Chorus reported a net after tax profit of $85 million for the 2018 financial year. That’s 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 amortization was stable at $653 million compared with $652 million in the previous year. This was a little over 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.
CEO Kate McKenzie says the results show that the strategic changes started during the financial year. She expects these changes mean Chorus will return to a modest ebitda growth in the 2020 financial year.
She says: “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”.
During the results presentation McKenzie said fibre demand is stronger than ever. The year saw Chorus complete 156,000 fibre instatallations. That’s a record and it means the rate of fibre uptake climbed from 35 percent to 45 percent.
Chorus says it invested $20 million in upgradeing copper broadband performance for about 270,000 addresses mainly in rural districts and areas covered by the 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 reduced 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 and Netflix is approaching two million viewers.
Chorus expects to see a small earnings decline in the 2019 financial year. This is likely to be the peak year of the fibre roll-out. The company forecasts a reduced ebitda in the range of $625 million to $645. It says it expects a modest ebitda growth in the following year.