For personal use only - ASX · 10/13/2017  · ADSL ADSL2+ VDSL2 GPON Average Connection Speed 10 CONNECTION SPEED > With 53% of broadband connections now on VDSL or fibre, average

Chorus Limited

Level 10, 1 Willis Street

P O Box 632

Wellington 6140

New Zealand

Email: [email protected]

STOCK EXCHANGE ANNOUNCEMENT

13 October 2017

Chorus Q1 FY18 Connections Update

Total fixed line connections declined by 20k to 1,582,000 in the three months to 30 September, while total broadband connections declined by 2k to 1,184,000

line loss slowed progressively through Q1 as our Ask for Better campaign made customers more aware of their better broadband options

broadband connections grew in Chorus’ UFB areas, while local fibre companies continued to gain fibre connections in their areas and some retailers promoted their wireless networks more widely

More customers than ever made the switch to better broadband on copper VDSL or fibre

53% of broadband connections now on VDSL or fibre, up from 45% at 30 June

50,000 connections were added to VDSL, our largest increase ever

field force productivity was the highest ever with 40,000 new fibre connections built

fibre uptake across all Chorus UFB areas is now 39%, with Blenheim leading at 47% uptake

Data demand continues to grow as video streaming drives increased broadband usage

1,240 gigabits per second average network throughput at 9pm in September 2017, up from 1,084 Gbps in June 2017

162GB monthly average household data usage in September (128GB average on copper broadband; 251GB on fibre), up from 155GB in June

ENDS

For further information:

Brett Jackson Investor Relations Manager Phone: +64 4 896 4039

Mobile: +64 27 488 7808 Email: [email protected]

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Q1 FY18 Connections Update 13 October 2017For

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Q1 FY18 OVERVIEW

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> Total fixed line connections declined by 20k to 1,582,000 and total broadband connections declined by 2k to 1,184,000

▪ line loss slowed progressively through Q1 as our Ask for Better campaign made customers more aware of their better broadband options

▪ broadband connections grew in Chorus’ UFB areas, while local fibre companies continued to gain fibre connections in their areas and some retailers promoted their wireless networks more widely

> More customers than ever made the switch to better broadband on copper VDSL or fibre

▪ 53% of broadband connections now on VDSL or fibre, up from 45% at 30 June

▪ 50,000 connections were added to VDSL, our largest increase ever

▪ field force productivity was the highest ever with 40,000 new fibre connections built

▪ fibre uptake across all Chorus UFB areas is now 39%, with Blenheim leading at 47% uptake

> Data demand continues to grow as video streaming drives increased broadband usage

▪ 1,240 gigabits per second average network throughput at 9pm in September 2017, up from 1,084 Gbps in June 2017

▪ 162GB monthly average household data usage in September (128GB average on copper broadband; 251GB on fibre), up from 155GB in June

Q1 FY18 CONNECTIONS UPDATE

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Q1 CONNECTION TRENDS

30 Sept 2016

31 Dec 2016

31 March2017

30 June 2017

30 Sept2017

Unbundled copper

105,000 99,000 90,000 82,000 76,000

Baseband copper (no broadband)

354,000 343,000 328,000 313,000 302,000

Fibre broadband (GPON)

203,000 231,000 259,000 292,000 328,000

VDSL (includes naked)

179,000 199,000 224,000 244,000 294,000

Copper ADSL (includes naked)

847,000 784,000 716,000 650,000 562,000

Data services (copper)

10,000 9,000 9,000 8,000 7,000

Fibre premium (P2P)

13,000 13,000 13,000 13,000 13,000

Total fixed line connections

1,711,000 1,678,000 1,639,000 1,602,000 1,582,000

> Total connections reduced by 20,000 to 1,582,000

a reduction of 17,000 copper lines with no broadband (including unbundled connections)

a decrease of 2,000 total broadband connections to 1,184,000

decline of 1,000 data services (copper) connections

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KEY CONNECTION TRENDS – Q1 FY18

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> copper voice only lines reduced by 17k (prior quarter –23k), with just under half of the reduction being UCLL connections presumably migrating to fibre, or other broadband products

> the decline in total broadband connections slowed significantly to -2k (prior quarter -13k) as our Ask for Better advertising and retailer incentives came into effect (campaign started in May)

• 53% of broadband connections are now on VDSL or fibre, up from 45% at 30 June

• VDSL connections grew by 50k in Q1 (prior quarter +20k) as some retailers began to accelerate the migration of their customers to better broadband

• fibre connections grew by 36k in Q1 (prior quarter +33k)

• broadband connections grew in Chorus UFB1 & 2 areas

Q1 FY18 CONNECTIONS UPDATE

INDICATIVE CONNECTIONS BY ZONE AT 30 SEPT(note: zones not yet defined to reflect UFB2+ areas)

Chorus UFB1 & 2 areas

Non-UFB1 & 2 areas

Local Fibre Company UFB 1 & 2 areas

TOTAL

Copper connections – no broadbandBroadband – copper and fibre

241,000 866,000

62,000170,000

75,000 148,000

378,0001,184,000

TOTAL 1,107,000 232,000 223,000 1,562,000*

*Excludes the 20k business fibre/copper data connectionsFor

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PROMOTING BETTER BROADBAND

> Our Ask for better campaign continues to raise awareness of VDSL and fibre availability

▪ more targeted incentives for retailers to migrate ADSL/UCLL connections to better broadband and win back off-net connections

▪ Consumer New Zealand has reported that wireless marketing claims “don’t stack up” relative to fixed line options given speed, data, and congestion limitations.

> Fibre migration trials yielding results

▪ 70% of customers spoken to agreed to connect their homes at the same time as the street rollout in Hokitika.

▪ 40% of customers in an Auckland neighbourhood, whom hadn’t yet connected to fibre, agreed to have their homes connected when approached by Chorus.

> Contact Energy has become the largest electricity retailer to enter the broadband market, offering unlimited plans only and no fixed term contract.

Q1 FY18 CONNECTIONS UPDATE

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> 39% uptake with 309,000 connections within UFB deployed footprint (FY17: 35% uptake and 275,000 connections)

73% of mass market fibre plans 100Mbps or higher

total number of 50Mbps connections now reducing

FIBRE UPTAKE & USAGE

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Total mass market fibre uptake by plan type

% of plans

> 162GB monthly average data usage per connection on our network in Sept 2017

▪ 251GB on fibre

▪ 128GB on copper

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Q1 FY18 CONNECTIONS UPDATE

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Monthly average data usage per connection on our network

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UNLIMITED DATA BECOMING THE NORM

Source: Statistics NZ ISP Survey June 2017

> 62% of connections are now estimated to be on unlimited data

Q1 FY18 CONNECTIONS UPDATE

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Chorus fibre connection activity - all NZ

Connections built and activated Additional connections completed

Orders

> 585,000 premises passed (FY17:581,000) out of

~1,054,000 to be passed by the end of 2022

784,000 customers now able to connect

14 days weighted average lead time for fibre connection (was 22 days in June)

27k work in progress connections (was 32k in June)

customer satisfaction with installation was 7.4 in August (rolling three month average)

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FIBRE ROLLOUT AND UPTAKE

(net of cancellations and rejections in the month)

Q1 FY18 CONNECTIONS UPDATE

> 40,000 new fibre connections built in Q1, our

highest ever quarter for build

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Sep-16 Dec-16 Mar-17 Jun-17 Sep-17

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UFB1 UPTAKE BY REGION

% uptake relative to capable addresses

39% AVERAGE UPTAKE

Q1 FY18 CONNECTIONS UPDATE

ROLLOUT COMPLETED IN THESE AREAS

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ADSL ADSL2+ VDSL2 GPON Average Connection Speed 10

CONNECTION SPEED

> With 53% of broadband connections now on VDSL or fibre, average broadband speed has increased from 33Mbps in Sept 16 to 59Mbps in Sept 17.

Q1 FY18 CONNECTIONS UPDATE

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Connection Speed (Mbps)

VDSL2 ADSL ADSL2+ GPON

CONNECTION SPEED HISTOGRAM – 30 Sept 2017

~300,000+ ADSL customers could make the switch to

VDSL or Chorus fibre

Q1 FY18 CONNECTIONS UPDATE

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