Chorus chief executive Jean Baptiste Rousselot. Photo / Michael Craig
Chorus chief executive Jean Baptiste Rousselot. Photo / Michael Craig
Analysts got the key thing they were looking for from Chorus' full-year result: a boost in dividend guidance.
The UFB network operator confirmed a 35 cents per share full-year dividend this morning.
And it raised its dividend guidance for the next two financial years from 40 cents per share to45 cents to 42.5 cents per share for FY2023 and 47.5 cents per share for FY2024.
The move to increase the profit payout to shareholders came as Chorus reported its full-year net profit had increased from $51 million in FY2021 to $64m.
Ebitda edged up from $657m to $660m - but was shy of the forecast $665m to $685m.
And revenue increased slightly from $955m to $965m.
Jarden analyst Arie Dekker's first blush take was, "Notwithstanding the relatively small size, the extra dividend should be well received. Otherwise result, outlook and commentary in line with expectations."
Shares rose 2.4 per cent to $7.99 in early trading. The stock is up 9.3 per cent for the year.
Going into today's full-year report, Forsyth Barr had Chorus rated neutral, with a 12-month target of $7.30.
Analyst Aaron Ibbotson said with the big-spending years of the UFB rollout behind it, Chorus was well-placed to fulfil its promise to fatten dividends.
The firm was also "one of the few beneficiaries of inflation", which would give it more wriggle room under the complex formulas behind its regulated Maximum Allowable revenue.
And uncertainty over the new regulatory regime was now behind it.
But a lot of the anticipated growth is already built into Chorus' share price. Ibbotson said there could also be an element of the firm being "boxed-in" by regulation and a potential technology threat from fixed-wireless as Spark, Vodafone and 2degrees mobile upgrades expanded.
Chorus chief executive Jean Baptiste Rousselot. Photo / Michael Craig
On a conference call with analysts, chief executive JB Rousselot said the copper switch-off had started to gain momentum, with copper service now turned off for 7000 customers and termination letters sent to another 13,000 (under the new regulatory regime, Chorus can turn off copper service in areas with UFB fibre).
Rousselot said "90 per cent" of customers affected by the copper withdrawal had upgraded to UFB fibre (households can also move to fixed-wireless services offered by Spark, Vodafone and 2degrees via their mobile networks).
CFO Andrew Carroll said copper withdrawal had been in a pilot phase. There would be a "substantial increase" in activity over the new financial year.
Rousselot said Chorus would seek to increase its regulated revenue - and maintain its performance edge over fixed-wireless - by seeking to increase numbers on faster, more expensive Fibre Max and Hyper Fibre plans, and finding new fibre connection work on greenfields property developments, particularly in Auckland.
And he said his company would also try to increase its unregulated revenue with new "edge" data centres within exchanges. The CEO said there was a lot happening with hyperscale data centres being constructed for the likes of Amazon and Microsoft, but that Chorus' "edge" effort would be "complementary" and target regional areas and suburban pockets.
Expand fibre to 90 per cent of the population
Rousselot also said Chorus would like to expand its core business: the Ultra Fast Broadband (UFB) fibre rollout, whose second phase is now all but finished following an earlier expansion from 80 per cent to 87 per cent of the population.
The Chorus CEO also said it would boost New Zealand's "digital equity" if the "pragmatic policy decision" was made to extend the public-private UFB rollout from 87 per cent of the population to 90 per cent.
"Some European governments have gone beyond 90 per cent, so it's time to have that conversation," Rousselot said.
Asked if he was open to Chorus' plan to expand the UFB to 90 per cent population coverage, Digital Economy Minister David Clark said, "My officials are engaging regularly with the telecommunications sector to understand opportunities to ensure that connectivity in Aotearoa will meet the needs of New Zealanders into the future."
Carroll said increases in labour costs had been in line with the CPI. Under the new regulatory regime, Chorus is allowed one round of price increases per year. In July, it raised its wholesale pricing by up to 6.9 per cent across its suite of wholesale plans - though also cut pricing on its more expensive plans (its Hyperfibre 8000 plan was cut from $150 to $110 per month, for example; see table above) as it sought to entice customers to faster, higher-yielding services.
Asked about apparently stalled progress on Chorus' share buy-back as its stock has risen, Carroll said "we've been out of the market for a while" but pledged the buy-back would be completed.
