Chorus CEO to resign after successful company transformation

Chorus has announced today that CEO and managing director Kate McKenzie will pack her bags and head to Australia at end of 2019, after three years in a CEO role.

The announcement comes as the company released its full year figures, reporting $53 million profit and earnings before interest, tax, depreciation and amortisation of $636 million.

"With the announcement of Chorus' full year results today, Kate has advised the board of her intention to return home to Australia at the end of the year," comments Chorus chairman Patrick Strange.

Strange says Chorus will consider internal and external candidates for the new CEO and managing director role.

"The Board would like to thank Kate for the superb work she has done leading Chorus. We are well placed to take advantage of the opportunities ahead as we move from building the fibre network to operating it, thanks to her tenure and leadership. We are sorry to see her go but understand her desire to spend more time with her Sydney-based family. She will leave with our very best wishes and thanks for a job well done.

"It is well set up to thrive as it transitions into its next phase following the completion of the fibre network build. I am also extremely proud of the talented executive team we have built who I am certain will continue to take Chorus forward. It is now an ideal time to pass the reins to the next CEO who can lead Chorus through the next phase," she says.

Demand for fibre has continued to grow, with 33,000 orders in July 2019. The majority of Chorus' broadband connections are now on fibre, and Chorus has lifted the volume of fibre connections delivered from around 12,000 monthly in June 2016 to more than 26,000 in July 2019.

Kate McKenzie says the original ultra-fast broadband programme is nearing completion, which will reduce the company's capital expenditure. Chorus also notes that the demand for fibre broadband has never been stronger.

"When Chorus signed up to the original UFB project with the Government in 2011 we had a target of 20% for fibre uptake by 2020. We've well and truly smashed that target," says McKenzie.

"This year demand for fibre was stronger than ever. We completed a record 186,000 fibre installations, and fibre uptake within our UFB areas grew from 45% to 53%. That is all the more impressive when you consider we built the network past another 176,000 homes and businesses during FY19.

Fast facts:

- Monthly average household data usage on copper and fibre connections across Chorus' network increased by 55GB to 265GB in FY19. Fibre customers used an average of 357GB.

"Pleasingly we've seen a growing proportion of customers opt for higher speed connections, with uptake of one gigabit per second plans increasing from 7-10% of our consumer connections in the period.

- Chorus has seen peak time traffic across its network grow from 1500Gbps in June 2018 to 1900Gbps in June 2019. This is the equivalent of 380,000 simultaneous high-definition video streams.

- In the last year, Chorus has connected 9,000 lines. This was a significant jump from a gain of just 1000 lines in FY18, reflecting Chorus' ongoing initiatives to win broadband customers from cable and fixed wireless networks in Chorus areas, together with premises growth nationwide.

- Chorus says it is on track to achieving an ambitious goal of connecting 75% of residential fibre orders in a single appointment. This 'fibre in a day' initiative underpins Chorus' goal of making it as easy as possible for customers to have fibre connected to their home or business.

"Despite some of the competitive challenges we face, particularly the decline in voice-only connections, we remain focussed on returning to modest EBITDA growth in FY20," McKenzie comments.

She also notes that while the phase-out of copper network begins, Chorus will continue to maintain it.

"Declining copper connection volumes present an opportunity for us to realise maintenance and capital expenditure savings in some areas. However, this doesn't mean we'll stop looking after the copper network. Faults on the copper network remain relatively infrequent, averaging about once every five years, and usually take less than 24 hours to repair.

"The Commission has indicated it will develop a copper withdrawal code for the industry by mid-2020. Naturally, we'll take a customer-centric approach and inform consumers well in advance and in accordance with the new code.

"While we're starting to plan for when we might start switching off parts of the copper network in our fibre areas, it will be on a street-by-street basis, subject to factors such as fibre uptake. In the interim, we believe retailers need to take care to avoid creating consumer confusion about the timeframes for copper switch-off. Some consumers appear to have been advised that they need to disconnect from the copper network when that isn't the case.

Chorus reports that it will pay a final dividend of 13.5 cents per share on 8 October to shareholders as a token of a successful year.