Broadband as the 4th utility: The rise of the internet of things

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1 Broadband as the 4th utility: The rise of the internet of things Forsyth Barr Investor Day 31 May 2018

2 Disclaimer This presentation: Is provided for general information purposes and does not constitute investment advice or an offer of or invitation to purchase Chorus securities. Includes forward-looking statements. These statements are not guarantees or predictions of future performance. They involve known and unknown risks, uncertainties and other factors, many of which are beyond Chorus control, and which may cause actual results to differ materially from those contained in this presentation. Includes statements relating to past performance which should not be regarded as reliable indicators of future performance. Is current at the date of this presentation, unless otherwise stated. Except as required by law or the NZX Main Board and ASX listing rules, Chorus is not under any obligation to update this presentation, whether as a result of new information, future events or otherwise. Should be read in conjunction with Chorus audited consolidated financial statements for the year to 30 June 2017, half year results to 31 December 2017 and NZX and ASX market releases. Has been prepared with due care and attention. However, Chorus and its directors and employees accept no liability for any errors or omissions. Contains information from third parties Chorus believes reliable. However, no representations or warranties are made as to the accuracy or completeness of such information. 2

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4 OUR WHOLESALE NETWORK Chorus-owned Common network assets Our copper network Our fibre network ~600 local exchanges ~11,000 cabinets ~280,000 poles ~30,000km duct network ~130,000km copper VDSL broadband to ~80% of lines vectoring upgrade outside our fibre areas ~46,000km fibre fibre available to ~1.36m customers by Dec 22 point-to-point fibre in CBD areas 4 fibre backhaul to multiple cellsites

5 NEW ZEALAND GOT IT RIGHT Chorus is building ~75% of the Government contracted UFB network, covering ~65% of NZ-wide connections by Dec ,000 Chorus rollout schedule indicative only UFB1 UFB2 & UFB2+ 120, ,000 80,000 60,000 40,000 20,000 Premises passed - FY12 FY13 FY14 FY15 FY16 FY17 FY18 FY19 FY20 FY21 FY22 FY23 Premises to pass by Dec 2022 ~1,054,000* Source: news.com.au Customers able to connect Crown funding 57:43 equity/debt Estimated communal capex ~1.36 million up to $1.33 billion $2.26 to $2.37 billion

6 SHARED NETWORKS: THE NEW NORM Denmark: 2018 TDC buyout to create network unit South Korea: mobile carriers to share 5G infrastructure USA: Crown Castle expanding from tower assets into fibre Telecom Italia: network split proposed Czech republic: network split in 2015 Singapore: NBN rollout began 2009; Netlink Trust listed 2017 Mexico: wholesale 4G network launched 2018 Australia: Government owned NBN rollout began in 2010 NZ: Chorus demerger

7 THE DATA REVOLUTION HAS BEGUN GB average monthly data usage 204GB with fibre users averaging 291GB 10Mbps average connection speed 70Mbps and continuing to grow 10k fibre connections on our network ~400k with 43% uptake across completed UFB areas 10bn fixed line voice call minutes 5bn with mobile voice minutes doubling to ~9bn

8 FIXED LINE ADVANTAGE: PEAK TIME CAPACITY Chorus network traffic by time of day Network throughput (Tbps) 8

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11 THE CHORUS NETWORK 11

12 EXCHANGES: NETWORK EDGE COMPUTING Data centre image [steve]

13 POLES & CABINETS: STREET ASSETS Ventia IoT sensor trial in Auckland pole-based equipment to connect underground infrastructure sensors delivered via long range wide area network radio signal (LoRaWAN) radio equipment powered by Chorus copper cable fibre backhaul from pole Network 4 Learning trial in Christchurch pole-based wi-fi equipment to extend school web access to homes for low decile students wi-fiequipment powered by Chorus copper cable copper backhaul from pole

14 WI-FI: EXPANDING OUR REACH > fixed + wi-fi networks carry more than 80% of network traffic wi-fi uses free public spectrum > wi-fi hotspots expected to double by 2021 to 542 million New York: ~7,500 kiosks provide free wi-fi calling Source: Cisco VNI Mobile, 2017 new wi-fi standard expected to achieve: 14Gbps throughput lower latency reduced power requirements

15 IN THE HOME

16 TV Chorus coverage to ~95% today at 10Mbps

17 DATA DEMAND KEEPS GROWING > network throughput will continue to grow, particularly at peak time and as higher bandwidth content becomes available CHORUS NETWORK THROUGHPUT INDICATIVE ONLY HD TV uses 3 GB per hour 4K TV uses 7 GB per hour

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19 Any questions? 19