Fixed line communications infrastructure provider, Chorus, has reported net profit after tax (NPAT) of $171 million and earnings before interest, tax, depreciation and amortisation (EBITDA) of $663m for its 2013 financial year (ended June 30).
Investments in fibre network – particularly the Ultra-Fast Broadband (UFB) and Rural Broadband Initiative (RBI) programmes – accounted for 85 per cent ($579m) of Chorus’ $681m gross capital expenditure in the period.
According to chief executive officer (CEO), Mark Ratcliffe, the numbers represent a “good operating result, particularly with both the… programmes slightly ahead of target, a small increase in the number of access lines and a six per cent increase in copper broadband connections.”
“On the downside, capital expenditure demands continue to be significant and regulatory headwinds remain.”
Ratcliffe said Chorus has deployed more than 3000 kilometres of fibre cabling in the past 12 months, taking its total network beyond 30,000km. At June 30, its UFB network serviced 205,500 end users, accounting for 153,000 premises, with 51,200 rural end users in reach of the RBI. Moving forward, Chorus’ key focus surrounding the UFB network is cost efficiency; presently, it spends two-thirds of its revenues on capital investment, Ratcliffe claims.
The average cost of completing the 2013 financial year UFB network build was $2935 per premises passed. The goal for 2014 is an average cost per premises passed between $2900 and $3200, with Chorus expecting to spend between $660m and $690m on capital expenditure in the new financial year.
According to a statement, an ongoing challenge for Chorus is the current regulatory environment. A Commerce Commission decision on copper line pricing in December has reduced EBITDA by $20m on an annualised basis, and a recent government discussion paper proposes a review of the telco regulatory framework with an immediate focus on copper pricing. The company claims the discussion paper implies reduced future earnings; Chorus claims it suggests a decrease of its pricing within the range of $2.48 to $7.48 per broadband connection per month.
The Chorus Board approved a fully imputed final dividend of 15.5 cents per share to be paid on October 11. The Dividend Reinvestment Plan will apply for eligible shareholders for this dividend. Chorus’ 2014 financial year dividend guidance is unchanged.
Chorus employs 763 permanent and fixed-term employees, and an addition 4434 who are either employed directly by its service company partners or are sub-contracted.