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

[Foreign Language] Good morning, and welcome to Chorus' 2025 Annual Shareholders Meeting. I'm Mark Cross, Chorus' Chair. We're joining you virtually this morning from the Chorus Network Lab in Auckland. On the information conveyed to me, I confirm that a quorum of shareholders is present and declare the meeting open. The minutes of the last Annual Shareholders' Meeting have been approved. The Notice of Meeting, including the explanatory notes, has been circulated to all shareholders, and I intend to take it as read. We have a fairly short agenda today in terms of the formal business of the meeting. As the video clip we played just before shows, our network helps Kiwis across the countries meet every day so we think it's only appropriate that we showcase our own technology for today's meeting. On to today's agenda. I'll start today's agenda with a short summary of the year and some of the things the Board has been focused on to deliver value to shareholders. Chief Executive, Mark Aue, will then cover what's happening at an operational and market level. After that, we'll move to resolutions, questions and voting. First, some information on how to ask questions and vote. Shareholders and proxies have the ability to ask questions and submit votes. If you have a question submit during the live meeting, the Q&A is always open, so please feel free to submit questions throughout the meeting. These will be addressed at the relevant time. To submit a question, simply select the Q&A tab on the right half of your screen, type your question into the field and press submit. Please be as concise as possible and ensure they relate directly to the matter being considered. We will not aggregate or edit questions unless inappropriate language is used and will provide plenty of opportunity for follow-up questions. Any questions not answered in time will receive an e-mail response after the meeting. Voting today will be conducted by way of a poll on all items of business. I'll shortly open the voting for all resolutions. To give you enough time to vote, you'll shortly be able to cast your vote on all resolutions under the vote tab. Your vote has been cast when the tick appears against the available options. You can change your vote up until the time I declare voting closed. Simply select "change your vote" to do so. I now declare voting open on all items of business. I'll give you a warning before I move to close voting near the end of the meeting. If you need assistance at any time, simply type your query into the question field via the Q&A tab and someone from Computershare will respond, or you can call Computershare on 0800-650-034. I and my fellow directors intend to vote all undirected proxies we hold in favor of the resolutions. I'll call for voting once I have given an overview of each resolution and each director standing for reelection and election has addressed you. I'd firstly like to introduce your directors to you. Joining us online are Sue Bailey; Neal Barclay, Will Irving, and Jack Matthews. Directors, Kate Jorgensen and Miriam Dean also join me here at the Auckland Lab. Sue, Will and myself are standing for reelection today in accordance with the NZX listing rules. We also have with us today key personnel, including Drew Davies, our Chief Operating Officer; and Kristel McMeekin, our General Counsel; as well as representatives from our auditors, KPMG, and our legal provider, Chapman Tripp. Before I cover off the FY '25 year-end review, I'd like to thank and acknowledge our people, our partners and our customers. At the heart of what we do is ensuring the high performance and reliability of our network as digital connectivity becomes increasingly essential to daily life. As we noted in our August results announcement, Chorus delivered another consistent and reliable financial result, proving the resilience of our digital infrastructure assets in a challenging economy. Our fiber connections continue to grow, up 3% versus FY '24, and we continue to see improvements across our key financial metrics. EBITDA was $705 million, up from $700 million last year. Operating cash flows of $559 million were strong and up 9% on the prior year. These results enabled total unimputed dividends of $0.575 per share for the year, an increase of $0.10 or 21% from the prior year. Fiber enables a more resilient future for our stakeholders, and we're pleased with the sustainability results delivered during the year. Fiber networks are widely acknowledged as the greenest broadband technology because of their data transmission capacity relative to electricity. By retiring legacy network equipment, we reduced our electricity use by 5% from FY '24, and we saw a 25% reduction in Scope 1 and 2 carbon emissions from our FY '20 base year. Investing in our people, partners and their safety, along with ensuring assets are safe, resilient and efficient is a critical part of Chorus' business. On safety, we continue to rank well ahead of industry benchmarks. Meanwhile, our people engagement score was 8.4 out of 10, remaining in the top 5% of technology industry benchmarks. Pleasingly, Chorus achieved its targets for FY '25 in all 4 drivers of health and well-being. We're proud of the work we do to support community good with a focus on digital inclusion. Our efforts on digital equity are very important to us, and we exceeded our FY '25 target of 1,000 digital equity connections by some margin. As in previous years, we note here the focus areas that our Board anchors to. These are the things we consider are most important to Chorus' success. Highlighting a few of these, on our managed exit from copper, New Zealand now has just 78,000 copper lines remaining, of which only 9,000 are in the Chorus fiber area. We fully appreciate the need for certainty with the retirement of our legacy copper network, particularly for those parts of New Zealand where fiber is not available. The reality is, though, while the network did play a valuable role in connecting Kiwis for over a century, copper lines now have a high fault rate, are vulnerable to weather events and are no longer providing the service that most consumers demand. At the same time, most rural consumers now have access to 3 alternative technologies that are often more affordable, better performing and more reliable than copper. Our recent experience with the retirement of old radio system technology on the copper network has shown rural consumers can successfully move to modern services like these and get a better service equal to, if not better, than old copper lines. and these were in some of the most remote parts of New Zealand like the Chatham Islands and a high-country Gorge in South Canterbury. As far as a managed exit in rural areas goes, I can assure you that as part of the copper network retirement by 2030, Chorus is committed to a clear consumer-centric process that supports the transition of customers to modern services. We're collaborating with a wide range of stakeholders to ensure that happens. In the meantime, for any queries or help on switching services off copper, you can contact our team at [email protected]. Moving on now to look at some of the other Board focus areas. Prioritizing long-term value through capital allocation remains a key area of focus for the Board. We were pleased to have our regulatory settings for fiber confirmed to the end of 2028. These new settings will underpin our cash flows for the next 3 years. We maintain the view that a solid investment-grade rating is appropriate for Chorus as a digital infrastructure company. Based on the S&P ratings down driver of 5x EBITDA, we remain of the view that 4.75x is an appropriate internal limit that allows sufficient buffer for our current BBB rating, and we're comfortable to operate up to that level. At the end of FY '25, net debt was 4.52x EBITDA. We will continue to use the balance sheet to fund CapEx where it meets our investment hurdle rates. Any growth investment must deliver greater shareholder value than returning it to shareholders. A core pillar of our capital management framework is a sustainable growing dividend. Our intention is to maintain that dividend growth at least at the rate of inflation within the bounds of our dividend policy, which is to pay an ordinary dividend in the range of 70% to 90% of our net operating free cash flows after sustaining capital expenditures. The step-up in dividend that we see on this slide has been driven by our solid results, the freeing up of cash flow as we move from build to operate, confidence in our future operating cash flows and a more efficient use of our balance sheet to invest in the business. For FY '26, we provided dividend guidance of a further increase to $0.60 per share, unimputed, subject to no significant adverse changes in circumstances or outlook. This continues to meet our objective of delivering real dividend growth. On the right-hand side, the chart shows our Total Shareholder Return performance against the NZX50. TSR performance is important for aligning management incentives with our shareholders' experience and to encourage longer-term decision-making. As the chart shows, Chorus has comfortably outperformed against the NZX50 companies over the last 5 years. Standing back now to look at some of the sector dynamics that we see ahead of us and drive our long-term thinking. We recognize that New Zealand is years ahead of many other jurisdictions in fiber deployment uptake and copper withdrawal. At 87% fiber coverage and 72% connected, this ranks us ninth in the OECD and 19th in the world. Meanwhile, copper in New Zealand is almost retired compared to many European countries, which are still heavily reliant on it. A bold vision got us to where we are in New Zealand today, and we want to continue that momentum. The benefits of fiber are real, measurable and highly scalable. Last year, Deloitte's Unleashing Fiber white paper estimated the ultrafast broadband program had added $31 billion to New Zealand's economy. Fiber is important to industries such as film, animation, gaming and cloud services, unlocking a wave of high-value, weightless exports. And the gains don't stop there. Deloitte projects those benefits could grow to $160 billion over the next 10 years. Extending fiber coverage from 87% to 95% could add another $17 billion in economic benefits. We estimate the cost to achieve that is around $3 billion, a strong 5.6x benefit to cost ratio. In an overall national infrastructure context, it's interesting to note that the 5.6x ratio for fiber compares to the 1.4x for the recent roads of national significance investment. We have submitted a proposal through the government infrastructure priorities program process because we believe there's a strong case for this, and we were pleased that this was endorsed by the New Zealand Infrastructure Commission as the only one of 17 projects that were submitted. But let's be clear, Chorus can't fund this entirely through shareholder capital. The returns we speak of aren't ours. They're economic and social benefits for New Zealand. We know the benefits of network expansion will be realized in the communities where fiber reaches rather than by the network builder, and that 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 how we can partner to bring this to life. Extending fiber further isn't just about additional streaming. This is for the farmers using Precision Agritech to optimize yields, monitoring real-time pricing and connecting directly to global markets. Remote health care providers using telemedicine to deliver specialist care and small and medium enterprises scaling up using digital tools, cloud platforms and e-commerce to reach global customers. The more we extend fiber, the more New Zealanders can unlock its potential. Of course, it won't all be fiber. In places where it's not viable, high-quality fixed wireless and satellite must play a complementary and vital role. But what matters most is this: everyone deserves the right to participate in the digital economy. That means access to infrastructure that's fit for purpose, scalable and future-proof. Global demand for high-capacity connectivity is only growing, driven by remote work, data-heavy applications and digital commerce. If New Zealand wants to stay competitive, we need to stay ahead of that curve. Other countries like Australia, Japan, Singapore and South Korea are not waiting for demand. They are already moving ahead on coverage and speed. In global terms, if we're not extending the network and increasing speeds, we're going backwards as a country. And we can't leave New Zealanders behind. We understand the intergenerational role we and digital connectivity play in shaping New Zealand's future. We believe everyone has a right to participate in the digital economy. Yet today, 1 in 5 people are digitally excluded with access, affordability and adoption being key barriers. So we're bringing fiber to more communities through a community co-funded fiber build and recognize that we have a social obligation to drive digital equity. We've also completed a proof-of-concept trial with 1,500 low-income households. Through our charitable partnerships, we're also tackling related challenges, device access, digital literacy and flexible pricing. But to scale a real solution, we need industry, retail service providers and government working together. We all have a role to play in delivering digital equity and ensuring every New Zealander has the opportunity to connect and thrive. Digital equity isn't optional. It's essential for full participation in today's economy. To wrap up, I'd like to acknowledge Chorus' staff. We've driven a lot of change in the business during the year as we shift to becoming a more efficient operator of an all-fiber business. It hasn't been easy for our people at times, particularly in a challenging economy, but we have renewed energy and focus on the strategy to continue to deliver to our customers and shareholders. Thank you to our staff for all of your continuing efforts. I also want to thank all our shareholders and my Board colleagues for your continuing support. I'll now hand over to Mark Aue for the CEO's address.

[Foreign Language] Greetings and a warm welcome to everyone. As Mark has noted, we're pleased with our resilient FY '25 financial results, particularly given the broader macro challenges. Over the past year, we have made good progress and laid the groundwork for changes in strategy and execution that we outlined at our previous Investor Day, recognizing a shift in our operating model from the great network builder to a great network operator. Our Road to 2030 strategy sets a clear aspiration: as a simpler, all-fiber business with 80% uptake by 2030. At the heart of that strategy is our purpose. We see this as unleashing potential through connectivity, enabling better futures for Aotearoa. This recognizes the intergenerational role that we play in enabling better futures for our people and our country. This year alone, we've doubled speeds for more than 700,000 households. We've extended fiber to over 9,000 homes and businesses beyond the original footprint because communities ask to be part of the future, and we've listened. We launched our digital equity pilot targeting 1,500 low-income households, wrapping together affordable fiber plans, refreshed devices and trusted community-led training. And where scale builds aren't viable, our Community Co-Funded Build Program aims to partner with local leaders to get fiber in the ground. As a public company, we're delivering solutions, not just aspirations. FY '25 or Horizon 1 marks the foundation of our 10-year journey. We've completed key initiatives and made solid progress, now shifting our focus to simplicity and efficiency, doing less, becoming leaner, reinvesting in capability and prioritizing scalable growth. Horizon 2 spans the next 5 years out to 2030, where the benefits of these changes will be progressively realized, shaping Chorus into a simpler, more efficient, innovative and competitive business. Horizon 3 is where we transition to a single-state technology, fiber, having fully retired copper by 2030 and ideally earlier. Over this time frame, we believe fiber's advantages as the gold standard in broadband will only continue to grow in relevance. Operationally, we continue to see accelerated demand for data. Average monthly data usage at 668 gigabytes as at September is up from 623 in the prior year. Annual network usage has increased 10% over the same period. To put that increase into context, that's the equivalent of 29,000 years of continuous high-definition streaming. So we continue to see the shape of consumer behavior evolving, and this only further plays to fiber's strengths. We've repositioned ourselves as a market challenger, driving education and awareness of fiber's superiority versus other broadband technologies. Our recent TV campaign highlighted the potential shared limitations of wireless broadband, where neighborhood traffic competes with your living room at peak times versus the dedicated connection of fiber. Consumer surveys run in parallel also confirm the growing awareness of these differences, with fiber well ahead of both 4G and 5G fixed wireless on Net Promoter Scores and preference. With a stronger economy and shifting technology trends, we remain confident our uptake goals are within reach. We continue to see opportunities for new infrastructure growth. While the property development sector remains subdued, new build volumes are stabilizing at pre-COVID levels of around 20,000 to 25,000 lots per year, with around 80% of new homes activating fiber within 5 years. Connectivity growth remains steady across cell site and smart locations with emerging opportunities in data center and mobile infrastructure. As we continue to optimize for an all-fiber future, we're seeing positive pathways emerge to regulatory simplification. The Commerce Commission's recent recommendation for the deregulation of copper services is very encouraging. The decision strongly recognized the availability of alternative technologies for rural voice and broadband services and highlighted the continued decline in copper demand. This is complemented by a review of outdated legacy constructs such as the Telecommunication Service Obligation and the Chorus' shareholder cap, to be led by the Ministry for Regulation. Both play a vital role in shaping a regulatory framework that prioritizes investment where it delivers the greatest benefit for New Zealanders. More broadly, we're on track to retire copper in fiber served areas by the end of 2026, with full retirement by 2030, as we say, ideally sooner, through a clear people-centric transition across industry, government and communities. We look forward to a resolution that will provide certainty to rural customers and a migration path to alternative services. Looking to copper recovery, we expect this program to step up in 2026 as the urban retirement of copper completes. Estimated net proceeds could still be in the order of $30 million to $50 million over the next 3 to 7 years. And as a flow-on, copper 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. As Mark outlined earlier, we were also pleased to recently have the government's Infrastructure Commission endorse our proposal to expand fiber to 95% of New Zealanders. This was the only private sector submission to be endorsed, recognizing rural connectivity as a critical national issue. This would see around $17 billion in economic value creation over the next decade across 1,000 communities and 160,000 families and businesses. Focusing on infrastructure that delivers economic growth for New Zealand is critical. These are the kinds of choices that matter now because they compound over time. But as we note, whilst the economic benefits of expanding fiber to more communities is substantial, so are the cost of deployment, and that, therefore, necessitates public investment. Our strategy is underpinned by our belief that fiber will continue to serve consumer needs well into the future. As we look ahead to 2030, the likely thematics favor a fiber world, one that we see 1 terabyte becoming the average data usage per month, where multi-gigabit plans become mainstream. We linear broadcast TV that has largely shifted to IP streaming and content quality and adoption of 4K and beyond continues and where copper has been fully retired. And through all of this, we expect fiber to still be the gold standard as the most reliable, scalable and future fit-for-purpose broadband technology. In summary, this year, we've continued to demonstrate the strength and resilience of both our digital infrastructure and our earnings despite ongoing economic headwinds. While conditions are expected to improve, that recovery will realistically begin from early 2026. Innovation remains a key differentiator. We'll continue to drive greater awareness of fiber superiority, particularly as AI accelerates demand for high-performance connectivity. We're actively progressing strategic opportunities. Some are already delivering returns, while in others, we've had the discipline and clarity not to proceed. On the regulatory front, emerging pathways offer potential for favorable near-term shifts, addressing outdated constructs. Copper retirement and fiber areas is now within sight and will increasingly unlock value from noncore assets. And finally, we've laid the foundation for our strategic reset and entered Horizon 2, focused on growth, simplicity and efficiency. Our conviction in fiber now and for the future remains absolute. It is technologically superior in every way that matters. On that note, I'll pass back to Mark.

Thanks, Mark. We now come to the resolutions outlined in the Notice of Meeting. We have Sue Bailey, Will Irving and myself retiring by rotation under the NZX listing rules and standing for reelection. The Board unanimously supports the reelection of each of those directors. A brief biography for each director standing for reelection was included in the Notice of Meeting. The fourth resolution relates to the fixing of the fees and expenses of our auditors, KPMG. Voting today will be conducted by way of a poll on all items of business. As a reminder, for those of you online and eligible to vote, you can cast your vote by clicking on the Vote tab and selecting your voting directions. Your vote is cast when the tick appears. There is no need to hit a Submit or Enter button as the vote is automatically recorded. You do, however, have the ability to change your vote up until the time I declare voting closed. I'll give you a warning before I move to close voting. If you wish to ask a question, please press on the Q&A icon. This will open a new screen. At the bottom of that screen, there is a section for you to type your question. Once you finish typing, please hit the Send button. You can also ask general questions that will be addressed at the end of the meeting. We now move to Resolution 1, Sue Bailey's reelection as a director. She retires under rotation under the listing rules and offers herself for reelection. It's my pleasure to propose Resolution 1, the resolution to reelect Sue as a Director of the company. I now invite Sue to address the meeting, noting that this has been prerecorded.

[Foreign Language] My name is Sue Bailey. This morning, I'm pleased to have the opportunity to seek your continued support and my reelection as an Independent Director of Chorus. I've had the privilege of being a director at Chorus since 2019. And in that time, much has changed. The ultrafast broadband network now reaches over 87% of premises in Aotearoa. Copper connections have reduced to fewer than 100,000, and we are now into the fourth year and second period of a price quality regulatory framework. During COVID and since then, we have all seen firsthand the benefits that an all-fiber network delivers to the people, communities and businesses of Aotearoa. It is evident in the way that since 2019, average data usage on Chorus' fiber network has nearly doubled to over 670 gigabytes per month. Wow. One thing that hasn't changed, though, over that time is the commitment of our people to deliver a future-proof and resilient fiber network. Under the leadership of our CEO, Mark Aue, and to use his words, Chorus now moves from being a great network builder to a great network operator. What do I bring to Chorus then? Well, my professional career includes over 30 years in telecommunications in roles spanning operations, sales and marketing, transformation and as a CEO. With this extensive industry experience, I believe I can continue to contribute at Chorus, both as an Independent Director and as the Chair of the People, Performance and Culture Committee as we move towards becoming a simplified all-fiber business, pursuing our purpose of unleashing potential through connectivity, enabling better futures for Aotearoa. On a more personal note, I have long admired New Zealand and New Zealanders for your innovation and can-do attitude. And with your support, I hope to add my bit through the role that Chorus plays in furthering that spirit of achievement. [Foreign Language]. Thank you very much. Over to you, Mark.

Thank you, Sue. Kristel, have we received any questions for Sue or about Resolution 1?

No questions have been received on Resolution 1. Thanks, Mark.

Thank you. I now move as an ordinary resolution that Ms. Sue Bailey be reelected as a Chorus Director. The Board fully supports Sue's reelection. If you've not already done so, I ask that shareholders vote on Resolution 1. We now move to Resolution 2, the reelection of Will Irving as a director, and the Board fully supports Will's reelection. I invite Will to address the meeting and again note that this has been prerecorded.

[Foreign Language] Good morning, shareholders. I'm seeking reelection today, having first been elected in 2022. It's been a privilege to contribute to Chorus' journey over the past 3 years, and I'm pleased to have the opportunity to seek your support for my reelection as an independent director. Firstly, why do I want to be a member of Chorus' Board and why am I seeking reelection? I've now completed my first term as a director. And in that time, I have contributed as both a Board member and a member of the Audit and Risk Management Committee. I've contributed industry insights and practical experience, having led a wide variety of corporate customer and operational telecommunications teams across Australia over many years. Secondly, what can I continue to contribute to the Chorus Board? As I've just mentioned, my broad experience working within the telecommunications infrastructure and regulatory environments in Australia gives me a unique perspective. From 2019 until last week, I was the Chief Strategy and Transformation Officer at NBN Co in Australia, the company established to build, design and operate Australia's wholesale broadband access networks. It is Australia's equivalent of Chorus. In that role, I've led teams across areas as diverse as the Chief Technology Officer and network planning, strategic partnerships, legal and regulatory, business continuity and security and new property developments, which is NBN's primary growth business. As of Monday this week, I'm now NBN's Chief Strategic Transactions Adviser in a part-time capacity. Prior to joining NBN, I was the interim CEO of Telstra InfraCo, Telstra's wholesale business. And before that, I led Telstra business, its small and medium businesses, customer sales and service division with revenues of over NZD 5 billion. And before that, I was Telstra's Group General Counsel. So my experience in wholesale and retail telecommunications across infrastructure, end customer sales of service and strategy gives me a strong strategic lens to assist Chorus with both the challenges and importantly, the opportunities it faces. Blend of legal, operational and strategic experience lets me contribute meaningfully as your company seeks to modernize its regulatory environment, build its customer base and unlock further value for shareholders. Finally, Chorus is a business that makes a very real difference to Aotearoa's society and economy. high-quality, reliable connectivity at home and for businesses, governments and community organizations is essential for a modern thriving nation. With your support, I look forward to the opportunity to work with my fellow directors and Chorus' strong management team to grow shareholder value and provide positive outcomes for New Zealanders in the years ahead. [Foreign Language] Thank you. Over to Mark.

Thank you, Will. Kristel, have we received any questions for Will or about Resolution 2?

No questions have been received on Resolution 2.

Thank you. I now move as an ordinary resolution that Mr. Will Irving be reelected as a Chorus Director. If you've not already done so, I ask that shareholders vote on Resolution 2. We now move to Resolution 3, my reelection as a director. I retire under rotation under the listing rules and offer myself for reelection. For full transparency, I'd first like to draw shareholders' attention to a proxy adviser's voting recommendation in relation to the choice of virtual format for this meeting and my reelection. As shareholders may be aware, proxy advisory firms provide advice to institutional shareholders on how to vote. ISS has recommended voting against my reelection as Chair, citing our decision to hold this meeting as a virtual-only event, which they view as a significant governance concern. This is the first time a proxy adviser has issued a negative voting recommendation on that basis with respect to Chorus, although we did have a virtual meeting last year. In response, let me explain why we elected to have a virtual-only meeting this year. At our last hybrid meetings, we had 10 or less shareholders with very few questions in person or online. So that's 10 shareholders out of over 19,000. The financial and environmental costs of a virtual meeting are significantly less than a hybrid meeting. The resolutions this year are largely administrative in nature. The meeting technology used by shareholders to attend this virtual meeting is tried and tested and allows full participation. It's also consistent with the NZX listing rules and the NZX Corporate Governance Code, and our constitution does permit virtual-only meetings. However, we're not wedded to the virtual meeting format and having received some feedback for the first time this year with a preference for a hybrid over a virtual meeting, our intention is to revert back to a hybrid shareholder meeting next year. As always, we'd welcome shareholder feedback on how we can improve our meetings generally. I'll now hand over the role of Chair of the meeting to Kate Jorgensen, the Chair of the Audit and Risk Management Committee, who will introduce the resolution relating to my reelection as a director.

Thank you, Mark. Good morning, shareholders. It is my pleasure to propose Resolution 3, the resolution to reelect Mark Cross as a Director of the company. The Board fully supports the reelection of Mark. I now invite Mark to address the meeting.

I'm seeking reelection today as required by the NZX listing rules, having first been elected in 2016 and reelected in 2019 and 2022. Having taken over as Chorus Chair in October '22, it's been a privilege to have led the Chorus Board for the last 3 years and to have been a director for the 6 years previous to that. I should note that this is the end of my third 3-year term. And on the Chorus Board, we've tended to observe 9-year tenures. Stepping into the Chair role provides some flexibility to that general tenure guideline. But in standing for reelection today, my intention is to ensure an orderly handover to a new Chair during this next term. The usual planning for that succession is already underway as part of our normal Chair and direct succession program. So with that said, I'm pleased to have the opportunity today to seek your support for my reelection as an independent director. I'd like to briefly address today why I'm here and what I can contribute as a director of your company. So firstly, why do I want to be a member of the Chorus Board and why am I seeking reelection? Chorus' purpose, unleashing potential through connectivity, enabling better futures for Aotearoa says it all for me. Chorus' fiber network is a critical national infrastructure business. As New Zealand's demand for data increases and become more reliant on connectivity, Chorus' role will only grow in importance. For a director, serving on the Board of such an entity means being involved in decisions that are economically, socially and technologically fundamental to New Zealand's future digital infrastructure. Secondly, what do I bring to the Chorus Board? So my current and previous Board roles as well as my prior executive career in investment banking have given me exposure to a wide range of industries, companies, markets, people and situations. And I bring all of these experiences to the Chorus Board table. I'm satisfied as Chair with what we've achieved over the last 3 years, Director, CEO and executive succession, a revised strategy, a regulatory review and a capital management and dividend reset. Activity is one thing, but outcomes for shareholders are more important. Chorus has performed well in total shareholder return as noted in my earlier address. We're clear on our strategy, on executing that strategy and on managing our capital in a way that delivers predictable and growing returns to our owners. With your support, I look forward to continuing to work hard alongside my fellow directors and our executives and staff to achieve those goals. Thank you.

Thank you, Mark. Kristel, have we received any questions for Mark or about Resolution 3?

No questions have been received on Resolution 3.

Thanks, Kristel. I now move as an ordinary resolution that Mr. Mark Cross be reelected as a Chorus Director. If you have not already done so, I ask that shareholders vote on Resolution 3. I now pass the role of Chair of the meeting back to Mark.

Thanks, Kate. We now move to the final resolution, Resolution 4, the auditor's fees and expenses. In accordance with the Companies Act, Chorus' current auditors, KPMG, have been automatically reappointed as Chorus' auditor. Under that act, auditor fees and expenses must be fixed in the manner determined at the annual meeting. Kristel, have we received any questions about Resolution 4?

No questions have been received on Resolution 4.

Thank you. I now move as an ordinary resolution that the Board be authorized to fix the fees and expenses of KPMG as auditor. If you've not already done so, I ask that shareholders vote on Resolution 4. I now invite shareholders to raise any other questions, comments or discussion, whether related to any of the presentations, the financial statements or the management of Chorus. While we're waiting for people to raise any items of general business, an e-mail address for your feedback is here on the screen. We welcome your feedback at any stage. Kristel, have we received any general questions?

Yes, we have, Mark. Our first question is from Stephen Mayne. How many full-time equivalent staff do we currently have? And is this likely to fall over the coming 12 months with the rapid rollout of AI? Which parts of our business and operations are the most prospective for AI productivity gains? And how energetically are we embracing those opportunities?