Chorus profit falls 24 percent but fibre uptake surges

Chorus reported a net after-tax profit of $85 million for the 2018 financial year, down 24 percent on last year’s $113 million. The company says the decline was smaller in the second half of the year than in the first.

In part this was because fewer customers switched to Spark's wireless broadband service during the last six months of the financial year.

Ebitda—earnings before interest, taxes, depreciation and amortisation—was stable at $653 million compared with $652 million in the previous year. This was slightly above the top end of the guidance range of $625 to $650 million and better than analyst forecasts.

Revenue dropped 4.8 percent to $990 million.

Return to growth

CEO Kate McKenzie says the results reflect the strategic changes introduced during the financial year. She expects these changes to help Chorus return to modest ebitda growth in the 2020 financial year.

“Our return to broadband connection growth during the year, together with strong forecasts for urban housing development and underlying broadband trends, such as fibre uptake and the demand for streamed video content, give us added confidence in our strategy,” she says.

During the results presentation, McKenzie said fibre demand is stronger than ever. Chorus completed 156,000 fibre installations during the year, a record that lifted the fibre uptake rate from 35 percent to 45 percent.

Upgraded copper performance

CChorus says it invested $20 million to upgrade copper broadband performance for about 270,000 addresses, mainly in rural districts and areas covered by local fibre companies.

McKenzie says: “Investing to promote better broadband that’s already available to many New Zealanders—our role as an active wholesaler—has succeeded in slowing the pace of connection decline. Continuing competition from wireless and other fibre networks saw our total fixed-line connections reduce, but the pace slowed considerably, with 76,000 connections lost compared to 125,000 last year.”

“By June 2018, 64 percent of our broadband connections were on high-performing VDSL or fibre services, up nearly 20 percent on the previous year. In the same time, we’ve seen the average monthly bandwidth demand on our network grow from 155 gigabytes per customer to 210 gigabytes. For fibre customers, this was greater still at 297 gigabytes per month.”

She says much of the demand is occurring in the evening as more customers shift to streaming video-on-demand services. Last week, Roy Morgan Research revealed that three million New Zealanders now watch streaming television, with Netflix approaching two million viewers.

Chorus expects to see a small earnings decline in the 2019 financial year, which is likely to be the peak year of the fibre roll-out. The company forecasts reduced ebitda in the range of $625 million to $645 million but expects modest ebitda growth in the following year.

Curran leaves cabinet, retains telecommunications portfolio

Prime Minister Jacinda Ardern has removed broadcasting and communications minister Clare Curran from cabinet. Curran also resigned her digital services and open government portfolios.

The moves came after the minister failed to record a meeting with Derek Handley. The entrepreneur is a candidate for the government CTO role that Curran has championed.

The prime minister said the breaches were not enough for Curran to drop all her portfolio. She keeps her main responsibilities: broadcasting and communications.

Curran told journalists at a press stand-up that she accepted that she had not met the prime minister's or her own expectations.

Nokia aims to fill Huawei 5G vacuum in Australia

Nokia has opened a new regional headquarters Sydney as it steps up to fill the hole left after the Australian government banned Huawei from building 5G mobile networks. Huawei and Nokia are the world's biggest network equipment companies.

The new Sydney office joins others in Melbourne, Wellington and Auckland. The company also has network operations centres in Sydney and Hamilton. It's main New Zealand customers are Vodafone, Chorus and Spark. In 2016 Nokia merged with Alcatel-Lucent.

Sky takes profit hit as earnings rise

The headline news that Sky TV reported a $240.7 million loss for the 2018 financial year after a $360 million value write-down. The underlying net profit was up 2.6 percent on the year to $119.3 million.

Sky says sales revenue fell six percent in the year to $839.7 million. This is the lowest figure in six years. During the year the company lost 57,000 customers, the total is now 768,000. It says it lost far fewer customers in the second half of the year.