Chorus Limited · NZX:CNU
Chorus — Investor Day (May 2012)
43 slides from Chorus's investor day presentation, May 2012
Slide 1: Chorus Investor Day
Chorus Investor Day Auckland, May 2012
Slide 2: Chris Dyhrberg, GM Network Build
Chris Dyhrberg GM Network Build
Slide 3: Building UFB
Building UFB Construction underway in 12 areas > Auckland kl d > Rotorua > Taupo > Napier-Hastings > Palmerston North > Masterton > Wellington > Blenheim > Ashburton > Timaru Tima > Dunedin > Invercargill
Slide 4: Working together with our service company partners
Working together with our service company partners > UFB agreements leveraging existing 10 year relationship > Gives certainty of work > Enables flexibility to adapt and optimise efficiencies over time We gain work efficiencies by: > Balancing work across regions and workforce > Detailed cost databa
Slide 5: Deployment principles
Deployment principles > Underground U d dbbuild ild ffor llowestt total t t l cost of ownership > Built and designed efficiently to last > Existing infrastructure > One dig opportunities > Innovative deployment technologies > Areas of high demand and priority users > Keeping community informed
Slide 6: Efficient deployment
Efficient deployment > Estimate use 40% existing network > Existing network 50% buried and 50% ducted > Consistency across UFB and d RBI
Slide 7: Efficient deployment
Efficient deployment Fibre from central office to cabinet > Some FTTN feeder fibre 264 customers > New p passive cabinet fixed fibre > Made in Christchurch 160 customers > Combined air blown and fixed fibre air blown fibre > Splitters installed on demand > No power required > Flexibility for more ca
Slide 8: Efficient deployment
Efficient deployment Fibre down the street > Build on existing network > Microduct or traditional fibre > One or both sides of street > Duct to fibre access point at boundary > Microduct benefits ▪ Air blown fibre delays investment until required ▪ No unused asset to maintain
Slide 9: Innovations in play
Innovations in play > Already using ▪ Micro/hydro trenching ▪ Same fibre for aerial or buried ▪ Blowing fibre from cabinet > Progressively more efficient ▪ Better re-use of existing network (ducts, fibre, poles) ▪ Pre-cast cabinet p plinth an example p of FTTN optimisation p > Global thinking ▪ Work
Slide 10: To the premises
To the premises Fibre to your home or business > CFH area approval > Retail orders a connection ▪ Residential within 4 days ▪ Business within 6 days > Fibre via lead-in or trench to equipment in the home > Charges g for standard install ▪ Residential no charge ▪ Business up to 2 months ▪ Working wit
Slide 11: Standard connection: A
Standard connection: A > 15m of new buried cable, 5m in the home > Re Re-use use lead lead-in in duct where feasible
Slide 12: Standard connection: B
Standard connection: B > One span of fibre using existing pole
Slide 13: Standard connection: C
Standard connection: C > fibre in existing pipe or pipe in a provided trench up to 100m
Slide 14: Inside the home
Inside the home Chorus network ends at the ONT > Installed direct to wall or protective cabinet > Standard install 5m within home ▪ 4 Ethernet ports ▪ 2 ATA ports ▪ A powered device
Slide 15: Layer 2 network
Layer 2 network ONT ONT ONT EAS GPON SPLITTER > Max 10km between central office and premises > Dark or lit fibre NID
Slide 16: Maintenance – Copper v Fibre
Maintenance – Copper pp v Fibre 50+copper lines 1 or 2 copper pairs 200+copper lines Annual fault rates per line Feeder Distribution Premises Copper .05 .13 .04 Fibre .04 .06 .04 Fibre feeder cable 2 fibre pairs fully ducted to the premises Source: Chorus and Analysys Mason data. Fibre figures assum
Slide 17: Victoria Crone, GM Marketing & Sales
Victoria Crone GM Marketing & Sales
Slide 18: NZ market snapshot
NZ market snapshot > Static access market and revenues > Slight decline in Chorus lines > Limited mobile substitution > UCLL growth tapering
Slide 19: NZ market snapshot
NZ market snapshot > Total access market is static Mobile substitution Non Chorus fixed access Other Chorus access Chorus UCLL & dark fibre Source: Chorus Indicative Data 2012
Slide 20: NZ market snapshot
NZ market snapshot > Static access market and revenues > Slight decline in Chorus lines > Limited mobile substitution Mobile > UCLL growth tapering IP Voice Dial up and Dial-up Dedicated Broadband UE CHANGE IIN REVENU Traditional Voice CHANGE IN CONNECTION C Source: IDC Telecommunications Tracker, Q
Slide 21: NZ market snapshot
NZ market snapshot > Broadband penetration 26% with room to grow ETRATION RATE PENE PENETRATION GROWTH Source: OECD Broadband Portal, June 2011
Slide 22: NZ market snapshot
NZ market snapshot > Broadband penetration 26% with room to grow > Broadband connections market share: Source: IDC Telecommunications Tracker, Q3 2011
Slide 23: NZ market snapshot
NZ market snapshot > Broadband penetration (26%) with room to grow > Copper dominates broadband ▪ Some fibre, wireless and satellite Satellite Fixed Wireless Fibre Cable Chorus UCLL Chorus Layer 2 Source: IDC Telecommunications Tracker, Q3 2011
Slide 24: NZ fibre market today
NZ fibre market today > 1% penetration > Fragmented market, predominantly business > Uncertain demand > Customers developing fibre business case > Early moves in the fibre market > Barriers are cost, coverage and consistency
Slide 25: NZ fibre market today
NZ fibre market today > Fibre business demand Home business Business 206,000 (11%) premises 162,000 (9%) Staff # <6 77,400 Non business 6-9 25,900 households 1.4m 10-19 20,900 (80%) 20 20-49 49 11,500 50-99 3,543 Source: NZ Stats ‘NZ Business Use of ICT’
Slide 26: NZ fibre market today
NZ fibre market today > Fibre connections by size of business 100 employees 100+ l 19% 50–99 employees 14%14% 20–49 employees 7% 6–19 employees 4% 0 100 200 300 DSL Cellular Wireless Cable Satellite Fibre Source: NZ Stats ‘NZ Business Use of ICT’
Slide 27: Global fibre trends
Global fibre trends > Growth in data > Fibre driver is content and bundling > HD content on multiple devices > Business reliance on network technologies > Fibre build not demand driven > Uptake lags fibre build > Cost barrier to uptake p Source: IDC ConsumerScape Survey, 2011 *Dotted line equals ave
Slide 28: Global fibre trends
Global fibre trends > Fibre uptake lags fibre build 3,500 9% 3 000 3,000 9% 10% Premises Passed 10% Premises Connected 2,500 10% 14% 41% 11% 41% 2,000 38% 38% 10% 37% 1,500 30% 11% 25% 3% 28% 1,000 8% 25% 25% 24% 53% 31% 9% 50% 26% 49% 500 38% 6% 22% 48% 1% 52% 0% - Denmark Denmark France France Ita
Slide 29: Chorus customer snapshot
Chorus customer snapshot > Customers focused on ROIC > Transition to new Chorus > Positive customer feedback > Understanding the implications of separation > Looking to Chorus for fibre direction > New business opportunities
Slide 30: Chorus market strategy
Chorus market strategy gy Operational A clear transition e cellence and excellence path to fibre customer service Reputation NZ’s network of delivery partner of choice and trust
Slide 31: Our open access product set
Our open access product set Business Fibre UFB Fibre today •30/10Mbps (Dark fibre, EP2P) •100/50Mbps •100/100 Mbps vices • 1Gbps Next-gen Next-gen Nextt-generation serv Copper voice ( VDSL2) (Baseband IP) Enhanced Premium data services ser ices Business Data (E-UBA) (HSNS) Basic data Legacy g y serv
Slide 32: New Service Opportunities
New Service Cloud Education Market Sector Opportunities Computing Sector Opportunities Strategy Bandwidth Management Future of Voice Broadband Backhaul Baseband Strategy Plus voice Mobile Operational Support Core extension Capability Data Strategy M2M & opportunities Telemetry Future of NGA Fibre Fi
Slide 33: Our fibre plan
Our fibre plan > A clear copper to fibre path > Business fibre today > VDSL as a stepping pp g stone > Support product development and readiness > Create the ideal installation experience > Marketing & education support > Encourage high bandwidth Bitstream products
Slide 34: Home installation learning
Home installation learning > There are benefits in the ‘experience effect’ > Low cost cost, least disruption > Fibre changes how Service Provider networks are built > End-user expectations are high, but not specific > What we’ve learned about installations ▪ First fibre experience must be positive ▪
Slide 35: Mark Ratcliffe, Chorus CEO
Mark Ratcliffe Chorus CEO
Slide 36: Building a bright fibre future for New Zealand
A new company that brings together our infrastructure and service business Buildingg a bright g fibre future for N New Zealand Z l d
Slide 37: A highly engaged team committed to delivering our promises
A highly engaged team committed to delivering our promises 85% ENGAGED
Slide 38: Our strategy – short term
Our strategy gy – short term Separation from Telecom Successful demerger and NZX listing Maintain efficient copper network business Build UFB, RBI and promote fibre Progressing UFB build Working with customers on their fibre offering Develop partnerships with LFC Di Discussions i with ith LFC LFCs o
Slide 39: Our strategy – longer term
Our strategy gy – longer g term Drive copper and fibre network efficiencies Cost minimisation for efficient network operations Deliver further capex optimisation Transition to a fibre world Improve service for customer loyalty and satisfaction Fibre products that enable customers to move to high ban
Slide 40: We want the regulatory certainty we worked to achieve
We want the regulatory certainty t i t we worked to achieve
Slide 41: What's ahead….
What’s ahead…. MAY JUN JUL AUG SEP OCT NOV DEC JAN FEB MAR APR MAY 2012 2013 1 Jun: UCLL submissions Aug: UCLL decision Aug: Financial Results Oct: AGM Nov: Systems transition plan Dec: UBA review decision Dec: UCLFS schedule 3 decision Dec: TDL decision 2013: TSO review 2014: Systems transition 201
Slide 42: Our challenges
Our challenges > UFB and RBI roll out delivered on time, time budget and quality standards. > Removal of regulatory uncertainty caused by the draft UCLL decision > Managing the financial implications of unclear fibre demand and assisting the Crown on its fibre uptake objectives > Operating within st
Slide 43: Ends
Ends