Chorus Limited (CNU.NZ) Earnings Call Transcript & Summary

[Foreign Language] Good morning, and welcome to Chorus' FY '25 Full Year Results Announcement. I'm Mark Aue, the Chief Executive. Joining me is Drew Davies, our Chief Operating Officer. I'll begin with an overview of our results and key priorities during Horizon 1 of the strategy reset outlined at our Investor Day in December last year. Drew will then take you through the financials and guidance for FY '26 before I return to discuss the year ahead and the outlook for Horizon 2. We're pleased to be reporting another resilient result given the broader macro challenges and a weaker New Zealand economy. Through the year, we've made good progress and laid the groundwork for the change in strategy and execution that we'd outlined at our Investor Day. We've driven innovation through our recent Boost speed upgrades and repositioned ourselves in market to drive greater awareness of fiber's superiority. We're shifting focus to simplicity and efficiency with our organization redesign and investment in new capability. And we're seeing the potential for favorable regulatory shifts in the near term. From a results perspective, total fiber connections were subdued, but up 3% to over 1.1 million with uptake lifting to over 72% and with a further 26,000 addresses passed and now over 1.5 million. We've continued to grow fiber revenue across the year by 7%, even with the deferral on annual price increases and the offset of our ongoing exit in copper services. Our simplification program and disciplined cost management has held operating expenses at $309 million, slightly better than last year. This was achieved despite cost inflation, higher regulatory levies and one-off costs relating to operating model changes and the exploration of new strategic opportunities. This resulted in EBITDA of $705 million, in line with our guidance range and $5 million ahead of the prior year. Gross CapEx was down 3% to $415 million with sustaining CapEx flat at $205 million. Operating cash flows of $559 million were strong and 9% up on prior year. We've also confirmed an unimputed final dividend of $0.345 to deliver on our guidance of a $0.575 dividend for the FY '25 year in total. Finally, we're also pleased with our sustainability efforts with our electricity use down 5% and a 25% reduction in Scope 1 and 2 carbon emissions. At our Investor Day, we outlined a strategy reset, shifting our operating model from the great network builder to being the great network operator. This was based over 3 distinct horizons and a key focus on Horizon 2 out to 2030. As noted, I'm very pleased with the progress we've made over the year, and we remain on track. To recap, we have a clear purpose, reflecting the intergenerational role we play in enabling better futures for our people and country. That purpose is supported by a clear aspiration in becoming a simplified all-fiber business with 80% uptake by 2030. Underpinning the strategy are 4 strategic pillars as [ LEAP ] that frame our priorities across Chorus. All of these are outcome-based and have provided the clarity and specificity to guide Chorus over multiple horizons. FY '25 or Horizon 1 was the foundational stage of what we see as a 10-year journey. We've completed key initiatives and are pleased with progress in getting the organization future fit for purpose, prioritizing our activity so that we do less, we make the organization leaner and reinvest in capability and focus on scalable investment. Horizon 2 covers the next 5 years to 2030, where the benefits of change are realized progressively and a Chorus that is reflective of a simpler, more efficient, innovative and competitive business. Horizon 3 is where we transition to a single-state technology, having switched off copper by 2030. And we firmly believe fiber's advantages as the gold standard in broadband will only grow in relevance over that medium term. Turning to performance across our 4 LEAP pillars. In Lead, we remain focused on driving fiber uptake to 80%, adding 31,000 connections in the year. Cost of living pressures highlighted the appeal of our 50 megabits entry-level plan, growing 41,000 lines. About 3/4 of this growth was from new premises, off-net connections or other legacy retail plans. Migration from higher speed plans was about 1/4 of the growth. So we still don't see significant downtrade risk and retaining customers through plan optionality remains a priority in the short term. Growth continues for 1-gigabit plans and above with Hyperfibre plans now over 5,000 customers and growing daily. Our Boost initiative in June increased speeds for our 50 and 300-megabit plans to 100 and 500 megabits, respectively. Feedback has been very positive, and the upgrade covers more than 700,000 homes. This underscores our aim of keeping fiber's superior capability to other technologies clear in market. Fiber uptakes lifted to over 72%, with original UFB1 areas at 75% and UFB2 continuing to grow at pace, up 4% to 62%. And the right-hand chart also shows we are seeing more net connection growth in our fiber areas whilst copper migration now comes to an end. We've seen accelerated demand for data. Average monthly usage at 671 gigabytes in June, up from 623 gigabytes the prior year, and this lifted again to 684 gigabytes in July. Across our base, 19% of fiber customers now use more than 1 terabyte of data, up from 16% the year before. And as the chart on the right shows, the higher the planned speed, the more data is consumed. Trends post our Boost speed upgrade are relatively new. However, we can point to a significant increase in throughput for 50-megabit, now 100-megabit plan customers at peak evening time of 14% versus pre-Boost. That tells us again, if you provide larger pipes and speed, customers will use it. We also know the shape of consumer behavior continues to evolve and plays to fiber's strengths. Annual network usage was up almost 10%, but with a 70% increase in peak traffic events. To put that into context, the usage increase is the equivalent of 29,000 years of high-definition streaming. This again highlights the resilience and scalability of the network. We continue to forecast average monthly customer usage of over 1 terabyte by 2029 and believe fiber to be the only resilient technology to support this. We're continuing to shift as a market challenger, lifting consumer awareness and deepening understanding. As an example, our TV campaign highlighted the potential shared limitations of wireless broadband where neighborhood traffic competes with your living room at peak times versus that of a dedicated connection on fiber. Consumer surveys also confirm the growing awareness of these differences with fiber well ahead of 4G and 5G fixed wireless on Net Promoter Scores. Turning to our Expand pillar. While the property sector has been subdued as a result of the economy, we're stabilizing NPD volumes to pre-COVID levels with 24,000 lots over FY '25, and we expect circa 20,000 to 25,000 lots per year ongoing. Meanwhile, we've seen steady growth in connectivity. Cell site connections reached 3,400 by year-end, while smart locations grew 23% to more than 2,500. Data center development is also creating emerging growth. We've launched Express Connect, a new solution that simplifies and accelerates data center connectivity, enabling remote provisioning in as little as 4 hours with no extra equipment or on-site support. Finally, an update on the potential Tasman Ring subsea project with Datagrid. Our MOU and engagement has ended as the project did not meet our investment criteria. We'll continue to monitor opportunities in the sector, but this is no longer an area that we are actively pursuing. Our Adapt pillar is about driving operational excellence. As part of getting future fit, we refined our operating model in the second half of the year. This involved realignment of teams, roles and processes to better reflect the acceleration of our shift to an all-fiber business. This has seen a roughly 10% reduction in roles, and we're now adding new capability and customer retention, data and analytics and AI integration. Our Frontier team has also evolved. Having extended fiber to more than 9,000 new premises, their scope now covers the full copper retirement, including simplifying property and legacy infrastructure assets and supporting optimization of our noncore footprint. Regulatory settings also remain critical, and we now have that clarity for the next 4 years. Our ID reporting in May showed we were very close to earning the maximum allowable revenue in 2024 with the core RAB continuing to grow. And finally, our Pioneer pillar. We've made strong progress towards retiring copper by 2030. Total lines fell 41% over the year to 92,000. That also meant 16,000 fewer copper faults with the left-hand chart showing reactive fault spend that fell another $7 million to $19 million across the 3 zones. In our fiber area, just 13,000 lines now remain, and we expect to retire this part of the network by mid-2026, with all customers having now received notifications. And in non-fiber areas, lines declined 24,000 to now 68,000. The shutdown progressively enables copper recycling. We've completed an initial trial with roughly 1,100 tons of copper recycled at a $3 million net benefit, but more important, frankly, with the learnings taken. On to fiber with our Frontier initiative, 51% of customers have registered their interest already. 4,500 premises have been passed and are ready to connect with 1,200 connected by end of June and around 2,000 connected by the end of July, showing the strong momentum and uptake of fiber. As a summary, therefore, of the 6 strategic opportunities that we'd noted for exploring, 4 remain on track and are either delivering benefits now or still forecast to do so in future. One, as IoT is under further review for scalability and one is subsea, we have made a conscious decision not to actively proceed with. I'll now hand over to Drew to take us through the financials.

Thank you, Mark, and kia ora, everyone. As Mark mentioned, it is great to be presenting a solid result, underpinned by strong growth in net cash flows from operations and positive net profits after taxes given the pressures in the macro economy throughout fiscal year '25. Turning to the income statement. We've reported EBITDA of $705 million, up $5 million over fiscal year '24. Revenues of $1.014 billion were up $4 million, driven by 7% growth in fiber revenues that were partly offset by our strategy to transition out of copper, resulting in the continued planned decline in legacy revenues. For operating expenses, we made good progress on reducing legacy cost, and this helped us absorb inflation in a number of cost lines as well as $9 million of one-off spend. This was made up of $5 million operating model changes and $4 million for subsea cable new revenue exploration costs. As we've discussed previously, D&A increased due to the acceleration of depreciation on our copper assets, which was $99 million in the current year, up $9 million from the prior period. Net finance expense was down $7 million as our weighted average interest rate on debt reduced from 5.77% to 5.39%. Overall, this meant we recorded $4 million of net profit after taxes for the year. Looking at the movements in our revenue categories, our fiber broadband revenues were up 7% or $48 million from fiscal year '24, driven by fiber connections numbers up 32,000 lines annually, along with an increase in ARPU, which was up $3.27 to $58.98 across the year. This outcome was achieved even with our annual price changes delayed from October '24 to January '25, which meant our fiber revenues were reduced by roughly $10 million in year. Fiber premium revenues were down $5 million as we moved customers from a legacy platform and they transfer connections to alternate services at Chorus. We continue to see growth in demand for mobile access and backhaul connections. As Mark mentioned, we continue to execute our copper exit strategy with connections down 41% and our combined copper broadband, voice and data revenues down $39 million in the year. Looking to this next fiscal year, we expect copper revenues to continue to reduce at a similar rate over the next 12 months before the tail stabilizes. Field services revenues were down slightly, driven primarily by lower new property development activity, which was offset by more roadworks project activities. Infrastructure revenues were up slightly as a result of higher colocation services. Other revenues were up slightly with a $3 million net gain from copper cable recycling sales, while the prior year included a property sale, which was not repeated. In the next fiscal year, we will revise our revenue reporting categories to provide more transparency on infrastructure revenues, which will coincide with implementing the reporting formats of the new accounting standard, IFRS 18. Total operating expenses of $309 million for the year are down annually by $1 million as we had strong cost management practices in place to offset inflationary pressures across many areas in the business. Labor costs were $85 million, which included $5 million of change costs. The labor capitalization rate has reduced from 47% to 44% as network build activities declined versus prior periods, such as fiber rollouts and the connection activities. For network maintenance, the general trend remains reducing fault volumes, partly offset by inflation and service company costs. Other network costs were flat and included $4 million of network and property optimization spend as we retire copper network assets. Electricity costs were also flat year-on-year with a 5% reduction in consumption, offset by higher electricity charges. Consultant spend was up $3 million as we invested to explore potential new revenue opportunities such as the subsea cable. We presented a view on fiscal year '24 direct copper expenses at our investor event in December, and the table on the left gives an update on the breakout by category. Overall, it shows a reduction of $9 million to $45 million in costs, primarily from network maintenance and IT expense savings. With the shutdown of urban copper, we do expect to see copper optimization spend in the other network cost line to increase as we shut down cabinets and exit sites in the future. Meanwhile, the chart on the right is our copper asset depreciation profile, as we've shown before. There is a $50 million step down in fiscal year '26, now that copper cables in our fiber areas are fully depreciated and will continue to step down in the future periods. Moving now to CapEx. Gross CapEx for the year was $415 million, down $12 million from fiscal year '24. Within gross CapEx, $205 million was sustaining CapEx and $210 million was for growth. Gross CapEx was supported by $4 million of Crown funding and $36 million of customer contributions for roadworks, new property and rural broadband activity. This slide shows CapEx using regulated categories for the fiber regulated asset base, RAB. CapEx attributable to the fiber RAB, which excludes capital contributions, is estimated to be about $340 million. H1 allocations have been audited, but H2 are yet to be audited for the 2025 calendar year. For the non-RAB CapEx, you can see copper CapEx was $9 million, of which $6 million was third-party funded. Leverage, net debt to EBITDA lifted slightly to 4.52x on an unadjusted S&P methodology with borrowings up to -- up by $245 million. We remain well below our S&P threshold of 5x. S&P has recently introduced a new digital infrastructure rating criteria covering tower companies, fiber companies and data centers. They are currently considering how the new criteria applies to Chorus. The new rating criteria introduced by S&P is an acknowledgment of the stable regulatory environment and utility-like nature of our fiber business. During the year, we repaid our first tranche of Crown financing in June and the debt replacement was very successful with strong domestic demand for the $170 million of capital notes. We have $514 million of euro notes to refinance in fiscal year '26, and we're currently looking at our refinancing options. Lastly, about 70% of our interest rate exposure is fixed for the next 3 years. Finally, on dividend and guidance. We've announced a final dividend of $0.345 unimputed to be paid in October. The DRP is not available. Dividend guidance for fiscal '26 is $0.60 unimputed and reflects the ongoing positive trend in cash flows. Fiscal year '26 EBITDA guidance is $710 million to $730 million. We base this range on continuing growth in our fiber connections base, along with the next fiber price change applying from January '26 and also continuing to execute our strategy to exit copper services with similar reductions in copper revenues as seen in fiscal year '25. We would be in the bottom half of this range if the current macroeconomic conditions continue longer into the 2026 calendar year. With the fiber Frontier expansion program at an end, gross CapEx guidance for fiscal year '26 is in the range of $375 million to $415 million. We've reduced the sustaining CapEx range to $195 million to $215 million for fiscal year '26. This reflects the decline in copper spend and our expectations on project phasing in the near term, coming in lower than the range we provided at the Investor Day in December. Overall, the numbers are tracking well, and we're pleased with the strong foundations we've set the business on for the future. I'll now hand back to Mark to run through the outlook.

Thank you, Drew. If we turn to the start of Horizon 2 and our journey out now to 2030, we expect to see the benefits of change realized progressively with Chorus reflective of a simpler, more efficient, innovative and competitive business. First, under Lead. Our proposed pricing changes are with retailers for consultation now and come into effect from January 1. However, we'd note a number of retailers have already changed pricing earlier, in part driven by other local fiber company changes. We retain our ambition for 80% uptake and already have several initiatives underway to target fiber-ready homes. With a stronger economy and shifting technology trends, we're confident our uptake goals are within reach. I'd also note, this includes our digital equity trial aimed at 1,500 low-income households. But it's clear this is a complex issue and as we've consistently said, requires broad collaboration across telcos and government to scale. On the right, ongoing multiyear research continues to highlight the gap between fiber and fixed wireless. Awareness of both is very high, but consideration and particularly preference as first choice remains strongly in fiber's favor. The scalability of fiber makes it attractive for evolving technologies like AI, where industry forecasts anticipate a step change in demand. The rapid evolution of AI will only further cement fiber's technological superiority, with Nokia forecasting that AI will generate almost 40% of global consumer broadband traffic over the next decade. Separately, recent Venture Insights research noted 6 key takeaways when considering and approaching AI revolution, of which align with our medium-term outlook. Essentially, these recognize AI timing and scaling might be uncertain, but the direction is not where the debate on fiber versus fixed wireless will be reframed and AI applications will likely shatter the good enough performance threshold. Symmetry and latency, the strengths of fiber will become the critical performance indicators with a new lens needed on valuation of telco assets based on their readiness for the AI era. Frankly, fiber networks are crucial in an AI-driven world, where ultrafast, low latency speed matters, where reliability counts and where massive data transfers are the norm. And we believe those demands will come sooner than we think. In our Expand pillar, NPD remains a key growth driver for connections. We've recently streamlined our processes and refreshed our market proposition to make it even easier for developers to access the benefits of open access fiber. As the chart on the right shows, fiber activation builds year-on-year as homes are constructed, reaching around 80% activation as connections within 5 years of passing a lot. And remember, a lot can represent multiple connections. Separately, infrastructure demand continues to grow through backhaul, smart locations, data center connectivity and mobile infill. Our third pillar, Adapt, continues our focus on operational excellence. We've spoken to changes made in our second half and simplification of systems and processes will continue in the new year. We're also seeing a positive pathway to regulatory simplification that we talked about at the Investor Day. Encouragingly, the Commerce Commission recommended deregulation of copper services to the Minister last week. The decision strongly recognized that all rural consumers had access to alternative technologies for voice and broadband services and highlighted the continued decline in copper demand. So this is a great step forward. We're also pleased with the Ministry for Regulations telco sector review that provides the potential to streamline the multiple layers of regulation. The review should be completed by early 2026 and encouragingly is reviewing outdated legacy constructs such as the TSO and the restrictive Chorus shareholder cap. To our last pillar, Pioneer, it continues our plans to retire copper completely. We expect full retirement in UFB areas by mid-2026 and within LFC areas by the end of '26. There's no question in our minds that copper will need to be fully withdrawn by 2030, given global trends and the cost to maintain it. Spain is the latest country to shut down their entire copper network with the wider EU targeting 2030 for their own shutdown. Urban retirement underpins our copper recovery program. Having completed the initial trial in FY '25, we're now selecting an extraction partner to scale up as more exchanges become copper-free from early 2026. And this remains a $30 million to $50 million opportunity over the next 3 to 7 years. Retirement also enables us to optimize other property assets as they become noncore. But as we've said, this will happen progressively over our Horizon 2 time frame. And finally, back to fiber. We were pleased to recently have the government's National Infrastructure Commission endorse our proposal to expand fiber to 95% of New Zealanders. It was 1 of 17 projects and the only private sector endorsement. Our proposal has a benefit cost ratio of 6.3 based on an expected $17 billion in economic benefits for a cost of less than $3 billion. However, the Commission's endorsement is independent of any government funding decisions and has highlighted though the absence of a government connectivity strategy for rural. We know the benefits of network expansion will be realized in the communities where fiber reaches rather than by the network builder. And that, therefore, necessitates some form of public input and investment. There are significant merits in this proposal, and we look forward to discussions with the government on solutioning to bring this to life together. So to wrap up, over the year, we've continued to show that both digital infrastructure and our earnings are resilient despite ongoing economic headwinds. Whilst conditions will improve, that is realistically from early 2026. Innovation will continue to be a key differentiator with the need to drive greater awareness of fiber superiority over other technologies. And we believe the rapid evolution of AI will only continue to highlight the advantages of fiber. In parallel, we'll continue to explore strategic opportunities. And while these look to the medium term, some are already delivering benefits and in others, we have the clarity of not progressing. In regulation, emerging pathways create the potential for favorable shifts in the near term, dealing with outdated constructs. And copper retirement in fiber areas is in sight and will increasingly unlock opportunities for noncore assets. And finally, I would again recognize the groundwork we've laid for the reset in strategy and execution that are enablers as we transition into our Horizon 2 with a focus on growth, simplicity and efficiency. Our fundamental belief in fiber, both now and for the future is unwavering. In our minds, it is technologically superior in every way that matters. Thank you. Let's go to the questions on the phone line, please, operator.

[Operator Instructions] Your first question today comes from Arie Dekker with Jarden.

First one, just on the guidance. And Drew, you did mention that it could be at the bottom end if macro conditions continue. Yes, I mean just in terms of those price rises that you've got proposed for the second half, I mean, the mid-single digit. So against that, I guess, the guidance does look a bit soft. Is that because you are factoring in mix shift down to continue even withstanding, so, economic conditions? And can you also just talk a little bit about the introduction or proposed introduction of the new low-speed plan at [ 4010 ] and what motivated you to put that into the mix?

Well, let me start, Arie. So what I meant by the lower half of the guidance range and if the macroeconomic -- what Mark talked to earlier was subdued growth at 32,000 connections in the last year, right? And we've said before, we typically would see 40,000 to get to our aspiration of 80% by 2030 penetration. So if we continue to see less movement in market and so forth that people are not going out there and changing buying and so forth, that's where we see net connection growth maybe at the lower end again in the sense of in the 30,000 range. But net-net, we're not factoring in more downtrades or anything like that. So it's more of a macro connection number. Mark, do you want to talk to the lower speed plan?

Yes, Arie. Look, on the low-speed plan, really, it was to provide some optionality versus the mass market products. I think if you look at the growth in the 50-megabit plan that's now obviously become the 100-megabit plan, 50% of that growth were actually from premises that had either been off the network for greater than 30 days or that had never joined. So we're conscious that actually there's a segment for market growth there that previously wasn't being tapped. So it's really for the optionality. I think it's out to consultation at the moment. And to be frank, I'd say there's mixed reviews around ranging or the need to range an even lower speed plan versus just starting with the entry at 100-megabit. But then in some cases, there are actually retailers that quite like the idea of having that as an option.

Okay. No, thanks. And then just -- I mean, because just -- and again, it sort of comes to the guidance. I mean you've called out $9 million in the operating cost base in '25 associated with exploring the Fiber Ring, and, I guess, cost of changes. That sort of comes out -- I presume a decent chunk of that sort of comes out in the FY '26 cost base and you have further reductions in costs associated with copper switch off. So yes, can you just talk me through, am I reading that wrong? Are there going to be sort of -- are these costs going to continue? Or are you going to feel more of the costs hit OpEx as the labor capitalization rate continues to come down?

Yes. I think, Arie, let me speak to that. So $309 million is what we reported, and you're correct, there's $9 million of one-offs. So it gets to an underlying of $300 million. What we would say is we would have a low single-digit increase from the $300 million on a net basis. That's reflective of we are increasing the one-off retirement expenses for copper. So you're seeing that step up as we kind of come out of our UFB areas and turn off cabinets and so forth. So you have that. In addition, there's some other inflationary pressures, some rates and rents, but we would base it off of that number of $300 million plus a very small single-digit increase.

I think maybe the other point on that, too, Arie, is you picked up on sort of capitalization. So the transition as we move from great network builder to great network operator, there's simplification in here. There's less of the focus on the mass build that there has been in the past. So a lot of the role reductions that we've had are indicative of that transition to being the great network operator. So capitalization actually comes down. So whilst there's savings, they don't necessarily transition into OpEx, but they do come through in lower CapEx and obviously into cash flow.

Great. Just on a couple of the other things. So the extraction partner, will there be revenue sharing proposed there? And then also, I accept you've given a range and it's over a period of time. But just so that we can sort of get a bit of a sense of what's required and sort of monitor it, what sort of market price for copper is required, say, to support the low end of that $30 million to $50 million range?

Look, Arie, I think in terms of revenue share, we're looking at a range of options. As I said, one of the key takeouts from the trial was more about the learnings. Great to have a $3 million net benefit, but it was more the learnings. And looking at how easy it was to extract, looking at accuracy of data records where cables were, the gauge -- gauges, the large gauge, small gauges of copper, the cables that we can take out. So some really great learnings. Realistically, we'd look to stand up the second phase in the second half of this fiscal year, and we're looking at an extraction partner and how we might be able to do this to improve the margins around that. In terms of the range, I think where we are at the moment from a market price on copper is favorable. But it's a fine balance of actually doing the extraction, which even if we can improve that or lower that extraction cost and improve the margin, there is a degree of complexity associated with it. So we need to be able to see a pathway where that copper market price is still holding up around where it is.

No, that's helpful. And last one for me. You've had a process underway, I think, for the high sites, and that's what you were going to look at first on the asset optimization. Can you just sort of give any guidance as to the timing of potentially releasing some capital from those high sites?

Yes. I mean we are progressing, and we have a number of things in flight right now. Obviously, we haven't announced anything today. There may be something in the first half of this current year, but if anything, it would be very small. And we're not going to be rushed on it, and I think it's going to be more in the second half of next year, if not longer.

Your next question comes from Aaron Ibbotson with Forsyth Barr.

Mark, I'm just curious to get you to add some color to your confidence on reaching 80%. Just looking at some of the moving parts here, if -- you got [ 32,000 ] if I got it right, residential from business new connections, new property development. I'm not sure how many you got, but 25,000, 24,000 lots passed -- 24,000 lots passed. Presumably, if you look at the sort of loss of copper connection or broadband connections in Chorus fiber area, that's probably another [ 10,000 ] or so. So it seems to be pretty much plus/minus 0 of genuine new connections of the existing base, and you need to hit at least 20,000 a year, maybe more to be anywhere near your sort of 80% target. So it seems to be sort of 0 at the moment. So can you talk a little bit more to what gives you -- what sort of underlying trends you're seeing that gives you the confidence that you're on track?

Yes, sure. I think we'd noted in the Investor Day that broadly speaking, we needed about 200,000-plus connection, 240,000 connections to get to that 80%, half of which we had recognized coming from previous NPD development. And again, that's part of showing the chart in the presentation that over the course of 5 years, you see that naturally build. Obviously, with property sector slowing down, some of that development from outside boundary to then inside boundary with developments are completed, that's actually been a bit suppressed obviously, but we see that coming back on as the economy improves. So half of that growth would come from work that's already been either completed or in train. The other half, we have big pools of opportunity. So 240,000 in active ONTs. And that's where winback plays a key role from other technologies. It's why we are pushing to be really clear on the technological superiority of fiber over other broadband forms like wireless or satellite indeed. There are segments like retirement villages, and the -- there is 200,000 ONTs that we have passed -- premises, sorry, that we have passed that are therefore in the denominator when we calculate 80% that are not connected, right? And that's an opportunity for us to go back again and look at those because essentially, the cost of passing fiber is a sunk cost, right? But there are 200,000 premises that are currently passed but not connected. So we do see large pools available.

Yes. I -- I understand all of that. But if you look over the last 12 to 18 months, and you can cut the numbers different ways, but certainly the way we cut the numbers, there seem to have been very limited, if any, progress outside of converting copper lines and new developments.

Right.

So why haven't you been able to tap into that over the last 12 to 18 months?

Yes, look, now to clarify, of the 31,000 growth, there's actually very few that is from copper really, not on a large scale. We're still getting retention, but actually, there is growth. It is real growth that's coming as I said from the…

So those 20,000 copper lines, if I look at the broadband only, I think you had, whatever it was, 30,000 in total. Have they all gone to other technologies then not being converted to fiber?

Some have gone to other technologies. Yes. Some have gone to other technologies. But, yes, we are seeing growth that's outside -- in fiber that is outside of copper withdrawal and a migration back to fiber. As I said, on the 100-megabit -- well, sorry, the 50-megabit plan that is now the 100-megabit, half of that growth in the 41,000 lines were coming from premises that had either been off the network for greater than 30 days as a minimum or had never joined the network. So that's indicative of winback for us as much as we can tell.

Yes, I appreciate that. But there's a gross and a net impact now. So we're looking at the net impact, but thank you. My second question, and I don't want to be confrontational. But when you talk about this preference of fiber over fixed wireless, which I appreciate, and the type of questions being asked, there's a price gap as well here. If you ask people if they want to drive a Porsche versus a Volkswagen, I guess most people would say Porsche, but a lot more people drive Volkswagens. So what research are you doing when it comes to price sensitivity, particularly towards the lower end of these sort of offerings? How much more are people willing to pay to get that better or gold standard experience of fiber?