JB Rousselot Chorus Chief Executive.
Telecommunications network operator Chorus, created in 2011 following the demerger from Telecom NZ, has made sterling progress to ensure most New Zealanders benefit from ultrafast broadband (UFB).
Chorus was chosen by the government to build a fibre network for about 830,000 premises, initially for the 24 cities and large towns, and then the second stage for smaller communities. It is already ahead of that schedule, and has won the Most Improved category of the Deloitte Top 200 Awards.
“We have just passed the milestone of having more people connected to fibre than those on copper connections,” said Chorus chief executive JB Rousselot. “And 17 per cent of the fibre consumers have gone straight to the best, high-speed plan.”
He said the company has focused on customer satisfaction and employee engagement and “we are pleased that we have had some good outcomes. During the Covid lockdown there was a lot of pressure on the network and we did the right thing by keeping people connected — it’s something that the industry does well.”
By the end of September, Chorus' fibre optics cable passed 947,000 premises, up from 931,000 in the three months between April and May this year. An even more significant statistic when considering a multi-dwelling unit or single office block is counted as one premises.
Operating with a team of 870 staff located in Auckland, Hamilton, Wellington and Christchurch and using contractors, Chorus completed 16,000 new installations in the September quarter, bringing the total to 47,000. The 757,000 connections serviced 1.226 million customers, up from 725,000 and 1.209m in the April-May quarter.
We have just passed the milestone of having more people connected to fibre than those on copper connections.
Chorus' goal is to reach 1m connections and service 1.36m customers within two years, and extend UFB to 87 per cent of the population. By then it would have built a network of 54,000km of fibre.
With fibre broadband reaching speeds of 100Mbps or more, it means users can connect multiple devices and have no problem playing, watching, listening, and working at the same time.
In its recent presentation to the UBS Australasia Virtual Investor conference, Chorus said Covid-19 was driving awareness of fibre reliability and capacity as more people worked from home, and it was lifting its connections intensity in the present 2021 financial year. The strongest growth was in Auckland with a 70 per cent uptake in fibre, and Chorus had contracted 25 greenfield properties.
Chorus has provided operating earnings (EBITDA) guidance of $640-$660m for the present financial year compared with actual earnings of $648m for the 2020 year ending June. Gross capital expenditure is expected to be between $630m and $670m after peaking in 2018 and 2019. Revenue for the last year was $959m, down from $970m in the 2019 financial year.
Chorus' share price has climbed from the March 23 low of $5.995 to around $8.24, after reaching a high of $9.22 on September 16. Chorus is one of the top 15 biggest companies on the NZX exchange with a market capitalisation of $3.7 billion.
Deloitte Top 200 judge Neil Paviour-Smith said while the 2020 financial year saw Chorus' revenues and profitability relatively stable compared with prior years, the company achieved a 23 per cent increase in total fibre connections which offset the continuing decline in copper connections.
“For many years Chorus has been carefully navigating the fibre regulatory regime which is inching towards finalisation. This is a key value driver for Chorus with the company credited with making good progress.”
The relative stability and growth in market confidence in the company’s performance saw its share price rally an impressive 77 per cent over the past year.
Finalist: 2degrees
Telecommunications provider 2degrees has been niggling away at its market for more than a decade with the motto “fighting fair” and has now become a significant player in the country’s mobile and broadband services.
The company invested more than $1 billion to complete the rollout of its national mobile and broadband networks, and it has become a full-service provider to not only consumers but also businesses and corporates such as Auckland Airport and government agencies including the Reserve Bank and Ministry of Primary Industries. It provides broadband to nearly 110,000 homes.
Back at the start of 2013, 2degrees didn’t feature on the broadband market share, dominated by Spark and Vodafone. By the second quarter of this year, 2degrees had 7 per cent of the market, while Spark had fallen from 48 per cent (in 2013) to 38 per cent and Vodafone from 29 per cent to 24 per cent. 2 degrees had also grabbed 8 per cent of the fibre market share, with Spark at 35 per cent, Vodafone 18 per cent and Vocus 15 per cent.
Mark Aue, chief executive of 2degrees, said “the company has made a significant impact on the industry; it’s been almost unrecognisable as we’ve moved away from the duopoly of Telecom (now Spark) and Vodafone over the past 11 years.
“We’ve gone above and beyond expansion and become a company of substantial size. We are the only top tier telco with a 100 per cent Kiwi-based call centre and we have had a genuine focus on customer care and experience — and providing value in product innovation and pricing.
“During the Covid crisis, we removed broadband caps and waived late payment fees. We work with anybody and would not disconnect them, even now, if they are suffering from economic hardship.”
Aue said customers continue to appreciate simplicity. “We spent last year celebrating our 10th anniversary by refreshing our brand to highlight the breadth of our offering.” The company now has 1100 staff and 350 working in the call centre.
The industry challenger, 2degrees, was recently recognised by Campaign Asia as New Zealand’s top telco brand and was the only telco in the Colmar Brunton Top 20 reputation index.
For the past year ending December 31, 2 degrees increased profit from $19.6m to $28.6m and operating earnings (EBITDA) grew 12 per cent to $147.5m, from $131m.
The company, which launches 5G at the end of next year, has arranged a sharing agreement where it uses its own spectrum via partner infrastructure to serve pockets of New Zealand not covered by its national mobile network.
The agreement has seen an increase in mobile traffic as customers enjoy the benefits of improved services in less populated areas and on regional roads. The 2degrees national mobile network reaches 98.5 per cent of the population.
Judge Neil Paviour-Smith said 2degrees delivered its strongest ever result in the past year, delivering 11 per cent growth in mobile and 32 per cent increase in fixed broadband subscribers, and driving a 46 per cent uplift in profitability. In a highly competitive market, New Zealand’s third mobile network provider has grown its customer share with a focus on higher value, post-pay connections and expanding opportunities to bundle its products with home broadband, he said.
Finalist: AsureQuality
Over the past two years, state- owned enterprise AsureQuality has implemented a renewal strategy to get its fundamental business well balanced — and now it is ready to go into growth mode.
“We took a hard look and saw we didn’t have a sustainable business,” said AsureQuality interim chief executive, Jeremy Hood. “We saw a number of areas including financial ratios where our competitors were doing better than us. We had to understand our costs of doing business, reduce them in some areas, and get our profit in line with revenue.”
AsureQuality, which plays an integral role in maintaining the country’s important food supply, reduced its international exposure by forming a joint venture with French certification company, Bureau Veritas.
They now jointly run food testing laboratories in Australia, Singapore, Vietnam, Indonesia, Malaysia and Thailand.
“We are doing pretty good now financially — similar to what it was last year which was a record,” said Hood. “We were an essential service during the Covid lockdown and our team of 1800 kept working.”
Formed in 2007 from the merger of Asure New Zealand and AgriQuality, Asure Quality provides inspection, certification and food testing and other specialist services. The business can be traced back to 1875 when sheep inspectors were employed by the Crown Lands Department.
Asure Quality’s 4000 customers range from producers, processors, wholesalers, retailers and regulators along the food supply and represent industries such as dairy, meat, poultry, seafood, horticulture and wine. It also provides services to forestry, live animal export and biosecurity.
With an eye on the whole food supply chain, AsureQuality’s services include audit, farm assurance, training, assurance mark traceability, diagnostics, and laboratory testing, as well as inspection and certification.
In the 2020 financial year ending June, AsureQuality’s revenue increased slightly to $255.9m from $254.02m, and its operating expenses were similar at $220.2m. Its gross profit fell from $33.03m to $27.02m, and net profit decreased from $25.9m to $19.95m.
Judge Neil Paviour-Smith said the growing importance of food safety, testing and inspection services had seen AsureQuality deliver record revenues and record operating profitability in the past year.
Revenue was favourably impacted by high demand for live animal exports, continuation of the M Mycoplasma. bovis response programme and implementation of nationwide tuberculosis testing services.
These services and record results were delivered notwithstanding the challenges from Covid-19 which caused variable demand from customers for food testing and additional costs in operating procedures, said Paviour-Smith.
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