“New property development revenues were about $2m lower due to the slowed economy, while there was strong growth in the lower-revenue 50Mbps broadband plan, largely reflecting cost of living pressures,” the firm said in an NZX filing.
“We are seeing some grade-down from 300[Mbps] to 50[Mbps],” chief executive Mark Aue said on a conference call with analysts. “We’re also not seeing the trade-ups to 1Gbps or Hyperfibre … There’s an element of riding through this economy.”
The 50-megabits-per-second Home Fibre Starter plan grew from 21,000 wholesale connections to 68,000 in the first half. Chorus recently said it would double the speed of its Starter plan to 100Mpbs from June – will provide a usability boost for low-income households – and boost its competitive appeal against the fixed-wireless broadband offered by Spark and other retailers.
Chorus, whose UFB fibre revenue is tightly regulated, has recently proposed various possible new lines of business, including an expansion of the (now completed) urban Ultrafast Broadband (UFB) fibre rollout areas in a new public-private initiative.
Communications Minister Paul Goldsmith has said he would consider the proposal, but noted fiscal constraints. Chorus has also put forward a memorandum of understanding with DataGrid, signed in December, for a feasibility study on a new transtasman cable (DataGrid, founded by Hawaiki Cable alumni Remi Galasso and rich-lister Malcolm Dick, is now owned by Singapore’s H2 Cable.)
Today, Chorus also floated another potential project: “Work with retail service providers [like Spark, One NZ and 2degrees] on a proof-of-concept that aims to bring an equitable fibre product to 1500 low-income and digitally excluded households.”
“Recent statistics show nearly 400,000 households in New Zealand are unable to afford meaningful digital access. In the case of digital exclusion, we recognise the potential role we can play in driving positive social outcomes, both through and beyond connectivity,” Aue said.
How costs would be shared and other details were not immediately clear.
Chorus said its original full-year Ebitda guidance excluded exploratory opex for the possible subsea cable. On the conference call, Chorus CFO Drew Davies said the amount – put t $4m on an investor day – would be “in the single-digit millions” fo the full year.
It noted the second half would include fibre price increases that will kick in from January next year.
Gross capital expenditure was $199m, down $33 million from the first half, reflecting cost control and fewer fibre installations, Chorus said.
Aue said the cable was not contingent on Datagrid’s envisaged hyperscale data centre in Southland. (The build is still on the cards, but the initial catalyst for the project – Datagrid potentially seizing on some 572MW of capacity from Meridian’s Manapouri power station freed up by Rio Tinto’s withdrawal disappeared with the Australian firm’s decision to maintain its aluminium smelter at Bluff.)
The firm said the number of fibre connections grew by 14,000 in the first half to 1.09m or 71% of the 1.53m premises within reach of the UFB. It’s gunning for 80% by 2030.
Remaining copper connections fell 22% to 123,000 – with fewer than 28,000 copper lines in Chorus areas. In rural areas, Elon Musk’s Starlink, which now has more than 37,000 customers and more than $73.8m revenue in New Zealand, has emerged as a strong alternative.
Shares closed on Friday at $8.93. The stock was up 12.9% over the past 12 months going into today’s results.
Chris Keall is an Auckland-based member of the Herald’s business team. He joined the Herald in 2018 and is the technology editor and a senior business writer.
