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Chorus open to convergence in fixed, mobile networks, CEO McKenzie says

Monday 26th February 2018

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Chorus chief executive Kate McKenzie says she's open to the growing crossover between fixed and mobile telecommunications networks, which has seen the network operator lose connections to sometimes rival and customer Spark New Zealand. 

The Wellington-based company has been experimenting with new technologies to repurpose existing assets, such as a trial with Network for Learning to extend a low decile school's managed internet service to local homes with wireless technology attached to its poles, and started on a proof of concept trial for a Long Range Wide Area Network to enable internet-of-things services.

"If you have a look at some of the trials we have been running the thesis is that convergence is happening across fixed and mobile networks," McKenzie told analysts in a conference call today. "We have an open mind to what opportunities that might present." 

Chorus found itself at loggerheads with Spark last year when the retailer started aggressively pitching its fixed wireless hybrid service as a stronger alternative to the network company's copper-based services, including VDSL technology. Spark's uptake has tracked ahead of expectations, with the retailer targeting 125,000 wireless connections by the end of June as it seeks to ditch its use of copper-based products by 2020. 

McKenzie said 125,000 sounds "more realistic" than a 200,000 projection touted as a possibility, with a fixed network offering data at a tenth of the price of wireless delivery. 

Chorus posted a 29 percent decline in profit to $47 million in the six months ended Dec. 31 after customer connections dropped 7.1 percent to 1.56 million. The network operator mitigated some of that decline in the latter part of the period, giving it confidence annual earnings before interest, tax, depreciation and amortisation will be near the top end of the $625-650 million guidance range. Ebitda fell 9.7 percent to $329 million in the half. 

Part of that improvement comes from efforts to cut costs following a strategic review, including trimming its workforce by 10 percent from a peak in August last year. The company had 971 permanent and fixed-term employees as at Dec. 31, and is most of the way through that reduction which should lower headcount to about 950 and generate annual savings of $10-to-$12 million. 

Improving customer experience is also a key goal, with Chorus wanting to reduce customer effort for a simple fibre connection to less than a day within the next 18 months. 

The shares rose 1.1 percent to $3.79.


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