of maintaining network spares

• Reduced following FY17 strategic review

• Other costs declined with initiatives around travel and other corporate expenses

30

FY19 gross capex guidance

$820m - $860m gross capex reflects:

 Fibre $660m-$690m

• $280-310m fibre connections & layer 2

• $90-110m spend forecast for UFB2/2+ communal

• continued greenfields and transport (UFB2) spend

• ~$10m pole programme continues

• customer retention mix weighted more to fibre

• Copper $90m-$110m

• vectoring rollout complete

• ~$10m pole programme continues

• Common : $55m-$70m

▪ includes potential innovation spend

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FY18 vs FY19 illustrative capex profile
Common Copper Fibre
$820 - $860m
$810m
620 660-690
132 90-110
55-70
58
FY18 FY19 GUIDANCE
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31

FY19 guidance summary

	FY19guidance	FY18 result
UFB1 Cost Per Premises Passed(CPPP)	$1,500 - $1,600	$1,568
UFB2/2+ communal capex	$90m - $110m (based on estimated starting premises of 45,000 to 55,000 and premises handed over of 25,000 to 35,000)	$61m
UFB1 Cost Per Premises Connected (CPPC)	$1,000 - $1,150 (excluding layer 2 and including standard installations and some non- standard single dwellings and service desk costs)	$1,037
Fibre connections & layer 2 capex	$280 – $310m(based on mass market 155,000 – 175,000 fibre connections, and 14,000 backbone builds and including service desk costs)	$294m
FY19 Gross capex	$820 – $860m	$810m
FY19 EBITDA	$625 – 645m	$653m

32

Capital management

• 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.

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• FY19 dividend guidance of 23 cps , 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

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During the UFB build programme to 2020, the Board
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.
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FY12*: prorated for the post demerger period of seven months

33

> At 30 June, debt of $1,922m comprised:

Debt

	As at 30 June 2018 $m	As at 30 June 2018 $m
Borrowings	1,922
+ PV of CFH debt securities(senior)		129
+ Net leases payable		238
Sub total	2,289
- Cash	(50)
Total net debt	2,239
Net debt/EBITDA	3.43 times

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

• Long term bank facilities $290m undrawn; $60m drawn

• ▪ NZ bond $400m

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

Term debt profile

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800
CFH debt securities available
700
Face value of CFH debt securities issued
600
NZ
EUR EMTN
$M 500
NZ Bond
400 785
GBP EMTN
677
300
75
200 400 62
35
16
100
134
105
70 70
0
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34

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Appendices
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INVESTOR ROADSHOW

15 October 2018

Appendix A: Pro forma FY17 net earnings

For information purposes only. This appendix provides an approximate translation of FY17 to show the illustrative impact if NZ IFRS 9, 15 and 16 had applied in FY17.

Income statement	FY17 results $m	NZ IFRS impact $m	FY17 (adjusted) $m	Notes
Operating revenue	1,040	8	1,048	Broadband modem upgrade costs incurred in FY17, in FY18 these are now capitalised and amortised in accordance with NZ IFRS 15
Operating expenses	(388)	50	(338)	$42m costs incurred in acquiring and retaining customers (provisioning $32m, Labour $5m and IT $5m). These costs are now capitalised and amortised in accordance with NZ IFRS 15 and disclosed as separate items in fibre and copper capex. $8m rent and rates are now recognised as a right of use asset with the value capitalised and depreciated over the life of the lease.
EBITDA	652	58	710
Depreciation and amortisation	(339)	(40)	(379)	Increase in depreciation and amortisation in line with NZIFRS 15 and 16.
Net interest expense	(154)	7	(147)	NZ IFRS 9 and 16 impact to account for change in accounting treatment for ineffectiveness and capitalisation of leases.
Income tax expense	(46)	7	(39)	Net tax impacts associated with NZ IFRS changes.
Net earnings for the year	113	32	145

36

Appendix B: Understanding network maintenance

Fibre uptake initially reduces variable copper costs only

• Rural areas are disproportionately more expensive to maintain than urban areas

• Copper costs don’t reduce in proportion to the number of connections – there is a significant fixed element

• Fibre share of maintenance will grow, but at a lesser rate than copper because variable fault rate is lower on fibre (although costlier to fix)

• In the long run, we think there is around an annual $10m saving from full copper to fibre migration in Chorus UFB areas

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Copper maintenance: Exchange + feeder Cabinet to street In boundary (excludes urban (indicative) cable boundary home wiring) Fixed 30% 70% 0% Variable 20% 40% 40%

% FY18 reactive maintenance cost

% FY18 lines

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Chorus UFB
Rural (non-UFB)
LFC UFB
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FY18 reactive maintenance
spend $m
8
Fibre
36 Copper -
fixed
31
Copper -
variable
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37

Appendix C: Broadband market by retailer + technology

Broadband uptake by retailer (all technology)

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

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Source: IDC

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NZ broadband market – by technology
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1,800,000
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) Other fibre networks Other xDSL
Vodafone cable Fixed (mobile) wireless Legacy fixed wireless, satellite
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Source: IDC

38

Chorus connections

	30 Sept 2017	31 Dec 2017	31 March 2018	30 June 2018	30 Sept 2018
Unbundled copper	76,000	68,000	62,000	53,000	45,000
Baseband copper (no broadband)	302,000	290,000	279,000	268,000	255,000
Fibre broadband (GPON)	328,000	362,000	394,000	433,000	479,000
VDSL (includes naked)	294,000	320,000	325,000	321,000	309,000
Copper ADSL (includes naked)	562,000	499,000	465,000	433,000	402,000
Data services (copper)	7,000	7,000	6,000	6,000	5,000
Fibre premium (P2P)	13,000	13,000	12,000	12,000	12,000
Total connections	1,582,000	1,559,000	1,543,000	1,526,000	1,507,000

0 200000 400000 600000 800000 1000000 1200000 1400000 1600000	Fibre (GPON) VDSL Copper ADSL Unbundled copper Baseband copper
30-Jun-17 30-Sep-17 31-Dec-17 31-Mar-18				30-Jun-18		30-Sep-18
	Data services (copper) Fibre broadband (GPON) Copper ADSL Baseband copper (no broadband)	Fibre premium (P2P) VDSL Unbundled copper (no broadband)

39

Appendix D: Chorus mass market products

Fibre products (GPON)	Wholesale price (monthly)	Product type
Voice only	$25.00	UFB contracted products. FY19 pricing applies until end of 2019 with subsequent pricing subject to regulatory framework.
50/10Mbps	July 2017: $40.50 July 2018: $41.50 July 2019: $42.50
100/20Mbps	July 2017: $43 July 2018: $45	Chorus commercial products. Prices subject to change on notice, but must be within UFB contracted price cap in Chorus UFB areas.
200/20Mbps	FY17-FY19: $55
1Gbps residential	FY17-FY19: $65
1Gbps business	FY17-FY19: $75
100/100Mbps to 1G/1G business	FY17-FY19: $175+	UFB contracted product. FY19 pricing applies until end of 2019 with subsequent pricing subject to regulatory framework.

Regulated copper pricing	Regulated copper pricing	Line only (monthly)	With broadband (monthly)	With broadband (monthly)
Year 1 (from mid Dec 2015)		$29.75	$41.19
Year 2 (from mid Dec 2016)		$30.22	$41.44
	Year 3 (from mid Dec 2017)	$30.70	$41.71
Year 4 (from mid Dec 2018)		$31.19	$42.02
Year 5 (from mid Dec 2019)		$31.68	$42.35

Note :

• Copper prices were set by the Commerce Commission in Dec 2015

• Chorus charges the same for high-speed VDSL broadband as ADSL broadband

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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 2018 and NZX and ASX market releases.

• Includes non-GAAP financial measures including "EBITDA” and “adjusted 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. They should not be used in substitution for, or isolation of, Chorus' audited consolidated financial statements. 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 this presentation and Chorus’ FY18 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 (express or implied) are made as to the accuracy or completeness of such information.

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