Q4 FY20 Connections Update

10 July 2020

> Lockdown period had a significant impact on Q4 fibre activity and uptake

▪ restrictions on non-essential activity reduced fibre installations by ~15k and halted UFB2 rollout

▪ reduced fibre installations and constraints on door to door marketing saw Q4 fibre connection growth drop to 27k from 32k in Q3

▪ Chorus provided $5 million financial support to service companies to assist with reduced field force workflow/revenue and help retain workforce for rapid resumption of work in Alert Level 3

> Total fixed line connections declined by 4k to 1,415,000* (Q3 FY20: -13k)

> Broadband connections returned to Q2 level of 1,206,000*, with 4k growth (Q3 FY20:-4k)

*totals exclude 10,000 free broadband connections provided to student households

10 July 2020

Q4 FY20 overview

Q4 FY20 CONNECTIONS UPDATE2

COVID-19 constrains Q4 fibre growth

2,000

4,000

6,000

8,000

10,000

12,000

14,000

16,000

18,000

20,000

July Aug Sept Oct Nov Dec Jan Feb Mar April May June

Fibre installations (NZ wide)

FY18 FY19 FY20

> We’ve implemented a broad range of initiatives to support community and industry including:

▪ providing 10,000 broadband connections, free-of-charge for six months, to families without broadband as part of government initiatives for online schooling

▪ enabling temporary disconnections by removing disconnection and reconnection fees for businesses

▪ making a $2 million relief fund available to retailers for debt incurred from consumers and small businesses unable to pay their connection bills during the lockdown period

▪ introducing price reductions on our 1Gbps and small business plans from 1 July

▪ delaying our annual CPI increase until 1 October and limiting increases to selected fibre plans, despite increases to our service company and other costs

▪ continuing to invest in broadband capacity as network demands change post-lockdown

> It remains to be seen what impact wider COVID-19 economic effects will have on connections in the coming months

10 July 20203

Our response to COVID-19

Q4 FY20 CONNECTIONS UPDATE

UFB uptake reaches 60%

> UFB uptake increased from 58% to 60% within completed footprint in Q4

▪ uptake in UFB1 areas grew from 60% to 63%

▪ uptake in UFB2 areas grew from 35% to 37% (note: uptake includes some UFB2 areas that have been partially built, but not yet submitted for Crown sign-off)

▪ 725,000 connections (Q3: 695,000) now within completed footprint, including business premium connections

▪ 1,209,000 customers able to connect (Q3: 1,198,000)

▪ 931,000 premises passed* (Q3: 920,000) out of 1,054,000 target = UFB rollout 88% complete

> 31,000 fibre installations completed in Q4 (Q3: 38k)

▪ customer satisfaction increased from 7.9 to 8.1

*under the UFB contract, a multi-dwelling unit or single office block is one premises

Uptake

10 July 2020 Q4 FY20 CONNECTIONS UPDATE4

0

100,000

200,000

300,000

400,000

500,000

600,000

700,000

800,000

900,000

1,000,000

ADSL VDSL Fibre

Fibre now 73% of Chorus broadband connections in planned UFB zone

No. of connections

0

200000

400000

600000

800000

1000000

1200000

1400000

30-Jun-19 30-Sep-19 31-Dec-19 31-Mar-20 Jun-20

10 July 2020

30 June 2019

30 Sept 2019

31 Dec 2019

31 March 2019

30 June 2020

Unbundled copper (no broadband)

24,000 21,000 18,000 17,000 15,000

Baseband copper (no broadband)

214,000 201,000 192,000 185,000 179,000

Copper ADSL (includes naked)

327,000 304,000 283,000 261,000 245,000

VDSL (includes naked)

270,000 257,000 242,000 228,000 221,000

Fibre broadband (GPON)

599,000 645,000 681,000 713,000 740,000

Data services (copper)

5,000 4,000 4,000 4,000 4,000

Fibre premium (P2P)

11,000 12,000 12,000 11,000 11,000

Total connections 1,450,000 1,444,000 1,432,000 1,419,000 1,415,000

Fibre (GPON)

VDSL

Copper ADSL

Unbundled copper

Baseband copper

Fibre now makes up 53% of Chorus connections

Q4 FY20 CONNECTIONS UPDATE

> 1,206,000 broadband connections comprises:

▪ 740,000 fibre (GPON) connections

▪ 466,000 VDSL/ADSL (copper) connections

Business premium

5

Note: Free education connections are excluded from this data

27,000 mass market fibre connections added

▪ 1Gbps connections grew from 105k to 115k and now represent 16% of mass market fibre

▪ about 20% of orders are for 1Gbps

▪ 100Mbps plans reduced to 69% share of connections

▪ small business plans grew to 3k; 100Mbps business plan reduced from $55 to $52 from 1 July

0

10

20

30

40

50

60

70

80

90

100

Jun-19 Sep-19 Dec-19 Mar-20 Jun-20

% of plans

Total mass market fibre uptake by plan type

50Mbps

100Mbps

1Gbps

10 July 2020

1Gbps plans grow to 115k

200Mbps

Q4 FY20 CONNECTIONS UPDATE

$60 p.m.

$46 p.m.

$42.50 p.m.

$55 p.m.

Business/Education plans

6

-10

0

10

20

30

50Mbps 100Mbps 200Mbps 1Gbps

Fibre plan movement by quarter

Q1 Q2

Change in connections (‘000s)

$56 p.m.from 1 July

$43.56 p.m. from 1 Oct

$47.15 p.m. from 1 Oct

$56.38 p.m. from 1 Oct

10 July 2020

Connection changes by Zone (indicative)

Chorus UFB zone*

Rural (non-UFB) zone

Local Fibre Company UFB zone

Total connections at 30 June**

1,097,000 195,000 108,000

Broadband connections 980,000 155,000 71,000

Copper (no broadband) connections

117,000 40,000 37,000

* Includes planned UFB1, 2 and 2+ coverage**Excludes 15k fibre premium and data services (copper) connections

Q4 FY20 CONNECTIONS UPDATE7

8

3

7

16

1

1

-4

-8

-7

-7

-5

-5

-8

-11

-1

-1

-2

-2

-2

-2

-2

-3

-15 -5 5 15

Q4

Q3

Q2

Q1

Q4

Q3

Q2

Q1

Q4

Q3

Q2

Q1

Broadband connections

Copper (no broadband) connections

LFC Zone

Rural Zone

Chorus UFB Zone

N/C

Change in connections (‘000s) by zone**> Chorus UFB zone: 8k broadband growth despite

lower fibre installation volumes due to COVID-19 limitations on non-essential work

> LFC zone: slowdown in broadband disconnects through lockdown period

> Rural: VDSL and fibre connections continued to grow, offsetting ADSL reductions. Fibre connections now 20k

0.00%

10.00%

20.00%

30.00%

40.00%

50.00%

60.00%

70.00%

80.00%

Sep-19 Dec-19 Mar-20 Jun-20

% uptake relative to capable addresses

UFB1 uptake: 63%

Q4 FY20 CONNECTIONS UPDATE8 10 July 2020

Average uptake

Data usage returns to pre-lockdown growth path

> monthly average data usage per connection on our network reduced to 313GB in June, down from 346GB (March)

▪ 387GB on fibre (March:429GB)

▪ 198GB on copper (March:225GB)

> Q4 data usage was artificially lower (~10%) because international streaming providers have constrained their bandwidth delivery in response to COVID-19 effects on some telco networks

> April data usage (not shown on chart) was significantly higher because it reflected the effect of Alert Level 4 lockdown

▪ average: 406GB

▪ fibre: 495GB

▪ copper: 273GB

10 July 2020

200

225

198

363

429

387

293

346

313

0

50

100

150

200

250

300

350

400

450

Dec-1

4

Mar-

15

Jun-1

5

Sep-1

5

Dec-1

5

Mar-

16

Jun-1

6

Sep-1

6

Dec-1

6

Mar-

17

Jun-1

7

Sep-1

7

Dec-1

7

Mar-

18

Jun-1

8

Sep-1

8

Dec-1

8

Mar-

19

Jun-1

9

Sep-1

9

Dec-1

9

Mar-

20

Jun-2

0

Copper Fibre Average

Data usage (GB)

Monthly average data usage per connection on our network

Q4 FY20 CONNECTIONS UPDATE9

10 July 202010

Video meetings drive ‘new normal’ of higher upstream traffic

> upstream traffic peaked ~60% higher (than January levels) when lockdown began, driven by rapid adoption of video conferencing applications

> upstream traffic remains 10% higher than pre-lockdown, reflecting ongoing adoption of work from home practices and two-way bandwidth hungry applications

LOCKDOWN PERIOD

> downstream traffic initially peaked ~40% higher (than January levels) when lockdown began

> downstream traffic dipped in the first week of lockdown as streaming providers limited streaming quality

Q4 FY20 CONNECTIONS UPDATE

% c

han

ge f

ro

m J

an

uary t

raff

ic level

Upstream traffic remains 10% higher than pre-lockdown levels

10 July 202011

Video meetings create Godzilla effect

Upstream traffic spikes half hourly, consistent with meeting start times

Q4 FY20 CONNECTIONS UPDATE

10 July 202012

Commerce Commission report notes strong fixed line performance

> The Measuring Broadband New Zealand report for May 2020 noted:

▪ on average, fixed line broadband(ADSL/VDSL/fibre) connections experienced no significant drops in download speed during the first week of lockdown.

▪ average download speeds for fixed wireless plans decreased by around 25%.

▪ 90% of latency tests performed through fibre connections were below 20ms. By comparison, 96% of Fixed Wireless latency tests were above 30ms.

www.measuringbroadbandnewzealand.com/

Source: Measuring Broadband New Zealand, Autumn Report, May 2020

Q4 FY20 CONNECTIONS UPDATE