Chorus chief executive JB Rousselot is to depart in April this year. Photo / Michael Craig
Chorus chief executive JB Rousselot is to step down in April and will be replaced by chief operating officer Mark Aue.
The telecommunications network company made the announcement as it released its half-year financials, showing its net profit after tax had fallen from $9 million to $5m. Shares were down 0.3 per cent to $7.76 in early afternoon trading.
In a “first impression” note on the result, which was broadly in line with his expectations, Jarden analyst Arie Dekker noted Chorus confirmed it is tracking to the top end of its full-year range for operating earnings ($680m to $700m vs $682m in FY2023) and that the full-year FY2024 dividend of 47cps is now “locked in”.
Chorus has recently been in a game of brinkmanship with the Commerce Commission over its capex for the second regulatory period (RP2) of the post-UFB rollout era. The company has proposed to spend $1.3 billion - or $200m less than previously tabled - over 2025 to 2028 as fibre is expanded to cover 10,000 households rather than 30,000 - as it waits to hear if the Government will come to the party. Dekker said the reduction was “sensible”. He was not expecting any substantive update on negotiation with the Commerce Commission before Chorus’ full-year result.
Craigs analyst Wade Garinder called it a “clean result” with the main news being Rousselot’s departure. ”Tis the season for transitions clearly with Oceania Healthcare also announcing the exit of CEO Brent Pattison later this year,” Garinder said.
Rousselot, who came to Chorus after executive roles with Telstra and the National Broadband network across the Tasman, had been CEO since November 2019. His primary role was arm-wrestling with the Commerce Commission as it developed the rules for the new, post-Ultrafast Broadband fibre rollout era. The France-born executive, who turns 60 this year, told the Herald he wanted to pursue directorships in a new career phase rather than see another CEO role.
Aue joined Chorus in April 2023 - he was previously CEO of 2degrees, ahead of its mid-2022 merger with Vocus NZ (trading as Orcon Group) and the CFO of Vodafone NZ - now called One NZ.
One of his first challenges will be selling the Government on a proposed expansion of the UFB into rural areas - which an MBIE briefing for new Communications Minister Melissa Lee called slow and expensive. Chorus says extending the UFB would offer better performance and natural disaster resilience - but the most ambitious version of its plan would require another round of Crown investment.
There will also be a continued tussle with Spark, One NZ and 2degrees - refereed by the ComCom - over the way the retail telcos market their fixed-wireless products, which Chorus sees as sometimes pitched too aggressively as an alternative to UFB fibre.
Chorus chairman Mark Cross said Rousselot had been an exceptional leader for the business.
“Under his guidance, Chorus completed the government-supported Ultra-Fast Broadband programme, saw fibre reach more than one million New Zealand homes and businesses and he led the business through its greatest test, Covid-19. We are grateful for his passionate advocacy of fibre and consumer transparency.”
Cross said Aue’s appointment as CEO came at a pivotal time for Chorus and the industry.
“His deep understanding of Chorus and the telecommunications industry, combined with a proven leadership and innovation track record, makes him the ideal person to lead Chorus into its next chapter.
“Mark’s focus on the customer, and growing fibre connections, will be a core part of Chorus’ future. His appointment represents the fruition of ongoing strategic succession planning overseen by the board.”
The company’s half-year result was down mainly due to higher interest rates and the accelerated depreciation of copper assets in areas where fibre is available.
Chorus’ earnings before interest tax, depreciation and amortisation (Ebitda) were $347m for the six months to December 31 - up $5m on the comparable half.
Its operating revenue rose $16m to $503m while expenses were up $11m to $156m due to inflation-linked cost increases and some one-off costs.
Fibre connections rose by 31,000 to 1,062,000, while the number of premises with connections grew to 1,493,000.
Rousselot said the growth in fibre uptake was driving the company towards becoming a simpler, pure digital infrastructure company.
“Over the last 12 months, copper connections dropped by 94,000, and fibre grew from 78 per cent of Chorus’ connections to 85 per cent. This shift has seen network fault volumes drop by 15 per cent, and we expect these fault volumes to fall further as we look to fully retire copper in urban fibre areas by the end of 2026.
“Our objective remains to achieve 80 per cent fibre uptake, and we are continuously refining our active wholesaler strategy to help achieve this.”
Chorus confirmed it would pay an interim dividend of 19 cents per share in April. Its dividend reinvestment plan remains suspended.
The company said its Ebitda guidance for the full year was unchanged at $680m-$700m and was tracking towards the top half of that.
Its capital expenditure was unchanged at $400m to $40m but was also heading towards the top half of that. Chorus shares last traded at $7.80 and are down 4.12 per cent for the year.
Shares closed at $7.80 yesterday.
The stock is down 4 per cent over the past 12 months.