Release Date: August 25, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Chorus Ltd (CHRYY, Financial) reported a strong financial performance for FY24, with EBITDA reaching the top end of their guidance range.
- The company has successfully increased Fibre uptake to 71.5%, with a significant rise in average monthly data usage.
- Chorus Ltd (CHRYY) has managed to keep operating costs largely flat year-over-year, despite inflationary pressures.
- The company has achieved a 39% reduction in Scope 1 and 2 emissions, thanks to increased renewable energy usage and the decommissioning of legacy equipment.
- Chorus Ltd (CHRYY) has a clear strategy to transition to an all-Fibre business by 2030, aiming for 80% Fibre uptake, which aligns with global broadband trends.
Negative Points
- Copper connections have decreased significantly, which may lead to challenges in managing the transition and associated costs.
- The company faces headwinds from the reduction of legacy network services, which are expected to impact revenue in FY25.
- Net interest expenses have increased due to higher debt levels and rising interest rates.
- Chorus Ltd (CHRYY) reported a net loss for the year, partly due to a one-off non-cash tax expense.
- There is uncertainty around the timing and impact of proposed price changes, which are subject to regulatory approval and market conditions.
Q & A Highlights
Q: Can you discuss the proposed price changes and their impact on copper migration and Fibre penetration goals?
A: Mark Aue, CEO: We consider market trends and CPI inflation for pricing. As we phase out copper, we aim for an 80% retention rate on our broadband network. There's a global willingness to pay for higher-speed broadband, not just for speed but also for quality and reliability. We're also developing new market propositions, like the home Fibre data product, to cater to segments we don't currently serve.
Q: With the strategy focused on simplifying the business and increasing Fibre uptake, do you expect a reduction in OpEx as copper is retired?
A: Mark Aue, CEO: Yes, we expect a reduction in copper-related costs as we accelerate its withdrawal, aiming for a 2030 exit. While there are costs associated with decommissioning, we anticipate overall cost reductions. Additionally, automation and operational excellence will drive further efficiencies.
Q: What are the next steps for withdrawing from copper in non-Fibre areas, and is there any government support for this transition?
A: Mark Aue, CEO: We're in discussions with the government, emphasizing that copper is outdated. With alternatives like satellite and fixed wireless, we see a positive outlook for exiting copper. While there's no current discussion on subsidies, we aim for a clear exit date, supported by regulatory metrics.
Q: Can you clarify the expected cost growth for FY25 and the impact of legacy network service reductions?
A: Katrina Smidt, Acting CFO: We anticipate modest cost growth, primarily due to labor and electricity rates, and costs associated with accelerating copper withdrawal. Legacy network services will see a step change in FY25 as some platforms shut down, impacting revenues.
Q: What are your thoughts on the future growth of data usage and its impact on Fibre demand?
A: Mark Aue, CEO: Data usage is rising, with 17% of our base using over a terabyte monthly. We expect exponential growth driven by IoT, cloud apps, and 4K streaming. Fibre's high-quality connectivity positions us well to meet this demand, unlike wireless networks which face capacity constraints.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
