The number of people ditching a traditional phone line when
buying broadband soared 82 per cent in the year to June,
lines company Chorus says.
When presenting its financial results yesterday, Chorus
revealed the number of wholesale "naked" broadband
connections it sold grew to 91,000 during the year.
This is up 82 per cent from 50,000 connections in June 2012.
"Naked" broadband is internet that comes without a
traditional phone line and is sold by retail companies such
as Vodafone, Orcon, Slingshot and Snap.
This option can be cheaper than buying a combined phone and
internet package, particularly for customers consuming large
amounts of data each month.
While it comes without a phone line, some internet companies
- such as Orcon - still offer calling services on naked
broadband using a method called VoIP (Voice over Internet
This solution transfers voice traffic via a broadband
connection, rather than the traditional phone network.
Chorus is unable to tell how many people on naked broadband
are using VoIP services, according to a company
representative. Meanwhile, Chorus expects the current year's
earnings will be flat-to-weaker after it eked out a small
gain in its first 12 months as a standalone business.
Adjusted earnings before interest, tax, depreciation and
amortisation rose 1.2 per cent to $654 million in the 12
months ended June 30, and Chorus forecasts flat-to-low,
single-digit earnings before interest tax depreciation and
amortisation (ebitda) in 2014.
Annual net profit of $171 million compares with earnings of
$102 million in the previous period, which captured only
seven months of the company's operations since it split with
Chorus shares fell 3c, or 1.01 per cent, yesterday and closed
The company has a question mark over how the regulatory
landscape will change as the Government considers whether to
overrule the Commerce Commission's proposed price cuts on its
regulated copper lines.
Chorus said enforced price cuts might make its construction
of a national fibre network uneconomic.
The company estimated the outcome of the regulatory review
could slice between $20 million and $100 million from annual
On top of the regulatory uncertainty is the cost of building
the ultra fast broadband (UFB) and rural broadband initiative
(RBI) networks, which gobbled up 85 per cent of Chorus'
annual $681 million capital expenditure. The UFB build of
$2935 a premises passed was in line with guidance, as was the
Chorus predicts capex of between $660 million and $690
million in 2014, and is targeting an average cost per
premises passed of $2900-$3200.
It expects the UFB network will cost $1.7 billion-$1.9
billion, and the RBI $280 million-$295 million.
12 months ended June 30
Ebitda: $663 million
Net profit: $171 million
Revenue: $1.057 billion
Annual dividend: 25.5cps
- Hamish Fletcher of the New Zealand Herald, additional