Chorus attributes half-year profit drop to COVID impact on network migrations
Chorus on Monday reported net profit after tax (NPAT) of NZ$24 million and earnings before interest, tax, depreciation, and amortisation (EBITDA) of NZ$323 million for the half year to December 31.
These were both year-on-year decreases from NZ$31 million and NZ$332 million, respectively, with Chorus attributing the drops to the continued migration of customers from legacy copper services to alternative networks in non-Chorus fibre network areas and fewer people migrating to fibre connections than expected as a result of COVID-19.
Operating revenue for the period was NZ$473 million, down from NZ$483 million, while operating expenses essentially remained flat at NZ$150 million. Depreciation and amortisation was NZ$209 million for the half and EBIT jumped by NZ$20 million year-on-year to NZ$114 million.
Network performance was steady, Chorus CEO JB Rousselot said, with fibre uptake improving from 60% to 63% with 62,000 fibre connections added during the six months, which brought the total of its fibre connections to 813,000. Of those connections, 17% were on gigabit plans, the telco said.
Across its wider footprint, the company now has almost 1.37 million fixed-line connections, a decrease of 50,000 from the year prior, along with 966,000 premises passed in total, meaning the Ultra-Fast Broadband (UFB) network is now 92% complete.
Rousselot added that the second phase of its UFB fibre build, UFB2, is still on track. In the six-month period, fibre was added to Fox Glacier, National Park, and Mokau.
"As in the larger centres, those upgrading to fibre in these communities can typically get fibre installed for free and comparison websites highlight the diverse range of sharp retail offers available to new fibre customers," Rousselot said.
Chorus also announced it will start cutting copper services from September, with the switch-offs to first commence in areas where fibre uptake is "already high".
Around 5,000 customers, which comprises less than 1% of Chorus' copper network customer base, will have their services withdrawn by the end of the year. The decision to cut off copper networks was in response to the Commerce Commission's final Copper Withdrawal Code being released in December, the telco said.
Customers using Chorus' copper network will be given a six-month notification period before the first set of switch offs start in September.
"Outside of these limited initial trial areas, no one should feel under any pressure to move from copper. There is no overnight switch-off of the copper network. Our plans in the next 12 months are expected to affect less than 1% of the half million customers still on copper today," Rousselot said.
For the year ahead, Chorus said its EBITDA guidance remained the same despite COVID impacts, but the company is tracking towards the lower half of the guidance's range of NZ$670 million to NZ$700 million.
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