Hamilton Hindin Greene presentation 16 May 2018

DisclaimerThis presentation:

• Is provided for general information purposes and does not constitute investment advice or an offer of or invitation to purchase Chorus securities.

• Includes forward-looking statements. These statements are not guarantees or predictions of future performance. They involve known and unknown risks, uncertainties and other factors, many of which are beyond Chorus’ control, and which may cause actual results to differ materially from those contained in this presentation.

• Includes statements relating to past performance which should not be regarded as reliable indicators of future performance.

• Is current at the date of this presentation, unless otherwise stated. Except as required by law or the NZX Main Board and ASX listing rules, Chorus is not under any obligation to update this presentation, whether as a result of new information, future events or otherwise.

• Should be read in conjunction with Chorus’ audited consolidated financial statements for the year to 30 June 2017, half year results to 31 December 2017 and NZX and ASX market releases.

• Includes non-GAAP financial measures including "EBITDA”. We monitor EBITDA as a key performance indicator and we believe it assists investors in assessing the performance of the core operations of our business. These non-GAAP measures do not have a standardised meaning prescribed by GAAP and therefore may not be comparable to similar financial information presented by other entities. They should not be used in substitution for, or isolation of, Chorus' audited consolidated financial statements. Refer to the appendices of our FY18 half year, and FY17 full year, results investor presentations for further detail relating to EBITDA measures.

• Has been prepared with due care and attention. However, Chorus and its directors and employees accept no liability for any errors or omissions.

• Contains information from third parties Chorus believes reliable. However, no representations or warranties are made as to the accuracy or completeness of such information.

2

NEW ZEALAND GOT IT RIGHT

Source: news.com.au

Source: IDATE for FTTH Council Europe

FTTH/B penetration: uptake as a % of households Sep 2017

3

Hamilton Hindin Greene update – 16 May 2018

Denmark: 2018 proposal to split TDC

Singapore: NBN rollout began 2009;

Netlink Trust listed 2017

USA: Crown Castle expanding from

tower assets into fibre

Czech republic: network split in

2015

NZ: Chorus demerger 2011

Australia: Government owned NBN rollout began

in 2010

OPEN ACCESS: THE NEW NORM

4

Mexico: wholesale 4G network

launched 2018

South Korea: mobile carriers to share 5G

infrastructure

Telecom Italia: network split

proposed

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0%

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1,400,000

UFB rollout and uptake

UFB connections UFB available addresses

Planned footprint % Uptake

No. of connections

FIBRE ROLLOUT: ON TIME & ON BUDGET

UptakePremises to pass by Dec 2022 ~1,054,000*

Customers able to connect ~1.36 million

-

20,000

40,000

60,000

80,000

100,000

120,000

140,000

FY12 FY13 FY14 FY15 FY16 FY17 FY18 FY19 FY20 FY21 FY22 FY23

Chorus rollout schedule – indicative only*

UFB1 UFB2 & UFB2+

Premises passed

* UFB1 build ends Dec 2019 and UFB2 build ends Dec 2022.

Crown funding 57:43 equity/debt up to $1.33 billion

Estimated communal capex $2.26 to $2.37 billion

*Includes estimated 43k greenfields premises for UFB1


6

THE CHORUS NETWORK

> We operate a nationwide wholesale access network of fibre optic and copper cables connecting homes and businesses

Chorus is building ~75% of the Government contracted fibre to the premises network, covering ~65% of NZ-wide connections by the end of 2022

our fibre also provides backhaul to many mobile network sites/towers and retail service provider networks

Chorus-owned

Common network assets Our copper network Our fibre network

~600 local exchanges ~11,000 cabinets ~280,000 poles ~30,000km duct network

~130,000km copper FTTN broadband footprint to ~90% of lines VDSL broadband to ~80% of lines vectoring upgrade outside our fibre areas

~46,000km fibre FTTP available to ~1.36m customers by Dec 22 point-to-point fibre in CBD areas fibre to multiple mobile provider cellsites


CONNECTIONS BY ZONE

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> The table below shows indicative connection totals by zone as at 31 March

▪ broadband connections within the Chorus UFB zone increased

▪ connections in Rural (non-UFB) zone were stable

▪ the pace of connection loss in the LFC UFB zone has slowed compared to the same time last year

Chorus UFB zone*

Q3 change

Rural(non-UFB)zone Q3 change

Local Fibre Company UFB zone* Q3 change

TOTAL

Copper connections: no broadband

219,000 -13k 54,000 -1k 68,000 -3k 341,000

Broadband: copper and fibre

905,000 +11k 143,000 - 136,000 -8k 1,184,000

TOTAL 1,124,000 197,000 204,000 1,525,000**

* Includes planned UFB1, 2 and 2+ coverage**Excludes the 18k business fibre/copper data connections


CONNECTION TRENDS

> Local fibre companies gaining share as expected; losses to wireless networks moderating

between 1 July to 31 March total connections reduced by 59,000 to 1,543,000 (FY17: -125k);

at the same time, broadband connections reduced by 2,000 to 1,184,000 (FY17: -40k)

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30-Jun-16 30-Sep-16 31-Dec-16 31-Mar-17 30-Jun-17 30-Sep-17 31-Dec-17 31-Mar-18

Data services (copper) Fibre premium (P2P) Fibre broadband (GPON)

VDSL Copper ADSL Unbundled copper (no broadband)

Baseband copper (no broadband)

Copper ADSL

VDSL

Fibre (GPON)

Unbundled copper

Baseband copper

9

TRANSFORMING CUSTOMER EXPERIENCE

> emphasis on end-to-end customer experience to simplify systems and processes

weighted average lead times reduced from 14 to 8 days

field crews increased from 700 to 720

trialling new fibre migration methods with the aim of reducing customer effort to <1 day

> migration activity fuelling order growth

▪ 30+ concurrent campaigns (RSP and Chorus led)

▪ build + connection (ONT installation) in UFB2 towns

▪ strong response to trial Wellington off-net campaign


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Jun-16 Sep-16 Dec-16 Mar-17 Jun-17 Sep-17 Dec-17 Mar-18

50Mbps 100Mbps 200MbpsGigabit Education Business 100Mbps+

> 32,000 mass market fibre connections added in Q3

▪ 25,000 connections now on gigabit plans (Q2: 20,000)

▪ 67% of mass market fibre connections on 100Mbps

▪ 100/20Mbps pricing increases to $45 monthly from 1 July

FIBRE UPTAKE & USAGE

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Total mass market fibre uptake by plan type

% of plans

> Monthly average data usage per connection on our network grew to 185GB from 174GB in Dec 2017

▪ 268GB on fibre (Dec: 250GB)

▪ 144GB on copper (Dec:141GB)

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Copper Fibre Average

Monthly average data usage per connection on our network

GB


11

PEAK TIME CAPACITY IS KEY

Chorus network traffic by time of day

Network throughput (Tbps)


13

> New regulatory framework bill before Parliament:

Next steps: legislative process, then the Commerce Commission will consult and set input methodologies.

TRANSITION TO A REGULATED UTILITY MODEL

~13% of population


H1 FY18 $m

H2FY17

(adjusted)

$m

H1 FY17

(adjusted)

$m

Operating revenue 499 519 529

Operating expenses (170) (170) (168)

Earnings before interest, tax, depreciation and amortisation (EBITDA)

329 349 361

Depreciation and amortisation (192) (185) (174)

Earnings before interest and income tax

137 164 187

Net interest expense (70) (77) (79)

Net earnings before income tax 67 88 109

Income tax expense (20) (25) (31)

Net earnings for the year 47 62 77

14

INCOME STATEMENT

Note: H1 and H2 FY17 have been adjusted to show the illustrative impact if NZ IFRS 15 and NZ IFRS 16 had applied in FY17.

> ineffectiveness has not been removed from H1 and H2 FY17 to reflect NZ IFRS 9 changes

> D&A increasing post IFRS adoption


> The Chorus Board considers that a ‘BBB’ credit rating or equivalent credit rating is appropriate for a company such as Chorus. It intends to maintain capital management and financial policies consistent with these credit ratings.

▪ FY18 dividend guidance of 22cps, subject to no material adverse changes in circumstances or outlook.

• interim dividend of 9 cps, fully imputed with supplementary dividend of 1.6cps payable to non-resident shareholders

• record date: 20 March 2018

A Dividend Reinvestment Plan has been available to NZ and Australian resident shareholders with a 3% discount to prevailing market price.

The FY17 final dividend was underwritten with 54% DRP uptake.

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CAPITAL MANAGEMENT

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FY12* FY13 FY14 FY15 FY16 FY17 FY18

Chorus dividend profile

During the UFB build programme to 2020, the Board expects to be able to provide shareholders with modest dividend growth from a base of 20cps per annum, subject to no material adverse changes in circumstances or outlook.

Dividend suspended during copper pricing review

FY12*: prorated for the post demerger period of seven months

cps


Any questions?

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Hamilton Hindin Greene presentation 16 May 2018 · Premises to pass by Dec 2022 ~1,054,000* Uptake...

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