On paper, Chorus - which will deliver its full-year result on Monday - should be entering a golden new era.
Bar a few "i"s to be dotted and "t"s to be crossed, the heavy-spending days of the UFB fibre rollout, and uncertainties about the new regulatory regime, are behind it.
Free cash flow is set to increase, with up to 80 per cent paid out to shareholders as dividends fatten over the next few years.
Investors cheered Chorus' first-half result, which was at the upper end of guidance and saw the first-half dividend bumped from 10.5 cents per share a year ago to 14cps.
The full-year dividend guidance was upped from 26cps to 35cps as Chorus reiterated its full-year ebitda guidance of $665m to $685m.
The UFB operator has forecast a "minimum" dividend of 40 cents per share to 45cps for FY2023, with some analysts believing that could in fact stretch to 50cps, with 70cps on the cards for the years ahead.
Chorus - which recently hiked pricing by up to 7 per cent across its suite of wholesale plans - should also benefit from the current period of high inflation, Forsyth Barr analyst Aaron Ibbotson says.
While the formulas behind the new UFB regulatory regime are complex, Ibbotson says the bottom line is that Chorus will get more wiggle room around its Maximum Allowable Revenue under the new revenue regime.
"Chorus is one of the few beneficiaries of higher inflation," Ibbotson says.
He notes that when it was setting the rules for the first regulatory period (2022 to 2024), the Commerce Commission estimated inflation would be around 3 per cent, dropping to 2 per cent, in line with Reserve Bank projections at the time.
For each percentage point above that projection, Chorus can add around $55m to its Regulated Asset Base, which in turn feeds into and helps lifts its Maximum Allowable Revenue.
Not all elements of the high inflation environment benefit Chorus, but the net effect is positive, he says.
And to top it off, the Commerce Commission has put a leash on how Spark, Vodafone and 2degrees can market their fixed-wireless plans, which compete with fibre in some areas of the market.
The mobile players must now follow tighter rules around promoting all technology options, and reference the ComCom's broadband testing, which only includes 4G fixed-wireless, not the faster, lower latency 5G fixed-wireless.
A spokeswoman for the regulator did not yet have enough test volunteers for 5G, but anticipated adding 5G fixed-wireless in early 2023.
Chorus chief executive JB Rousselot. Photo / Michael Craig
But despite so many elements of the new landscape favouring Chorus, Ibbotson has a neutral rating on its shares and a 12-month target of $7.30 (or 7 per cent below its closing price yesterday).
A lot of the positives are already priced into the stock.
Ibbotson also sees Chorus as being "boxed in" to a degree as it works under "a relatively onerous regulatory environment".
He sees the risk from fixed-wireless as low at the moment, and fibre and wireless broadband as complementary products.
But he cautions with the roll-out of 5G in New Zealand, fixed-wireless broadband, at least in theory, poses a realistic alternative to a meaningful proportion of households.
What would cause Ibbotson to up his rating? A key element he will be watching for on Monday will be whether Chorus lifts its dividend forecast for next year from the current 40-45cps.
The ForBarr analyst says Chorus could sustain 50cps.
"This would likely be taken well by the market," Ibbotson says - but on balance he doesn't see the company deviating from its current guidance.
