Slide 1: Stock exchange announcement: Chorus investor presentation – 29 June
Chorus Limited Level 10, 1 Willis Street P O Box 632 For personal use only Wellington 6140 New Zealand Email: company.secretary@chorus.co.nz STOCK EXCHANGE ANNOUNCEMENT 29 June 2017 Chorus investor presentation – 29 June Chorus is delivering the attached presentation to various investors today. It n
Slide 2: Investor Presentation 29 June 2017
For personal use only Investor Presentation 29 June 2017
Slide 3: Overview
OVERVIEW > Total fixed line connections decline continued at broadly the same rate in April-May, For personal use only while broadband decline slowed modestly ▪ Ask for better broadband advertising campaign achieving strong awareness ▪ new record for fibre orders and connection activity in May ▪ com
Slide 4: Regulation: Moving to a Utility Model
REGULATION: MOVING TO A UTILITY MODEL > Final regulatory framework policy decisions announced by Government on 1 June For personal use only Fibre – post 2020 utility framework Copper – post 2020 legacy framework Regulated asset base (RAB) to be set by Commerce Commission: Where fibre is available:
Slide 5: Regulation: Building Block Model (BBM)
REGULATION: BUILDING BLOCK MODEL (BBM) > A regulatory framework that supports efficient private sector investment to meet network upgrades and increasing consumer demands through ongoing incentives to innovate, invest and improve efficiency for the long term benefit of For personal use only consumer
Slide 6: Regulation: BBM Details
REGULATION: BBM DETAILS > The Commission will set the upfront input methodologies to provide a transparent and For personal use only predictable guide to how regulated assets will be treated under the new framework ▪ draft legislation may provide further clarity on BBM details that are not yet presc
Slide 7: Chorus Connection Trends
CHORUS CONNECTION TRENDS For personal use only Chorus connections trends > Chorus connections declining 1800000 as: 1600000 ▪ voice only lines diminish 1400000 either through migration to 1200000 broadband and/or 1000000 mobile/wireless 800000 ▪ other Crown fibre partners 600000 grow broadband share
Slide 8: NZ Broadband Market – By Technology
NZ BROADBAND MARKET – BY TECHNOLOGY For personal use only > Demand for broadband IDC - NZ broadband market by technology continues to grow 1,800,000 1,600,000 ▪ broadband penetration still increasing ▪ continued premises growth as 1,400,000 1,200,000 result of New Zealand’s 1,000,000 migration/popul
Slide 9: NZ Broadband Market – By Retailer
NZ BROADBAND MARKET – BY RETAILER For personal use only IDC – NZ broadband market share by retailer > Fibre rollout is a churn event ▪ smaller retailers have been 1,600,000 growing their share of overall 1,400,000 market ▪ intense retail competition 1,200,000 focused on unlimited data and 1,000,000
Slide 10: Better Broadband Campaign
BETTER BROADBAND CAMPAIGN For personal use only > Campaign to upgrade customers to fibre, or VDSL as a stepping stone to fibre, commenced in May ▪ strong response to above the line campaign • 80,000 unique visitors to askforbetter.co.nz • 29,000 address checks: 9k could upgrade to VDSL and 10k could
Slide 11: Focus on Fibre Connections
FOCUS ON FIBRE CONNECTIONS For personal use only What we achieved Dec 2015 Jul 2016 April 2017 Lead times 20 days 16 days 11 days A better customer experience than ever Customer satisfaction 6.6 6.8 7.3 before Customer escalations 6% 8% 5% Technician reschedules 14% 10% 4% Doing more jobs than ever
Slide 12: Fibre Rollout and Uptake
FIBRE ROLLOUT AND UPTAKE For personal use only Chorus fibre connection activity - all NZ > Fibre orders increased significantly in May 25000 25000 Ask for better campaign and retail May 2017 orders increased 33% vs May 2016 incentives stimulating demand 20000 20000 release of new fibre ready add
Slide 13: Fibre Demand Keeps Growing
FIBRE DEMAND KEEPS GROWING For personal use only > 35% of potential customers have connected to fibre demand continues to accelerate in newly completed areas fibre uptake spans all ages, incomes and family types fibre has 100% awareness and highest satisfaction, loyalty and likelihood to recom
Slide 14: Data Demand Keeps Growing
DATA DEMAND KEEPS GROWING > Online viewing is driving data demand > 147GB average monthly household data usage on For personal use only ▪ Our network traffic peaks between 8:30pm and our network in May 2017 (103GB in May 2016) 9:30pm each day and has grown almost 50% in the 125GB average on copper
Slide 15: Peak Hour – An Ever Growing Mountain of Data
PEAK HOUR – AN EVER GROWING MOUNTAIN OF DATA For personal use only 9PM 9PM 6PM 6PM 3PM 3PM 6AM 6AM Time of day Time of day Note: data represents average of traffic across all days in May, excluding corporate traffic. 14 INVESTOR PRESENTATION 29 JUNE 2017
Slide 16: Fixed Line Delivers Consistent Performance
FIXED LINE DELIVERS CONSISTENT PERFORMANCE > Customers value reliability and consistency of service For personal use only ▪ our network is designed to support peak demand: ADSL, VDSL and fibre perform within ~97% peak speed band ▪ fluctuations in fixed line performance typically reflect retailer net
Slide 17: Wireless Performance Highly Variable
WIRELESS PERFORMANCE HIGHLY VARIABLE > Buffering has increased significantly on wireless in the last month ▪ Truenet data shows buffering events as a percentage of all measurements increased to 25% in May For personal use only Buffering Average vs Peak Hours (8-9pm) 30 25.8% 25 20 % 15 April May 11.
Slide 18: Copper Network Performance
COPPER NETWORK PERFORMANCE > For personal use only Copper broadband performance increasing Mbps steadily 25 Average Copper Connection Speed ▪ new Dynamic Line Management (DLM) technology deployed in April resulted in 20 increase in average download speeds of: • 18% on ADSL connections 15 • 8% on VDS
Slide 19: What We're Focused On
WHAT WE’RE FOCUSED ON Better broadband For personal use only • Driving broadband uptake and retention • Providing customers with a network that is fast, reliable and congestion free Transforming customer experience and cost • Optimising the fibre/VDSL connection experience for customers • Implementi
Slide 20: Leveraging the Utility of Our Network
LEVERAGING THE UTILITY OF OUR NETWORK NZ premises growth: For personal use only ~400,000 new homes expected in Auckland by 2040 Urban fibre footprint enabling new non- broadband connections (e.g. CCTV, micro cells) National network footprint enables HD online TV to 95%+ of Data growth driving Exchan
Slide 21: Appendices
For personal use only Appendices 20
Slide 22: Understanding Our Business
UNDERSTANDING OUR BUSINESS > Our revenues are largely from copper (mostly regulated) and fibre (largely contracted) connections For personal use only Fixed line connections 31 March 2017 31 Dec 2016 30 Sept 2016 30 June 2016 31 March 2016 31 Dec 2015 Unbundled Copper (including SLU/SLES) 90,000 99,0
Slide 23: NZ Fixed Line Market
NZ FIXED LINE MARKET For personal use only Vocus 2o MyRepublic NOW $49 intro plan Local Fibre Companies 22
Slide 24: Indicative NZ broadband coverage
Indicative NZ broadband coverage 100 No fixed line broadband coverage Government target (2025) Rural Broadband Initiative (RBI) 2011-2017 wireless access to 275k homes + businesses. Last 1% to access 10Mbps 99% to access 50Mbps For personal use only 110k able to access Chorus fixed broadband: 90 57%
Slide 25: UFB Uptake by Region – March 2017
UFB UPTAKE BY REGION – March 2017 For personal use only 100% BUILD 100% COMPLETE 90% 80% 70% 60% 50% 40% % uptake relative 34% UPTAKE to capable 30% addresses 20% 10% 0% Jun-16 Sep-16 Dec-16 Mar-17 % of build complete 31 March INVESTOR PRESENTATION 29 JUNE 2017 24
Slide 26: Disclaimer
Disclaimer For personal use only This presentation: • Is provided for general information purposes and does not constitute investment advice or an offer or invitation to purchase Chorus securities. • Includes forward-looking statements. These statements are not guarantees or predictions of future pe