Chorus sees increased competition from wireless broadband

Chorus has reported a 24 percent increase in net profit for FY17

Chorus has reported a 24 percent increase in net profit for FY17 despite a decline in broadband connections as copper broadband connections decline and as take-up of competitors’ wireless broadband increases.

Broadband connections fell three percent to 1,186,000 and total fixed line connections were down seven percent to 1,602,000. NPAT was $113m up from $91m in FY16, EBITDA $652m up from $594m and operating revenue $1040m, up from $1008m.

However when 2016 EBITDA was adjusted to reflect the change in regulated copper pricing from 16 December 2015 and the effect of capitalisation of certain labour and IT costs previously expensed, FY17 EBITDA was down on the FY16 adjusted figure of $677m.

CEO Kate McKenzie said the company had launched an advertising campaign in May to promote the benefits and availability of better fixed line broadband in response to the growing competition from wireless broadband. She said early indications were that it was producing positive results.

“Our promotion of better broadband has been supported by a growing awareness of the importance of reliable broadband at peak demand times,” she said.

 “In the last year we saw a 51 percent increase in the average amount of internet traffic through our network around 9pm each evening. This trend seems set to continue as more and more New Zealanders use their broadband connection to stream video content on demand.”

Chorus is projecting New Zealand households monthly data download volumes to treble by 2020 to 680GB per month from 170Gb per month in FY17, following a 52 percent growth during the year.

It claims fixed wireless broadband performs about the same as ADSL for webpage browsing and cites TrueNet data showing fixed line broadband (fibre/VDSL/ADSL) delivers consistent performance at peak times whereas wireless (mobile) networks share capacity, as evidenced by significant video buffering.

 

Read more: Chorus rejigs exec roles to sharpen customer focus

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