Chorus net profit falls 24 per cent as fixed line connections fall

Chief executive said demand for fibre was "stronger than ever" and that there were now more than 900,000 homes and businesses with Chorus fibre available at their door. Photo / Hawkes Bay Today.

Chorus' profit fell 24 per cent as the telecommunications network operator slowed the number of customers switching to different providers or technologies in an increasingly competitive market.

The telecommunications lines company said its net profit came to $85m for the June year, down from $113m in the previous year.

At an operating level, the company's EBITDA came to $653m, up slightly from $652m a year earlier, and modestly higher than its guidance of $625m to $650m.

Chief executive Kate McKenzie said demand for fibre was "stronger than ever" and that there were now more than 900,000 homes and businesses with Chorus fibre available at their door.

Chorus completed a record 156,000 fibre installations, which helped grow its fibre uptake from 35 per cent to 45 per cent.

The company invested $20m in a project to upgrade copper broadband performance for about 270,000 addresses across rural and local fibre company areas.

In a statement, the company said: "Results for 2018 largely reflect the annualised revenue impact of declining connections from 2017, the adoption of three new accounting standards, and costs incurred as part of an organisational transformation programme."

Capital expenditure of $810m was at the top end of the the company's own guidance range of $780m to $820m.

The increase in capex reflected growing demand for connections to the Chorus fibre network, with about 76 per cent of the company's spending being fibre-related.

Chorus said it would pay a final dividend of 13 cents and that it expected to pay a 23 cent dividend in 2019.

Chorus chief executive Kate McKenzie. Photo/Supplied.

Strategic changes Chorus started in FY18, which continue through FY19, are focused on achieving the company's objective of a return to modest EBITDA growth in FY20, it said.

"Our return to broadband connection growth in 2018, together with strong forecasts for urban housing development and underlying broadband trends, such as fibre uptake and the demand for streamed video content, give us added confidence in our strategy," McKenzie said in a statement.

The company's operating revenue fell to $990m from $1,040m.

Total fixed line connections were down 5 per cent to 1,526,000 and broadband connections increased by 1,000 to 1,187,000.

Additional reporting: BusinessDesk