Chorus Limited · NZX:CNU
Chorus — Technical Presentation (December 2014)
26 slides from Chorus's technical presentation, Dec 4, 2014
Slide 1: Chorus UCLL and UBA models briefing
Chorus UCLL and UBA models briefing 4 December 2014 • James Allen 38598-494
Slide 2: Contents
2 Contents UCLL model UBA model 38598-494
Slide 3: Contents: UCLL model
UCLL 3 Contents UCLL model Operator parameters Technology Services Implementation Result 38598-494
Slide 4: UCLL model
UCLL 4 UCLL model Overall approach: use techniques of bottom up LRIC modelling, but based on an adjusted version of the existing set of assets Adjustments applied are for: Increased use of aerial Optimisation of route length Use of network sharing Lower expected peak demand for copper pairs
Slide 5: Operator parameters
UCLL 5 Operator parameters Type of operator: hypothetical Network footprint: Current national network coverage offering NC-UCLL and SLU to existing premises covered Scale: demand similar to Chorus 38598-494
Slide 6: Technology
UCLL 6 Technology Technology – copper to the home those existing customers served with wireless links are not relevant to NC-UCLL costs Cabinets are used where cabinets are currently used Scorched node: Chorus MDFs and cabinets are retained Geo-typing – national model asset counts gathered
Slide 7: Services
UCLL 7 Services Products modelled: services using the copper access network including SLU, NC-UCLL, UCLFS, HSNS, etc) – but not UFB The model uses “technical services": non-overlapping services that map to specific network assets This may include for example route, cabling, joints, duct, manhol
Slide 8: Implementation
UCLL 8 Implementation Tool – Excel; one workbook; no macros Model is in real terms Key results are provided in nominal terms Time period Multi-year model Depreciation method chosen only requires a single year calculation; Determining a unit cost that is constant in nominal terms for 5 year
Slide 9: Increment and common cost markups
9 Increment and common cost markups Increment – all modelled services on access network Mark-ups for common costs are available, but not used (business overhead costs are included within the incremental cost, allocated via an EPMU) 38598-494
Slide 10: Total costs
UCLL 10 Total costs Asset counts come from NetMap, a Chorus GIS As noted above we have adjusted these in a number of ways (e.g. more aerial) Unit costs – based on costs faced by Chorus for modern asset type Trenching costs based on costs recently incurred and planned for the UFB deployment, wi
Slide 11: Allocation approach
UCLL 11 Allocation approach Services sharing trench/duct/cable/UUB are allocated costs based on the number of subscribers Opex is grouped into various categories, each treated distinctly some allocated based on drivers; some EPMU 38598-494
Slide 12: Annualisation
UCLL 12 Annualisation Modified Tilted Annuity is used Flat demand makes this equivalent to tilted annuity Tilt for each asset from asset price trend WACC – 8.1% post-tax nominal Lifetimes from Chorus fixed asset register (FAR) Asset annual unit costs -> technical service annual unit cos
Slide 13: Versions
UCLL 13 Versions Confidential version Restricted version certain information has been overwritten Public version much information has been overwritten All versions function in the same way – only the data differs Some outputs in the full model differ slightly as a result of the anonymisa
Slide 14: Result
Result 14 Result Service Unit cost (NZD/ month) NC-UCLL 74.10 SLU 81.43 UCLFS 84.87 The replacement cost of the modelled network (excluding costs reported in the UBA model) is NZD 14 B in 2013 real terms 38598-494
Slide 15: Contents: UBA model
UBA 15 Contents UBA model Operator parameters Technology Services Implementation Result 38598-494
Slide 16: UBA model
UBA 16 UBA model Overall approach: use bottom up approach for electronics; use existing locations and existing passive assets for connections between: cabinet / exchange, and exchange / Ethernet Aggregation Switch sites Adjustments are made for optimisation of route length Scope of model: ne
Slide 17: Operator parameters
UBA 17 Operator parameters Type of operator: hypothetical Network footprint: Current Chorus DSL network coverage offering UBA to existing premises covered Scale: demand similar to Chorus UBA 38598-494
Slide 18: Technology
18 Technology Technology – DSL on copper Scorched node: Cabinet DSLAMs are deployed where they are currently located DSLAMs also deployed at customer sites and exchanges, as per current locations Chorus MDF and EAS locations also retained Geo-typing Divides DSLAM locations into: MDFs, cabi
Slide 19: Services
UBA 19 Services Products modelled: all services using the Chorus network between the DSLAM and the switch including UBA, HSNS etc The model uses “technical services": non-overlapping services that map to specific network assets Future demand volume: forecast demand growth for subscribers and t
Slide 20: Implementation
UBA 20 Implementation Tool – Excel; one workbook; no macros Model is in real terms Key results are provided in nominal terms Time period Multi-year model depreciation method chosen only requires a single year calculation; determining a unit cost that is constant in nominal terms for 5 year
Slide 21: Increment and common cost markups
UBA 21 Increment and common cost markups Increment – all services offered on Chorus network between the DSLAM and first switch Mark-ups for common costs are available, but not used (business overhead costs are included within the incremental cost, allocated via an EPMU) 38598-494
Slide 22: Total costs
UBA 22 Total costs Asset counts come from Bottom up calculation for electronics Existing feeder routes to cabinets (from UCLL model) Existing inter-exchange links (from Chorus data) Unit costs – based on costs faced by Chorus for modern asset type Modern equivalent asset chosen for each
Slide 23: Allocation approach
UBA 23 Allocation approach Access network: services sharing trench/duct/cable/UUB are allocated costs based on the number of subscribers Core network: costs divided between UBA and other core network services (such as HSNS) on the basis of traffic Opex is grouped into various categories, each
Slide 24: Annualisation
UBA 24 Annualisation Modified Tilted Annuity is used (UBA demand is forecast to change over time) Tilt for each asset from asset price trend and demand WACC – 8.1% post-tax nominal Lifetimes from Chorus fixed asset register (FAR) Asset annual unit costs -> technical service annual unit cos
Slide 25: Versions
25 Versions Confidential version Restricted version – certain information has been overwritten Public version – much information has been overwritten All versions function in the same way – only the data differs 38598-494
Slide 26: Result
UBA 26 Result Service Unit cost (NZD/ month) EUBA0 16.57 The replacement cost of the modelled network is NZD 2 B in 2013 real terms 38598-494