Chorus singing the praises of fibre in steady year

Cutting expenses allowed New Zealand broadband wholesaler to finish year with steady results.

New Zealand broadband wholesaler Chorus recorded relatively even numbers in a year where coronavirus took hold.

In the year to June 30, the company reported revenue was down 1% to NZ$959 million, earnings before interest, tax, depreciation, and amortisation (EBITDA) grew 2% to NZ$648 million, and net profit was reported down 2% to NZ$52 million.

Breaking down revenue by access technology, its fibre broadband segment grew 34% to NZ$393 million, while copper revenue dropped 21% to NZ$369 million. Field services revenue fell NZ$9 million to NZ$65 million due largely to the pandemic, the company said.

"We chose to provide NZ$5 million in financial support to our service companies and their subcontractors. This assisted them with the impact of reduced levels of work and helped retain the workforce for a rapid resumption of activity as alert levels relaxed," Chorus CEO JB Rousselot said.

"We also agreed a relief fund of NZ$2 million, which we made available to retailers to help address the expected increase in bad debts for consumers and small businesses unable to pay their bills during lockdown."

Chorus said it had completed 167,000 fibre installations throughout the year and the number of 1Gbps connections almost doubled from 58,000 to 115,000. Across its UFB footprint, the company now has 1.2 million customers able to connect, an increase of 100,000, with 931,000 premises passed in total, meaning the network is 88% complete.

In total, Chorus has 740,000 mass market fibre customers, 11,000 with fibre premium connections, and 466,000 customers still on copper.

The cost of UFB2 was boosted by NZ$43 million on the bottom end of its new NZ$548 million to NZ$568 million range, due to extending the footprint by 1,000 premises and increasing use of underground build versus aerial drops. UFB2 is almost at the halfway mark while the UFB1 build was completed during the fiscal year.

"We remain focused on connecting more New Zealanders to fibre," Rousselot said.

"We're seeing something of a fixed-line renaissance as consumers place even greater value on the reliability and unlimited capacity of fibre relative to other broadband technologies."

Rousselot added switching off New Zealand's copper network would not happen overnight, and would be on a "street-by-street basis" where fibre is available. The New Zealand Commerce Commission has proposed that Chorus give six months' notice of when it intends to decommission the copper in an area.

Over the year, Chorus reduced its staff numbers by 5%, and was able to lower its network maintenance costs by NZ$9 million to NZ$64 million due to fibre uptake, lockdown restrictions, and drought conditions in the upper North Island resulting in lower copper faults.

The introduction of Wi-Fi 6, Rousselot said, was interesting and the company had created a 50Mbps symmetrical plan for urban infrastructure connection at NZ$55 a month.

"Internationally this is considered a potential alternative to 5G in enterprise and other private environments (like airports or stadiums) where cost effective capacity and support for a large number of devices is important," the CEO said.

"We're starting to see interest from local government organisations for 'smart location' connectivity, like CCTV cameras, traffic lights and digital advertising sites. Often these will be switching from existing copper or mobile connections, taking advantage of fibre's higher and more consistent bandwidth."

For the coming year, the company expects EBITDA to be between NZ$640 million and NZ$660 million, with the wholesaler to spend between NZ$630 million and NZ$670 million in capital expenditure.

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