Chorus reports half year, sheds 10 per cent of staff

Chorus reports half year, sheds 10 per cent of staff

Chorus says while it has lost connections, that was mainly to other local fibre operators rather than to retailers offering wireless

Chorus CEO Kate McKenzie.

Chorus CEO Kate McKenzie.

Network operator Chorus has reported reduced net profit for the half year ended 31 December.

The company reported net profit after tax of $47 million compared with $66 million in the previous corresponding period as it keeps a tight rein on costs.

According to the telco, the company is "well progressed" in implementing a strategic review that will see it shed 10 per cent of its headcount.

Operating revenue of $499 million was also down from $529 million with total fixed line connections down three per cent to 1,559,000.

Chorus CEO Kate McKenzie said the company expected to track towards to the top end of the full year EBITDA guidance range provided.

"While the impact on revenue of lost lines from previous periods was apparent in the financial results this period, it was pleasing that the line loss trend showed signs of abating during the half," she said.

"During the half year we continued our campaign to promote better broadband and this, coupled with an expanded field force, helped drive a strong increase in fibre and VDSL uptake while also slowing connection losses to other networks significantly."

Telco retailers, in particular Spark, have aggressively  and effectively marketed wireless broadband as an alternative to Chorus' new fibre network. However, McKenzie said Chorus' connection losses were largely to other local fibre companies.

“Losing just 5,000 broadband connections over six months, largely as anticipated to other local fibre companies, is a positive outcome," she said.

"Ensuring line loss trends continue to improve will be strongly influenced by the improvements we continue to make in customer experience. For example, we are aiming to consistently deliver one day installs for fibre by the end of next financial year."

McKenzie said she was pleased to see average lead times for fibre reduced from 22 days to 14 days during the half year, despite record order volumes.

Chorus' broadband connections were stable at 1,181,000 while Chorus made 70,000 new fibre connections and 76,000 new VDSL connections.

Meanwhile, operating expenses fell, to $170 million from $194 million, despite pressure from increased construction.

Chorus is implementing of a range of changes identified through a strategic review it undertook last year.

“One of the major initiatives flowing from the strategic review was a new operating model for the company,” said McKenzie.

“Wider retailer adoption of automated fibre provisioning, together with other process improvements, has allowed us to review our internal structure with an expected 10 per cent reduction in headcount now well progressed.

During the half year Chorus announced a further agreement with the Crown to extend its UFB rollout by another 54,500 premises. In total this means more than 87 per cent of the population will have fibre available to them by 2022, with Chorus responsible for around 75 per cent of that.

In addition, a $20 million programme to deploy VDSL vectoring technology in rural and other local fibre company areas has the potential to improve broadband performance for 260,000 premises.

“Chorus is investing around 60 per cent of its revenues in rolling out fibre broadband infrastructure for New Zealand," McKenzie said. "In that context, certainty for investors is clearly of paramount importance, and we urge the Government to progress the legislation underpinning the sector’s regulatory framework. 

“The timeframe that is currently indicated suggests the vast majority of the network will be built before investors are able to gain any certainty about the treatment of their investment, so naturally we will be seeking timely passage through the House and implementation."

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