Chorus Limited · NZX:CNU
Chorus — Macquarie Australia Conference 2016
30 slides from Chorus's conference presentation, May 6, 2016
Slide 1: Chorus investor presentation and fact sheet
Chorus Limited Level 10, 1 Willis Street P O Box 632 Wellington 6140 For personal use only New Zealand Email: company.secretary@chorus.co.nz STOCK EXCHANGE ANNOUNCEMENT 6 May 2016 Chorus investor presentation and fact sheet Attached is a presentation to be delivered by Chorus CEO Mark Ratcliffe at t
Slide 2: Macquarie Australia Conference 6 May 2016
For personal use only Macquarie Australia Conference 6 May 2016
Slide 3: Disclaimer
Disclaimer • This presentation may contain forward-looking statements regarding future events and the future financial performance of Chorus, including forward looking statements regarding industry trends, regulation and the regulatory environment, strategies, For personal use only capital expenditu
Slide 4: Introducing Chorus
For personal use only Introducing Chorus New Zealand’s largest fixed line communications infrastructure business 3
Slide 5: The Chorus Network
THE CHORUS NETWORK > Chorus operates a nationwide wholesale access network of fibre For personal use only Chorus-owned optic and copper cables connecting homes and businesses cables typically connect back to Chorus’ local exchanges, often via broadband cabinets Chorus fibre connects many mobile
Slide 6: Bringing New Zealand better broadband
BRINGING NEW ZEALAND BETTER BROADBAND > Established in December 2011 following demerger from Telecom NZ For personal use only listed on NZX and ASX ~NZ$1.6 billion market capitalisation S&P “BBB” stable; Moody’s “Baa2” stable > New Zealand’s largest fixed line communications infrastructure bus
Slide 7: Broadband capability
BROADBAND CAPABILITY Best available broadband to broadband capable lines For personal use only Fibre (GPON) VDSL ADSL2+ ADSL Fibre by 2020 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% 90,000 Connection Speed Distribution - 1 April 2016 80,000 ADSL ADSL2+ VDSL2 Fibre (GPON) Number of Connections 70,00
Slide 8: Fixed line market and trends
For personal use only Fixed line market and trends 7
Slide 9: Growing demand for broadband
GROWING DEMAND FOR BROADBAND 2,000,000 For personal use only 1,800,000 1,600,000 Number of 1,400,000 Chorus 1,200,000 connections 1,000,000 800,000 600,000 400,000 200,000 0 FY12 FY13 FY14 FY15 Q3 FY16 Broadband connections Line only > broadband connections have increased steadily as household inter
Slide 10: NZ fixed line market
NZ FIXED LINE MARKET For personal use only Rationalisation, new entrants and new business models 2o Vocus are disrupting the MyRepublic NOW $49 intro plan market Local Fibre Companies 9
Slide 11: It's a bandwidth revolution
IT’S A BANDWIDTH REVOLUTION For personal use only Average household bandwidth demand – January 2012 to 2016 200 150 100 50 0 2012 2015 2016 Copper - Fibre - 2016 2016 > 53% of online NZ consumers are streaming TV or movies (Nielsen survey, Jan 2016) > streaming an hour of HD video uses between 2GB t
Slide 12: Video needs sustained capacity
VIDEO NEEDS SUSTAINED CAPACITY 50Mbps 58.7Mbps For personal use only 48.9Mbps 39.2Mbps 29.4Mbps 19.6Mbps 9.6Mbps 100Mbps 108Mbps 90Mbps 72Mbps 54Mbps 36Mbps 18Mbps 11
Slide 13: Fibre rollout: a public-private partnership
For personal use only Fibre rollout: a public- private partnership 12
Slide 14: Building a Fibre to the Premises Network
(G1) Chorus Building a Fibre to the Premises Network Ultra-fast broadband (UFB) partnerships with Crown cover 33 candidate areas. ~1.1 MILLION ~360k of New Zealand homes and homes and population by businesses businesses in other end of 2019 within Chorus’ _UFB network areas 24 UFB areas $1.75b-$1.8b
Slide 15: Fibre rollout: 52% complete
FIBRE ROLLOUT: 52% COMPLETE For personal use only 435,000 premises passed out of 830,900 588,000 homes and businesses within reach 127,000 connections within UFB deployed footprint (105,000 at 31 Dec) 22% uptake across UFB areas now completing close to 500 fibre connections per weekday, up f
Slide 16: New Zealand UFB vs Australia NBN
New Zealand UFB Australia NBN For personal use only Four network providers: Chorus, Northpower, Ultrafast NBN is sole network provider Fibre, Enable FTTP to 75% of population by 2020; Government Mixed technology model – FTTP, FTTN, HFC, wireless, seeking to extend to 80% by 2022. satellite Note: Cho
Slide 17: Service uptake
SERVICE UPTAKE Chorus mass market fibre uptake by plan type NBN Fixed Line Speed Tier Mix (Mbps) For personal use only 100% 80% 60% 40% 20% 0% Dec-15 12/1 25/5 25/10 50/20 100/40 Source: NBN Half Year Results 2016 16
Slide 18: Rollout costs
ROLLOUT COSTS For personal use only Chorus FTTP average cost per premises NBN cost per premises (life to date) 5000 5000 $NZ 4000 $AUD 4000 3000 3000 2000 2000 1000 1000 0 0 FY13 FY14 FY15 FY16 H1 FTTP Fixed wireless FTTN brownfields Cost per premises connected Cost per premises passed Source: NBN H
Slide 19: Regulatory environment and capital management
For personal use only Regulatory environment and capital management 18
Slide 20: Regulatory overview
REGULATORY OVERVIEW 2020 Future framework For personal use only Government review of post 2020 regulatory Copper products: price paths for 5 years framework underway from Dec 16 2015 Minister announced (14 April) that the Government will move towards a utility-style regulatory framework with ‘buil
Slide 21: Capital management
CAPITAL MANAGEMENT > Currently rated BBB (stable) by S&P and Baa2 (stable) by Moody’s. For personal use only > The Chorus Board considers that a ‘BBB’ credit rating from S&P or equivalent credit rating is appropriate for a company such as Chorus. It intends to maintain capital management policies an
Slide 22: New Zealand's 'experiment' a success
NEW ZEALAND’S ‘EXPERIMENT’ A SUCCESS Combined Chorus + Telecom/Spark market cap For personal use only 9 8 7 NZ $ BILLION 6 5 4 3 Chorus demerger 2 1 0 30/06/2010 30/06/2011 30/06/2012 30/06/2013 30/06/2014 30/06/2015 21
Slide 23: Appendices
For personal use only Appendices 22
Slide 24: Appendix A: Guidance summary
Appendix A: Guidance summary H1 FY16 view For personal use only Cost Per Premises FY16: $1,700 - $1,770 Tracking to bottom of guidance Passed (CPPP) range with $1,643 for 33,000 premises build complete in H1 Cost Per Premises FY16: $1,050 - $1,250 (excluding layer 2 and including Tracking to bottom
Slide 25: Appendix B: Chorus term debt profile
Appendix B: Chorus term debt profile 1,000 For personal use only 900 800 310 700 600 Bond offer 500 125 6 May 2016 365 400 677 300 NZ 450 $M 200 400 100 250 89 70 46 46 76 40 40 59 - - - 31 Dec 16 31-Dec-17 31-Dec-18 31-Dec-19 31-Dec-20 31-Dec-21 31-Dec-22 31-Dec-23 31-Dec-24 31-Dec-25 31-Dec-30 31-
Slide 26: Appendix C: Illustrative Chorus pre-financing adjusted cash flows
Appendix C: Illustrative Chorus pre-financing adjusted cash flows 1200 For personal use only 1000 800 600 Rural Broadband rollout ends FY16. 400 UFB communal rollout ends Dec 2019. Fibre connection capex subject to demand. 200 Other fibre, copper 0 FY15 FY15 Estimated Estimated Estimated FY15 Capex
Slide 27: Appendix D: Copper product pricing summary
Appendix D: Copper product pricing summary Benchmark Pricing effective 16 For personal use only pricing December 2015 UCLL and UCLFS $23.52 Year 1 - $29.75 Year 2 - $30.22 Year 3 - $30.70 Year 4 - $31.19 Year 5 - $31.68 Basic UBA uplift $10.92 Year 1 - $11.44 Year 2 - $11.22 Year 3 - $11.01 Year 4 -
Slide 28: Appendix E: Chorus mass market fibre product pricing
Appendix E: Chorus mass market fibre product pricing For personal use only Mass market fibre product pricing $70.00 Accelerate: 200/200Mbps $65.00 Accelerate: 200/100Mbps $60.00 Accelerate: 200/20Mbps $55.00 Evolve 4: 100/50Mbps Accelerate: 100/100Mbps $50.00 Accelerate: 100/50Mbps $45.00 Accelerate
Slide 29: Understanding Chorus: a fact sheet for investors
MAY 2016 Understanding Chorus A FACT SHEET FOR INVESTORS For personal use only CNU CHRYY Chorus is New Zealand’s largest fixed line communications NZX & ASX code for ADR Programme infrastructure company. We wholesale access to our copper BBB Baa2 and fibre network to about 100 retail service provide
Slide 30: Building a Fibre to the Premises Network
Building a Fibre to the Premises Network Ultra-fast broadband (UFB) partnerships with Crown cover 33 candidate areas. AUCKLAND 75% ~ 1.1 ~360k For personal use only MILLION of New Zealand homes and homes and population by businesses businesses in other end of 2019 within Chorus’ UFB network areas 24