Chorus reports 24 percent profit dip, envisages IoT role

Chorus said the results reflected its shift to becoming an active wholesaler and its concentration on tight cost management

Chorus has report a net profit after tax $85m for the year to 30 June, down 25 percent from FY17 NPAT of  $113m. EBITDA, however, was up slightly to $653m from $652m), but operating revenue down 4.8 percent from  $1,040m to $990m.

Chorus said the results reflected its shift to becoming an active wholesaler and its concentration on tight cost management.  FY2019 guidance is for EBITDA in the range $625m - $645m as it continues with strategic changes started in FY18. It expects to return to modest EBITDA growth in FY20.

CEO Kate McKenzie said the company’s focus on its role as an active wholesaler had succeeded in countering competition from other networks. “Continuing competition from wireless and other fibre networks saw our total fixed line connections reduce, but the pace reduced considerably with 76,000 connections lost compared to 125,000 last year," she said.

Chorus said that, in FY18, it had invested $20m in a project to upgrade copper broadband performance for about 270,000 addresses across rural and local fibre company areas.

“The deployment of vectoring and new VDSL broadband electronics saw a more than 40 percent average increase in download speed for customers already on VDSL and a further 85,000 rural addresses who could benefit from improved broadband performance,” the company said.

McKenzie said this had helped to slow the loss of services onto other networks. “By June 2018, 64 percent of our broadband connections were on high performing VDSL or fibre services, up nearly 20 percent on the previous year.”

Chorus sees IoT edge computing role

Chorus said that, in FY18 it had started trialling new ways of using its network for IoT.

“We’ve started exploring the potential uses of our network assets to meet the expected needs for low-powered monitoring of sensors as the Internet of Things evolves,” it said.

“This included a proof of concept trial for a Long Range Wide Area Network [LoRaWAN]. Our solution used a pole-mounted wireless access point, powered by our copper network, to enable monitoring of hard to access locations such as underground wastewater or sewage pumping stations.”

The PoC trial was initiated in December 2017. However Chorus is well behind other operators. In its annual results announced last week Spark said its LoRaWAN network already cover 65 percent of the population. Kotahinet claims that its LoRaWAN network already covers more than 80 percent of the population.

Chorus also sees opportunities in another key area of IoT: edge computing. It says there is a “clear global trend” favouring the use of telco exchange to co-located edge computing resources for IoT, and has Wellington and Christchurch sites under development for deployment in Q3 FY19.

However in its annual report Chorus suggests it has already undertaken edge computing trials. “We’ve also run trials to develop connectivity options for the Internet of Things, network edge computing and television broadcasting,” Chorus says.

“The success of these trials has increased our belief in the potential socio-economic benefits our infrastructure can bring to New Zealanders, while providing future alternative sources of revenue for our business.”

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