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 Full Year results, released 26 August 2024:

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

Key FY24 results

• Increase in fibre connections: by 53,000 to a total of 1,084,000
• Fibre uptake increased to 71.4% addresses, up 2%
• Remaining copper connections: down 35% to 157,000
• Network traffic up almost 8% to 7,974 petabytes
• Operating revenue $1,010m (FY23: $980m)
• EBITDA $700m (FY23: $672m)
• Net loss after tax $9m (FY23: net profit $25m)
• Unimputed final dividend of 28.5 cents per share

Chorus has released a steady financial result for the year ended 30 June 2024, despite the challenging macroeconomic environment. The result was underpinned by Chorus’ first normal operating period after the pandemic, workforce and weather challenges of the last few years.

Fibre connections grew by 53,000 and made up 87 per cent of Chorus' fixed lines, with fibre uptake at 71.4 per cent of addresses. Data demand grew almost 8 per cent in the year to 7,974 petabytes and the fibre network carried 94 per cent of this traffic. Average monthly usage for fibre connections grew 6.5 per cent to 623GB through the year, surpassing COVID lockdown levels.

EBITDA was $700 million for FY24, a 4 per cent increase on FY23 EBITDA of $672 million. Inflation-linked price changes, together with ongoing growth in the uptake of high-speed fibre plans, lifted revenues by 3 per cent from $980 million to $1,010 million.

Operating expenditure of $310 million was $2 million higher than FY23 on a reported basis. Tight cost management and favourable weather mostly offset the impact of inflationary cost increases across multiple expense lines.

A net loss after tax of $9 million was reported compared to a profit of $25 million in FY23.This was due to a combination of a one-off $15 million non-cash tax expense following the removal of deductibility of tax depreciation for buildings, an $11 million increase in depreciation from our accelerated depreciation of copper assets, and higher interest costs