Chorus CEO Kate McKenzie leaving at end of 2019

Announcement comes as the broadband wholesaler reports lower revenue and earnings as New Zealand moves off copper, and onto fibre and wireless.
Written by Chris Duckett on

Chorus has announced its CEO Kate McKenzie will leave the company at the end of the year and return home to Australia.

McKenzie took on the role in February 2017, after resigning as Telstra's COO in July 2016.

Chorus said during her leadership, the company had improved its efficiency and customer experience.

"For example, nearly three quarters of fibre installations are now completed in a single technician visit, which avoids the need for a separate scoping visit, and reduces the effort required from customers to get their fibre connected," Chorus said.

"Overall customer satisfaction has increased significantly, and Chorus technicians are consistently rated as the most positive component of the overall fibre ordering and installation experience."

McKenzie said it was an ideal time to move on as the company passed its peak build of New Zealand's Ultra-Fast Broadband network earlier this year.

"As we complete the once in a generation fibre network build and begin the process of decommissioning the copper network over the coming years, our capital expenditure commitments will reduce markedly and we will therefore see a commensurate improvement in cashflows," she said.

"I am most proud of the culture change at Chorus."

McKenzie added she does not intend to take up another executive role.

"Of course, my one regret is I'd love to take the fantastic Chorus fibre network back home with me, but yeah, that's probably not going to happen."

For the full year to June 30, Chorus reported revenue of NZ$970 million, down NZ$20 million, and earnings before interest, tax, depreciation and amortisation (EBITDA) of NZ$636 million, down NZ$17 million. Net earnings from the year reduced from NZ$85 million last year to NZ$53 million.

Broken down by technology, fibre broadband increased its contribution to revenue from NZ$198 million to NZ$294 million, copper-based voice dropped from NZ$133 million to NZ$106 million, and copper-based broadband fell from NZ$421 million to NZ$344 million as the country shifts onto fibre.

New Zealand's Ultra-Fast Broadband is set to pass 1.05 million premises by the end of 2022, with the build of its original footprint to be completed within six months. A second stage of the network is due to be completed by 2024 and cover an addition 203,000 premises.

Chorus intends to fully write down its copper assets by FY25.

"We are starting to see the change in the mix of our connections from copper to fibre," McKenzie said announcing the results on Monday.

"And that's playing out in reduced network maintenance. This is implications for our service company workforce ... We'll keep working closely with our service companies to manage our reducing workforce needs as maintenance and build volumes reduce."

McKenzie also said that when Chorus began the UFB project in 2011, its target was a 20% take-up by 2020, and that target has been smashed.

"This year demand for fibre was stronger than ever. We completed a record 186,000 fibre installations, and fibre uptake within our UFB areas grew from 45% to 53%," she said.

"That is all the more impressive when you consider we built the network past another 176,000 homes and businesses during FY19."

For the coming fiscal year, Chorus said it expects EBITDA in the range of NZ$625 million to NZ$645 million.

In July, Chorus disclosed that of its almost 1.2 million broadband connections, 600,000 used fibre GPON connections.

The remaining half of the Shaky Isles was split between 270,000 VDSL connections and 327,000 ADSL connections.

Chorus added that it had 58,000 customers on 1Gbps connections, which it wholesales for NZ$60 per month.

Earlier in the year, Chorus announced that it would trial 10Gbps broadband speeds across residential and small and medium-sized businesses with fibre connections in Auckland and Wellington.

In April, a review found that Chorus and contracting firms, Visionstream and UCG, focused too much on productivity as migrants workers were exploited.

"There is evidence that the 'UFB Connect' part of the UFB work programme is where the model is exposed to breaches of labour standards and migrant exploitation," the review by Martin Jenkins said.

"These problems relate to services delivered by two of the service companies, Visionstream and UCG, through a range of subcontracted delivery partners."

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