Chorus Limited (NS) Analysis

Overview

Chorus is New Zealand's largest fixed line telecommunications network operator. It was listed on the NZSX in 2011 after it was chosen by the Crown to build a fibre network under a public-private partnership agreement. This fibre network will pass more than 1.3 million homes, businesses and schools by the end of 2022. Chorus also operates a nationwide copper access network. It provides access to its fibre and copper network on a wholesale basis to approximately 100 retail service providers.

CNU has been granted Listing with a 'Non-Standard' ("NS") designation. This designation was granted because there are provisions in CNU's constitution regarding ownership restrictions that require the consent of the New Zealand government. For further information, please see a copy of the waiver under Documents on CNU's homepage on nzx.com

Performance

The following information was extracted from Chorus Limited's Half Year results, released 24 February 2025:

Steady financial result as Chorus accelerates to an all-fibre future

Key FY25 results

• Increase in fibre connections: by 14,000 to a total of 1,098,000
• Fibre uptake increased to 71.7% of addresses
• Remaining copper connections: down 22% to 123,000
• Monthly average data use on fibre at a record 644GB in December
• Operating revenue $500m (HY24: $503m)
• EBITDA1 $346m (HY24: $347m)
• Net loss after tax $5m (HY24: net profit $5m)
• Unimputed interim dividend of 23 cents per share

Chorus has released another steady financial result for the six months ended 31 December 2024, despite the challenges of New Zealand’s prolonged economic recession.

EBITDA was $346 million for HY25, just below HY24 EBITDA of $347 million. Revenues of $500 million were down $3 million from HY24 largely due to the ongoing decline in legacy copper connections and revenues.

New property development revenues were about $2 million lower due to the slowed economy, while there was strong growth in the lower revenue 50Mbps broadband plan largely reflecting cost-of-living pressures. About 21,000 residential connections were added to this plan in HY25, while business and residential fibre connections on plans of 500Mbps or more grew by 17,000 lines. Multi-gigabit Hyperfibre connections continued to grow in popularity and recently passed 5,000 lines. About a quarter of residential customers are on 1Gbps speeds or faster.

Total fibre connections grew by 14,000 lines in the six months, with fibre uptake lifting to 71.7 per cent of the more than 1.5 million addresses passed. This growth in connections helped lift fibre broadband revenues to $361 million, up $20 million from HY24, and accounted for 72% of total revenues.

Operating expenditure of $154 million was $2 million lower than HY24, as Chorus’ strategy to simplify its business and reduce legacy costs helped offset inflationary cost pressures and costs to explore new revenue opportunities.

Gross capital expenditure was $199 million, down $33 million from HY24, reflecting disciplined cost control and fewer fibre installations.

The acceleration of depreciation on copper-related assets, as Chorus retires its legacy copper network, drove a net loss after tax of $5 million, compared to a profit of $5 million in HY24.