Chorus doubles half year profit, lifts full year guidance

Reports net profit after tax for the six months to 31 December 2016 of $66m

Chorus has reported net profit after tax for the six months to 31 December 2016 of $66m, double the figure for the same period last year. Earnings before interest, tax, depreciation and amortisation (EBITDA) were up 60 percent to $335m.

Operating revenues were $529m, up from $479m and operating expenses down to $194m from $207m.

The company said the increases were mostly due to regulated copper price changes, a changed capitalisation approach and careful management across expense lines. The biggest contributor to the increase in revenue ($30m) came from fibre services which saw a 50 percent increase to $91m from $61m in the same period last year.

In late 2015 the Commerce Commission relaxed some of the reductions it had planned to require Chorus to make in the price it charged other telcos for access to its copper telephone network.

Chorus CEO, Mark Ratcliffe, said fibre had become the broadband product of choice for customers in the past six months. “Between July and December we built 67,000 new fibre connections nationwide, up from 55,000 in the six months prior, and the average time customers wait for a fibre connection reduced from 17 days to 10 days.”

Today, 20 February, is Ratcliffe’s last as CEO of Chorus. Kate McKenzie, a former senior Telstra executive whose appointment was announced in December will take up the role. She will also be a director of the company.

He added: “With one in three broadband customers now having moved to fibre or a high-speed service like VDSL, we believe it’s time for us to do more to raise New Zealanders’ awareness of the better broadband choices that exist today.”

“It’s our intention to bolster the support we offer retailers in migrating customers to our fibre network where it’s available, or to VDSL as a fibre-ready transition step in other areas. We’re also looking at accelerating our fibre rollout plans in some suburbs.”

Chorus says that, in urban areas, around 681,000 customers are now within reach of its UFB network and it has completed 61 percent of its UFB build programme.

In January, Chorus was chosen by the Government to extend the UFB rollout to a further 169 areas, making broadband available to approximately 200,000 more homes and businesses beyond the 1.1 million customers in Chorus’ existing UFB1 areas.

Chorus said it had reached an initial agreement with Broadspectrum to design and build the communal network for 145,000 UFB2 premises, and that a separate design process was being trialled for the remaining 24,000 premises that would be tendered later.

Chorus said it had updated its guidance “to reflect competitive initiatives planned in the next six months and its changed capitalisation approach.” It has increased full year EBITDA guidance to $645m to $665m from $625m to $645m. Capex guidance is now $640m to $680m, up from $610m to $650m.

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