Chorus (ASX:CNU) reported “another robust result” for the six months ended 31 December 2025, pointing to continued fibre connection growth, rising fibre revenues, and lower operating expenses despite ongoing economic pressure in New Zealand. Chief Executive Mark Aue said the company had entered the next phase of its long-term plan, Horizon 2, with a focus on “growth, simplicity, and efficiency,” while Chief Operating Officer Drew Davies detailed financial performance and reiterated full-year guidance.
Fibre growth offsets ongoing copper decline
Aue said total fibre connections rose 3% half-on-half to more than 1.1 million, with fibre uptake increasing to 72.4%. Fibre revenues grew 7% in the period, and Chorus highlighted that fibre remained resilient even as the broader economy’s recovery was “still lumpy.”
On product mix, Aue addressed the company’s 50 Mbps Home Fibre Starter plan and subsequent “Boost” initiative. He said management remained “resolute” that the lower-speed plan and Boost changes were the right decisions, providing optionality during cost-of-living pressure and opening fibre to customers who were not previously attracted to existing plans. He said initial downgrades from higher plans were exacerbated by retailers’ pricing moves in the first quarter but have since settled.
Chorus highlighted recent reactivation trends among long-inactive fibre premises, including increases in connections from premises off-net for more than three months, more than one year, and more than two years. Aue said the company’s hypothesis was that prior plans did not appeal to some customers and that the revised plan structure created clearer differentiation between fibre and fixed wireless.
Half-year financial results and dividend
Davies reported EBITDA of NZD 357 million, up NZD 11 million from the prior comparable half. Revenue was NZD 506 million, up NZD 6 million net, as fibre broadband growth was partly offset by declines in copper revenue. Operating expenses fell 3% year-on-year to NZD 149 million, which the company attributed to savings from its operating model change, lower consulting costs, and continued reductions in legacy costs that helped absorb inflation in items such as rent, rates, and electricity.
Net profit after tax was NZD 15 million, compared with a NZD 5 million loss in the prior-year half. Davies said depreciation and amortization fell NZD 19 million to NZD 216 million, reflecting completion of accelerated copper depreciation in core UFB areas in the prior period.
Chorus declared an unimputed interim dividend of NZD 0.24 for the half, to be paid in April, with no dividend reinvestment plan available. Full-year dividend guidance remained NZD 0.60, unimputed.
Revenue drivers, cost movements, and CapEx phasing
Davies said fibre broadband revenue increased 7%, or NZD 26 million, driven by 31,000 more fibre connections and an approximate 4% lift in ARPU to NZD 57.73. Combined copper broadband, voice, and data revenue fell NZD 18 million, down 43% annually, as copper connections declined by 60,000, or almost 50%.
Field service revenue was down slightly, which Davies linked primarily to lower new property development activity, partly offset by more revenue from new connections in brownfields projects. “Other revenues” were stable year-on-year but lower sequentially because the prior half included a roughly NZD 3 million net gain from copper cable recycling trial sales.
On costs, Davies cited:
- Labour costs of NZD 41 million, down about 4% year-on-year, with “about 100 fewer roles” following operating model changes; the labour capitalization rate fell to 42% from 45% as network build activity declined.
- Network maintenance costs down NZD 7 million, driven by fewer copper faults and a 22% reduction in truck rolls, partly offset by network-related fault costs.
- Higher “other network costs,” partly due to cabinet shutdown costs and increased engineering activity linked to weather events.
Gross CapEx was NZD 158 million, down NZD 41 million from the prior half, split evenly between sustaining and growth (NZD 79 million each). Davies said Chorus expects CapEx to uplift in the second half due to project phasing, including national fibre build work, property refurbishments, and IT deliveries. Full-year FY2026 CapEx guidance was maintained at NZD 375 million to NZD 415 million, but Chorus now expects to land in the lower half of that range, with sustaining CapEx also expected in the lower half of its NZD 195 million to NZD 215 million band.
Copper retirement, recycling, and regulatory focus
Aue said accelerated copper retirement continued, with only 3,000 lines remaining in UFB areas and a target to retire UFB copper fully by the end of June. In non-fibre areas, copper connections declined by 26,000 over the last year, with 54,000 lines remaining. He also cited a NZD 4 million reduction in reactive fault spend and reiterated the company’s push for regulatory changes to support a broader copper exit.
Management said it was “hopeful” for decisions relating to copper deregulation and the TSO review in the third quarter, and referenced a Ministry for Regulation review over a similar timeframe. In Q&A, Aue clarified that his confidence around “positive pathways” related to copper exit and legacy constructs, not a prediction on fibre input methodology outcomes.
On copper recycling, Aue said Chorus was transitioning out of trial into final contracting for a fully operationalized program, with metals prices at historic highs putting estimated returns at the top end of a previously stated NZD 30 million to NZD 50 million range. Davies added that in the second half the company expects to implement the program and realize net sales “in the low single millions” this fiscal year.
Guidance tightened; balance sheet and NIFFCo sale in focus
Chorus maintained FY2026 EBITDA guidance of NZD 710 million to NZD 730 million, but Davies said the company now expects to be in the upper half of the range, citing improving fibre connection growth, revenue uplift, and disciplined cost management. In response to an analyst question, management said it was not seeing a “significant” improvement in underlying economic conditions, but pointed to targeted initiatives with retail service partners and a strong January connection result, which Aue said was the strongest since mid-2024.
Net debt was NZD 3.2 billion at 31 December, up about NZD 100 million from 30 June, primarily due to issuing EUR 400 million in euro notes and using proceeds to repay most of EUR 300 million notes early and to fully repay the revolving credit facility. Davies also discussed ratings agency approaches and the government’s planned sale process for its bespoke Crown Funding (NIFFCo) securities. Chorus said it would not participate in buying the NIFFCo securities and noted that terms cannot be altered without Chorus’s agreement if sold to a third party.
Davies said the final determination of S&P’s leverage calculations would depend on the sale outcome later in the year, including whether S&P might reclassify NZD 683 million of equity securities as debt. On a pro forma basis, if treated as debt, Chorus estimated S&P leverage would rise to around six times net debt to EBITDA, which it said remained below S&P’s stated threshold under its updated methodology.
Looking ahead, Aue reiterated an 80% fibre uptake aspiration and said execution would increasingly rely on improved data and analytics and more targeted approaches, including for brownfields infill where the company estimates roughly 200,000 premises were passed during the initial rollout but not installed or connected. He also said Chorus is launching an “equity fibre product” aimed at improving affordability and digital inclusion, working with community partners to identify eligible households.
About Chorus (ASX:CNU)
Chorus Limited, together with its subsidiaries, engages in the provision of fixed line communications infrastructure services in New Zealand. It offers phone and broadband services for residential and business customers; data and voice services; and solutions for transport and infrastructure. The company also builds and maintains a network of fibre and copper cables, local telephone exchanges, and cabinets. In addition, it offers co-location and value-added network services. The company was incorporated in 2011 and is based in Wellington, New Zealand.
