Chorus Limited · NZX:CNU
Chorus — Investor Day (May 2012)
22 slides from Chorus's investor day presentation, May 2012
Slide 1: Chorus Investor Day
Chorus Investor Day Auckland, May 2012
Slide 2: Disclaimer
Disclaimer Forward-Looking Statements > This presentation may contain forward-looking statements regarding future events and the future financial performance of Chorus. These forward-looking statements are not guarantees or predictions of future performance, and involve known and unknown risks, unce
Slide 3: It's been a busy year!
It’s been a busy year! MAY JUN JUL AUG SEP OCT NOV DEC JAN FEB MAR APR MAY 2011 2012 24 May: Telecom/Chorus is UFB Crown partner 24 Aug: Chorus starts UFB 13 Sep: Scheme book published 27 Oct: Shareholders Sh h ld approve demerger d 25 Nov: CNU on NZX 1 Dec: Chorus Ch demerger d 20 Dec: FTTN complet
Slide 4: Agenda
Agenda > Capex Overview: Andrew Carroll Carroll, CFO > UFB Update: Chris Dyhrberg, GM Network Build > Market & Revenues: Victoria Crone, GM Marketing & Sales > Overview: Mark Ratcliffe, CEO > General Q&A > Aim to finish at midday > UFB site visit for those who have registered
Slide 5: CFO capex overview
CFO capex overview Andrew Carroll, Chorus CFO
Slide 6: Overview of presentation
Overview of presentation > Chorus capital expenditure ▪ Fixed assets at demerger ▪ Historical ▪ Future ▪ Capex by category > UFB build programme
Slide 7: Chorus fixed assets at demerger
Ch Chorus fixed fi d assets t att demerger d $ $m Summary of property, plant, equipment and intangible Copper cables 705 assets as per Scheme Book pro Fib optic Fibre ti cables bl 272 forma amount of $2 $2,425m 425m Ducts and manholes 381 Cabinets 227 Focus on building asset base to support and grow
Slide 8: Chorus capex: historical view
Chorus capex: historical view > Limited useful benchmarks for historical Chorus spend Scheme Book described $410m FY11 pro forma capex INCLUDED EXCLUDED Regulatory capex 213m UFB & RBI programmes (FTTN ~$130m) UFB & RBI contributions
Slide 9: Future capex make-up
Future capex make-up Three main (asset-related) (asset related) capex categories: Fibre: includes spend specifically on fibre assets (e.g. layer 0 and 1 UFB network assets), assets to support the fibre network (e.g. IT delivering UFB products), and programmes largely focussed on fibre (e.g. RBI) Cop
Slide 10: Capex overview
Capex overview FY12 FY13 (7 months) $m $m Fibre capex 265 – 275 450 – 480 Copper capex 40 - 50 75 – 85 Common capex 25 – 35 35 – 45 Gross capex (guidance) 335 – 355 560 – 610 Less contributions CFH contribution 40 – 45 120 – 125 RBI grant 40 – 45 70 – 75 Oh Other 5 10 0 Total contributions 85 – 95 2
Slide 11: FY13 gross capex by category
FY13 gross g o capex pe by b category tego Indicative breakdown of FY13 gross capex (mid points of range) Common capex 7% Fibre capex 80% Information 4% UFB communal 48% technology 7% Building & engineering 2% services 13% UFB connections & 4% fibre layer 2 Other 1% Fibre products & 4% Copper capex
Slide 12: Fibre capex categories
Fibre capex categories •Estimated $1.4 – 1.6 billion cost across UFB build period UFB communal •Capex cost for ~ 100,000 premises to be commenced 48% off ttotal t l and d completed l t d iin FY13, FY13 with ith additional dditi l WIP ffor around d 10,000 premises UFB connections & fib layer fibre l
Slide 13: Copper capex categories
Copper capex categories •Upgrading or replacing plant (e(e.g. g poles, poles cabinets, cabinets Network sustain cables) where risk of failure or degraded service 6% •Proactive network replacement more cost effective than reactive maintenance Copper connections •Demand for copper connections for resi
Slide 14: Common capex categories
Common capex categories Information •Investment in future Chorus IT platforms, in part to technology meet June 2014 deadline to move from Telecom 4% enterprise p systems y Building and engineering g g •Spend for growth and plant replacement (e.g. power, services air i conditioning) diti i ) att Ch C
Slide 15: Contributions to capex
Contributions to capex •CFH contributes up to $929 million over course of programme, UFB at a rate of $1,118 per premise •Government grant funding of ~$225 million over 5 years to cover most layer 0 and 1 capex spend RBI •Layer La e 2 is not covered co e ed by b the grant g ant •Grant is payable on
Slide 16: UFB build metrics
UFB build metrics Estimated cost of communal network $1.4 to $1.6 billion Less contribution from CFH $929m Estimated net Chorus contribution $471m to $671m Estimated average cost per premise connected $900 to $1,100 (real) Estimated average cost per premise passed $1,685 to 1,926 Cost per premises p
Slide 17: UFB field crews
UFB field crews > Rapid increase in number of UFB field crews since September > Expect long run average of 180 to 190 field crews UFB crew p per month 200 174 175 oss the 180 160 eraged acro 140 136 134 120 100 eks) number (ave 100 wee 78 80 60 Crew n 40 25 20 0 0 S Sept O 11 Nov-11 Oct-11 N 11 Dec-
Slide 18: UFB progress
UFB progress > Build work expected to be complete for 40 - 42,000 premises by 30 June, across around d 360 cabinets. b Another h 10 – 12,000 premises are expected to be recognised as work in progress, many substantially complete > Consistent with FTTN, we expected initial CPPP would be greater than
Slide 19: FTTN experience
FTTN experience > FTTN project demonstrated significant opportunities to improve efficiencies and reduce unit costs over the build programme $160 FTTN Layer 1 Costs aveerage layer 1 cost per FTTN cabinett $'000 $0 Yr 1 Yr 2 Yr 3 Yr 4 19
Slide 20: Expected CPPP profile
Expected CPPP profile > CPPP to decrease as priority premises completed (around 2015) and deplo deployment ment p process ocess is optimised, optimised delivering deli e ing expected e pected UFB communal build cost of $1.4 – 1.6 billion $3,500 $3,300 deployment •deployment efficiencies •largely res
Slide 21: Evolution in build programme
Evolution in build programme FY12 FY13 > One-off start up costs > Focus on opportunities for > Rapid mobilisation contributed to operational and deployment inefficiencies efficiencies ▪ Sub optimal design in places, > Deployment teams in place - time to compounded by compressed implement resourcing
Slide 22: And another thing
And another thing > Expect FY13 dividend policy to be set by Board and outlined as part of full year result in late August