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Chorus

By Dan Stratful

Friday 2nd March 2012

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Chorus Limited (NZX: CNU ) has been formed to play a leading role in the Governments ultra-fast broadband (UFB) initiative which aims to be accessible to 75% of New Zealanders by the end of 2019.

CNU began trading on the NZX in November 2011 after it was demerged from Telecom at a ratio of one Chorus share for every five Telecom shares.

Today, CNU is the largest fixed line telecommunications network operator in NZ with a 93% market share of the fixed line access market.

UFB can deliver large amounts of data further and faster than copper cables which have traditionally delivered telecommunications services, and UFB will support services like internet television and high definition video conferencing.

The Government’s UFB initiative involves an investment of $1.3 billion by the Government (via government owned Crown Fibre Holdings Limited (CFH)) for the rollout of a fibre-to-the-premise network. CNU will partner with CFH to help build the UFB network and deliver broadband to rural NZ over the next decade while maintaining its existing copper network.

As a utility type investment, CNU anticipates an initial dividend policy of 25 cents per share which provides an income opportunity for income investors however dividends will be suspended if CNU’s credit rating falls below investment grade.

Telecom remains CNU’s largest customer providing around 84% of revenue and by July 2012, CNU expects to have run the new UFB network past more than 43,000 homes, health facilities and businesses and connect some 700 schools.

Status: YIELD BUY

CNU’s shares today traded at $3.33

For portfolio, sharemarket and fixed income enquires contact:
Dan Stratful at Investment Research Group (IRG)
Authorised Financial Adviser (AFA)
0800 437 8489, 09 304 0232, dan.stratful@irg.co.nz
**A disclosure statement is available, on request and free of charge.


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