Chorus Limited (CNU) Earnings Call Transcript & Summary

Good afternoon, everyone. My name is Mark Aue. I'm the Chief Executive for Chorus, and it's my pleasure to welcome everyone here today; to our guests that are joining us online and to our visitors here with us in our Auckland Fibre Lab. We appreciate you all taking the time to be with us. Some, I know, have traveled from out of town today, some from overseas and want you to know that we really appreciate you making the effort to be with us. I want to also acknowledge the many voices and thought leadership that we have across industry here with us. And equally, as part of our [indiscernible] Mali journey, acknowledging a house today [indiscernible] in the spirit with them. And equally, the spirit from the land outside to really just frame us for our afternoon together. Now I don't know about you, but watching that video, there's a pretty good feel factor, particularly when you can look back knowing what's actually been achieved. For those of you that are old enough like myself, may have recognized the voice on the advertisement as William Shatner, probably better known to Star Trek fans as Captain James T. Kirk of the USS Enterprise. Now back in 2011, I think rolling out high-speed fibre connectivity, the majority of this country probably seemed as foreign as deep space travel. But it took vision, it took courage and perseverance. It's taken a lot of work and capital investment. But really, this was about a belief in a fibre technology that would propel New Zealand onto a global stage, where we are today amongst broadband global leaders. Given that we only have 5 million people in our country and a topography that we have, I think it's an understatement to say that New Zealand has amazing telecommunications infrastructure. In fact, we'd say the UFB deployment is one of the best examples of public and private partnership in New Zealand history. So why are we here today? To be honest, this is not a tick box exercise for us. This is the first time in almost a decade that Chorus has run an extraordinary Investor Day. Frankly, we've been getting on and building this amazing network and implementing a rather complex regulatory framework. We've had solid results in a sea of discontent in the market, and we're all a month out from Christmas. So there's plenty enough to be doing. So why hold this now? I've been with Chorus for about 18 months. And roughly the last 7 months as the Chief Executive and both I and we, as a management team, feel it's important for us to be here today. We reported not so long ago in our full year results and road shows that our market context has shifted. The UFB program is complete. Competition and technology advancing and government, economic and regulatory frameworks are equally evolving as are the expectations of our stakeholders and our investors. So we have chosen them to reset and redefine our strategic frameworks with an eye to the future. And that's about Chorus evolving from being the once-great network builder needing to become the great network operator. Today is about providing greater transparency and insight into that core strategy and as we see it on our road to 2030. Today, we're going to talk to that strategy. We're going to talk to the clarity and specificity of what we believe future success is dependent on, how we see that happening, how we'll be different and we will be focusing our resources and why. From an agenda perspective, today, we're joined by our Chair of Chorus, Mark Cross, who I'll pass to shortly for comment. We also have an external speaker with Rupert Wood, who's a research Director from Analysys Mason. It's a pretty full agenda, and we're aiming to finish up around 4:30 today. The intention is to keep this quite open, but to try and keep us on time, we've got 2 junctures for Q&A. First will happen around 2:20 this afternoon and then later on at 4:15. You can submit questions online through a link to Slido and we'll pick those up. And we'll look to have a 15-minute comfort break in the afternoon, somewhere around 2:30, 2:35 and we'll update on those timings if required for our online guests. We'll also hear from a number of our Chorus team today, starting with Kurt Rodgers that we saw upstairs for some of us, is our Network Strategy Manager. Kurt is going to talk to the current and future shape of data demand, Elaine in Access on how we'll reach our fibre uptake aspiration of 80% of premises passed. Mike in Infrastructure, leveraging the great infra assets that we have to drive new revenue growth, Anna in Frontier on how we're exiting from copper completely and the key milestones to get to 2030. Ewen in Technology from understanding our network architecture and equally how we're scaling the network for future demand. Julian in regulatory implications. And finally, Drew Davies, who joined us as our new COO 6 weeks ago, and we thought what better way to indoctrinate someone then to jump into an Investor Day. So Drew is going to be pulling together a bit of the [indiscernible] on planning and also a look at asset optimization. So look, I hope you find today informative that it provides greater clarity and transparency and where we are headed and how we'll get there. To be clear on our road to 2030, we see great opportunity. Chorus and fibre technology has shown itself to be highly resilient as essential digital infrastructure and therefore, lower risk. We are in a maturing environment that has become reassuringly more predictable from a regulatory perspective. There are addressable markets that we see to grow into, and there are efficiencies to realize. We have a clear strategy and an aspiration on what we think that future success looks like. We're going to take you through those things today. I'll now pass to Mark for a comment.

Good afternoon and on behalf of the Board, let me welcome you to our Investor Day. We thank you for spending time with us today. I know it's a busy time of the year. And thank you also for entrusting your investment in us. Today is about building a shared understanding. So this longer format allows us to spend more time on our strategic priorities, our operational focus and our road map to long-term value creation. It also provides an invaluable opportunity to hear your perspectives, answer your questions and at depth that normally our regular results briefings don't allow. So Mark's outlined the agenda and the objectives for today, and I'll now share a Board level perspective. So I've been a Director of Chorus now for 8 years, the last of which as Chair and I am more confident than ever in our strategy positioning and momentum, achieving revenue and earnings growth last year in a really challenging macroeconomic environment underscores our strength as a provider of essential digital infrastructure. We had a pivotal leadership transition this year with Mark stepping into the CEO role in April. He's quickly reset and refined our strategy, and he's brought the whole business along with him, and you'll see his commercial focus and operational clarity embedded in the plan that you'll hear about this afternoon. So the context for that strategy is important. The global momentum around AI, generative AI has renewed the focus on high-speed fixed line networks, and Chorus plays a critical role at that picks and shovels end of the technology sector as the backbone of the digital economy. We think our streamlined strategy positions us well to capture that opportunity. In my first letter to shareholders as Chair, I outlined a set of beliefs or principles that still remain the foundation for our oversight today. These principles guide our work and set benchmarks against which we expect to be held accountable. And you'll see how these align with our new LEAP strategy with Mark and team takes you through that today. So just going through those briefly. So as we've shifted from build to operate, having the people with the right capabilities in the right areas is more vital than ever. We're becoming more productive, more efficient and getting better at taking smart risks. We're also adapting to a faster-paced, more competitive environment. Our strong commitment to diversity, equity, inclusion remains, and you'll see the progress reflected in some of the awards we've earned this year. There's always more to do, but we're proud of the progress we've made to date. On fibre, globally recognized as the benchmark, as the gold standard for broadband and it provides unmatched speed, reliability and capacity. It's energy efficient and sustainable. And we think that green advantage will become even more important over time. We think that bidding against increasing demand for speed and capacity is shortsighted and on the wrong side of history, as Kurt will show later. To increase our return on invested capital, our focus is on connecting customers to our existing network in preference to extending it, and that's a clear shift in emphasis and intent. We will target network extensions where our strategic and financial criteria allow and Anna will talk more about that later. But all of this is in pursuit of our overall aspiration to be an all-fibre -- a simplified all-fibre business with 80% fibre adoption. Copper, nearing the end of its life cycle, our focus is on landing the plane. So staying free cash flow positive by managing copper costs down as the revenues decline. And we think those copper regulations need to catch up with reality to reflect this shift. On the market. So we've been a passive wholesaler. We've been an active wholesaler and we're now evolving to a market challenger role. Broadband is inherently a complex consumer product, way more so than electricity, the customer experience, as we've heard and seen from Kurt this afternoon is, it extends just beyond just the connection to the home, to devices in the home and to recognize those realities, Chorus is doing much more to help customers understand their technology choices. When fully informed, we're confident fibre will remain the preferred choice. After all, it will deliver better outcomes than more New Zealanders are on the network and, of course, benefits for shareholder returns. You'll hear us refer to customers, the end users and to partners, the RSPs. And this is more than just semantics. It reflects a shift in mindset in how we view the market and our place in it. Having said that, although we compete in certain areas, having those strong partner relationships is still a critical part of our strategy. Digital equity, digital inclusion, top sustainability priority. We've done everything from supporting students in the pandemic to partnering on digital literacy initiatives. We're also committed to bridging the affordability gap and connectivity, and that's a really important strategic focus. On new opportunities. So generating nonregulated income is important, but it must meet strict return criteria. We need to be confident that we have or can build at least the capabilities to run those businesses well. And we'll generally steer away from opportunities that you, as our shareholders, can invest in directly unless there's a compelling adjacency to our core business. And you'll get a better idea of the sorts of opportunities that we think meet those criteria when we talk about some of the examples later. Capital structure, as a digital infrastructure business with predictable cash flows, we think that an investment-grade rating of BBB remains absolutely appropriate for us. It allows us to operate up to 4.75x EBITDA well within the S&P ratings trigger of 5. And we see no need to deleverage from there. Instead, we'll continue to use our balance sheet prudently to fund growth CapEx where it meets our investment criteria. Lastly and perhaps most importantly, capital discipline is paramount. You'll hear that a lot. Over the past year, we think we've made significant strides in prioritizing value, probably best demonstrated by the decision to withdraw our extended fibre frontier investment from the regulatory submission earlier this year. Our sustainable growing dividend remains the cornerstone of our capital management framework that provides certainty to investors and reinforces our position as a low beta dividend stock. Finally, just a few words on the Board. So I'm very happy with the Board and how we all work together. We've implemented planned Board succession over the past 5 years as the original directors rolled off. I think we've now got a great balance of skills and experience to meet our long-term goals with a real focus on that value maximization. We have no plans to increase the Board and so any future board changes will just reflect tenure and skills. So with that, thanks for joining us. Really appreciate your support and engagement. And I'll hand over to Mark now. [Presentation]

So quite the contrast between the 2 videos. You can hear the opening video at the start of our fibre journey back in 2011 and fast forward to the second that we've just played in 2024. And it's clear that Chorus has been key in driving major transformation across New Zealand and digital infrastructure. There are a number of key stats called out there, but 1.5 million addresses passed with almost 72% uptake already. That exceeded or far exceeded business case expectations. And it's a network that scales. So 17% of users already using more than a terabyte a month. And if you look back from 10 years ago and take the annual data usage, we're now consuming that in just over 2 weeks, right? So it's a network that is actually able to scale to the demand. There's a lot for us to feel incredibly proud of what we've delivered both as Chorus and as a nation. Fibre technology is propelling us in ways that we couldn't have ever imagined previously. And moreover, given its unique scalability, it's likely to continue to do so into the future, creating to solutions to problems that we don't even recognize we have today. I want to spend time doing 3 things in this session; first is a reality check on our market; the second, an economic benefit view of fibre into New Zealand; and then finally, take you through our broader strategy before passing to our team for more detail. To our market, we see ourselves certainly as provider of essential digital infrastructure. And through fibre, we've fundamentally changed the way we all live, work and learn and play. Fibre is not a luxury commodity. It's an essential service. And it's not just a residential access story, fibre is powering our digital economy and has become a critical enabler for connecting both domestic to global networks. And whilst the world and New Zealand, in particular, navigated through and also a particularly difficult period, since 2020, the resilience of fibre is clear. The COVID pandemic and several severe weather events since have only served to highlight how critical digital infrastructure is for New Zealand and enabling us to keep moving forward as a nation. Our economy has seen a severe economic downturn. But in contrast, Chorus and our foundations and fibre have created a resiliency and an offset to that market risk. It also has predictability, enabling us to maintain growth in connections and in earnings over the same period, whilst the market has been doing something quite different. Now for those who have been following Chorus for some time, you'll know that regulatory has played an oversized factor in our minds and effort for some time. It's also dominated a number of meetings with our key stakeholders and investors over the years. So we're pleased to say that, that has all changed for the better. The fibre regulatory regime is very much bedded in. We're now awaiting the final determination on our Mar, our Maximum Allowable Revenue over the next couple of weeks. So by mid-December, we should have that through and will be set to enter our second regulatory period from January 1 next year. And that regulatory period runs for 4 years when the prior was only 3, and we think that's another sign of maturing of the framework. Our relationship with the commission has also matured. We don't agree on everything, but we've been able to work through details constructively and rationally. And earlier this year, that resulted in a material improvement on our allowances, our expenditure for the second regulatory period for CapEx and OpEx that had a material lift to our final determinations. And that's enabled us to actually deliver within our business plan over the next 4 years. Today, regulatory focus is least about fibre, and it's more about our exit from copper completely and getting out of the increasingly archaic settings that we inherited back in 2011. I'd say to this point as well, the Commission has been very constructive. Commission itself produced and published a rural study where fibre was not available and noted that 97% of those premises can already receive an alternative provider to copper, whether that is mobile or alternative wireless, that's before you overlay satellite. So in short, we'd say the thematics are positive, and we're encouraged by the greater predictability and consistency in the regulatory approach. Our broadband market continues to evolve. The IDC data shows penetration dipped to 91% last year, but also forecasted to return to growth and reach 94% by 2028. If you look to the left-hand chart here, you note fibre, including the other local fibre companies was at about 1.46 million fibre connections. It's about 73% uptake. IDC also forecast though, of these customer groups, that 40% of those customers will up grade to gigabit speeds by 2028. The legacy technologies continue to fall away. Copper is now under 140,000 connections and even the One New Zealand cable network now around 30,000 connections. Fixed wireless, we'd note in the orange, obviously, a much larger part of the market at about 350,000 connections. That's predominantly 4G. And whilst we have 5G in market now. IDC are estimating, back from March, around 10,000 5G fixed wireless connections. New Zealand market is a bit unique in that regard. Spark already have a high penetration of about 30% of their base, One New Zealand at around 20% and 2degrees at under 10% and not surprisingly, have been marketing strongly for cross-sell. Finally, satellite -- and Starlink, in particular, as we have in New Zealand continue to grow, roughly 40,000 connections now and again, not surprising where fibre isn't available. If we look to the chart on the right, mobile operators have just under 75% of the broadband market share. But the growth in the market has been coming from the electricity and pay TV providers where they recognize the churn benefits of cross-bundling into their own core services. With Sky, we would note, most recently calling out a 13% churn benefit when bundling broadband with the set-top box customers. That makes for a very different customer lifetime value if you can drive that at greater scale. Secondly, I wanted to look at the broader market impact of fibre. Deloitte New Zealand recently published a report on the future of digital fibre infrastructure in New Zealand. We've included an online link in the pack for those who would like to review it. I won't dwell too much on the detail of what I think was a well-versed report, but the key takeaways were that fibre connectivity, access to fibre connectivity, not broadband, has already delivered $31 billion of economic benefit to New Zealand over the last 10 years. Further, the forecast were to grow to over $160 billion of cumulative benefit. They note how fibre networks are critical for delivering gigabit connectivity and enabling the more cutting-edge technologies that we're seeing develop in AI, cloud and IoT applications. They equally call out a need to stay ahead in New Zealand with a nod to further fibre expansion from the roughly 87% coverage we have today of a population, expanding out to 95% in the future. And that's with a focus on digital equity as well. That expansion alone is forecast to deliver $17 billion of economic benefit. And Anna Mitchell will pick up on this later into the expansion and how we could potentially play a role in supporting that. But obviously, that needs to come with the right government policy or regulatory support. Our position hasn't changed on that. Finally, let's talk to our strategy, where as we see it, our road to 2030. We've spoken about a need to plan over a longer term. And we see that as a 10-year horizon model with 3 distinct phases: Horizon 1 of FY '25, where we are today, that's about getting future fit for purpose. What are the seeds we'll plant now to derive benefits in the future. Horizon 2 running from FY '26 to the end of FY '29 is about accelerating those benefits from that transition to an all-fibre business through growth, simplicity and efficiency. And Horizon 3 is FY '30 beyond, where we moved to our single state technology exiting from copper and only have fibre. We've also set a clear aspiration, clarity of what we want to become and what does success look like in the future. For us, that exploration is a simplified all-fibre business with 80% uptake by 2030. I appreciate that's a mouthful, but it's anchored into everything that we're doing. It speaks to driving efficiency and operational excellence across the business. It's a need to exit completely from legacy copper technology that is no longer fit for purpose. The 80% uptake anchors us to a target. It's aspirational, but we believe it's achievable based on international benchmarks and what we see as the technological superiority of fibre. And 2030 makes this all time bound, not just for us, but it's a market for other stakeholders so that we can all work backwards on what we need to believe to drive this outcome. We've also set a clear purpose. And I don't mean a corporate purpose statement. I mean a purpose for higher cause. This is something that I'm personally very passionate about, having 5 children, I genuinely want to leave this place in a better state than when I joined it. And we know that companies that embrace purpose are ones that have also focused equally on societal objectives as much as they have on traditional financial metrics. And they've done it in a way that becomes embedded into the culture of the business and into the everyday decision-making. For us, that purpose is unleashing potential through connectivity, enabling better futures for Aotearoa. That speaks to setting free the hidden capacities and abilities of our country, it's people, it's businesses and communities by providing the most reliable, scalable and future technology, where we drive intergenerational impact, creating a more resilient, sustainable, prosperous and better connected country. Now part of framing that purpose statement, it needs to be broad enough that it's recognizable for all of our stakeholders, and we see that wrapped around an ecosystem as you see here. For us, that shows up as 4 quadrants. Our people, our customers, partners and investors, our communities and our environment. As you can see, we are already doing many things today that fall under these quadrants, and we'll be creating more initiatives and programs as we embed purpose into the DNA of the business. But to call out, 2 examples here, and first on sustainability and how we're showing up in the environment. Mark talked earlier on the importance of sustainability to us. The progress that we have already made is significant, and we've set some pretty ambitious targets to reduce our Scope 1 and 2 emissions by 62% and a net reduction of 25% on electricity by FY '30. The second example is in digital equity. So how does that show up for communities and for our customers. And as part of Chorus' transition to an all-fibre business that includes a key focus on digital equity. The estimates are 1 in 5 people in Aotearoa at the moment are digitally excluded. That equates to roughly 10% of households, which quite frankly, I think, is a staggering statistic, particularly when you consider the core services for government, retail, health and banking are only becoming more increasingly digitized and more likely to exclude even more people. Our key partnerships with organizations like [indiscernible], RAD, Manaiakalani, Katoa Connect, Digital Seniors and the Digital Equity coalition for Aotearoa are all helping us to bridge that digital divide. I'm proud of the collective approaches that we're taking and can share that we're working at pace to provide affordable connectivity options for vulnerable and low-income households. To be clear, that is not a government-backed initiative. This is about Chorus stepping in with purpose and finding other like-minded partners who share our passion around digital equity. My challenge to our business has been that if the decisions we're taking aren't enabling us to deliver on our purpose, then we should challenge them and we should stop them. Throughout this process, we've also looked at our capabilities, our business model and core competencies. Now some today, we would recognize our core strengths; others are ones we would recognize as we transition into becoming the great network operator, the capabilities that we need to develop. Today, we're already an efficient network operator, but we see further opportunities through simplification and operational excellence. We are an infrastructure player. We are not a telco asset. We know how to do this, and we're good at it. Our tangible assets, we know we have superior fibre broadband assets. We need to leverage those core assets more effectively and be willing to divest from those that are noncore rapidly. And regulatory management has been a strength. And overall, the regime provides greater certainty and reduces broader risk. But we now need to evolve into that to ensure that we can exit from copper completely. There are 2 shown here that are ones we need to develop capability in, and you would have seen us already starting to change. The first is as a market challenger. That's a mindset shift, being more assertive and finding new ways to compete more effectively. And you can see some of that happening already with our advertising, and Elaine will pick up on this as well. The second is our go-to-market capability. It needs a different posture. We want to raise awareness and education about the differences of fibre technology versus other broadband. We're going to need to develop and leverage advocacy groups, lobby for product disclosure and transparency and highlight the superiority of fibre over other broadband technologies. We need to move beyond simple downlink speeds to characteristics that better reflect fibre, reliability, consistency, uplink speed, latency and the fact that is yours as a dedicated link, you're not sharing it. It's also the greenest technology out there. And again, you're going to hear from our speakers today about how that will come through as a change. But to be clear, we are playing to win. We're not playing to play. We've then framed this in 4 strategic LEAP pillars that we call LEAP. So LEAP Is about momentum. It's about leaping forward, leaping ahead, leaping over. It's about leading fibre uptake to 80% of premises passed, expanding growth into new revenues, adapting where we drive operational excellence through discipline and efficiency. And finally, where we pioneer change, exiting Copper completely by 2030 to a single fibre technology. When we bring all of these elements together, it looks a little bit like this in our strategy house or again as we see it, our road to 2030. That provides the clarity and specificity on what it is we're trying to achieve and what success looks like. That's our purpose and our aspiration. It's understanding the capabilities of our strengths and the ones that we need to develop into and how we're going to show up differently. It's about creating alignment on what the success looks like and creating an energy for change. That's our LEAP pillars. Now for us, that also recognizes a material shift that needs to start happening now to deliver on our Horizon 2 aspirations. But FY '25 marks a steep change in what has been a very successful story to date, but now becomes that transition to a more future simplified state, with one single superior technology, and that is fibre. Now before I ask the team to step into a little more detail on the strategy, we thought we'd start by stepping back and taking a more broader global context. We're going to hear from Rupert Wood, who's a Research Director for Analysis Mason. Rupert's based in London, so given the time difference we've prerecorded his address. Analysis Mason, as many of you know, are leading global consulting firm and the technology media and telecom space. And we've asked Rupert to provide us a sense of what he sees happening in broadband markets across Europe and the U.S.A. with fibre and other technologies, including fixed wireless.

It's important to separate from the outset, 2 quite distinct business models for FWA. First, the complementary model on the left, this is where fixed operators, sometimes supported by public subsidy, use fixed wireless access to provide service in areas deemed uneconomic for FTTP. Thus, the long-term share of fixed wireless access will be largely a function of what are often public policy decisions on technology choice. Second, on the right, the challenger model, and this is where mobile operators, MNOs seek to compete largely on price against wireline operators. This is [indiscernible], a threat to wireline businesses as opposed to being part of it. But as you all see, it has various inherent limitations and the MNOs that utilize this model may not be as committed to wireless base disruption as first appears. This slide shows fixed wireless access share of fixed broadband in selected developed economies in 2019, 2021, 2023 and the blue arrows also provide a broad indication of the trend in 2024 based on part year figures. The first and pretty obvious point to make is that take-up is extremely varied from negligible in, for example, the U.K. and the Netherlands to about 35% of all broadband in Austria. This shows, I think, that there is little intrinsic demand for fixed wireless broadband. Customers are not taking it because it is fixed wireless. It is essentially the supply side and not the demand side that determines fixed wireless share. However, I should nuance that a little. Some customers will value the short setup time and some may also value its portability. And it's also worth noting that typically the share of take-up among small business sites is usually higher than in residential. Small business sites may be less demanding in terms of bandwidth and traffic than residential, and they are -- can sometimes be more temporary in nature. And in fact, in the U.S.A., mobile operator fixed wireless access serves another function, it can be suitable option for a business with multiple small sites across the country because, in fact, in the U.S.A., no fixed operator has national coverage. A second obvious point to make is that fixed wireless access share does not automatically rise. In fact, in most of these countries, the share in 2024 as far as we can see, is not shifting much either way. The U.S.A. is an obvious exception. There's a group of countries on the right here where fixed wireless access has no significant role. And on the whole, we expect it to remain that way. Fixed broadband coverage is good, fibres-to-premises competition is strong and price is low. Other than for niche reasons, it's difficult to see where demand in, for example, France might come from or importantly, which mobile operator would even have an incentive to offer it. At the other end of the scale, fixed wireless access has around 35% share in Austria, and again, it's the supply side that explains this. Austria has suffered from low levels of fixed line investment. Prices are high, fibre coverage is about the lowest in Western Europe. And Poland too had historically poor levels of high-quality coverage, fixed coverage, but ambitious government fibre intervention schemes have changed this. So the fixed wireless share is now falling away quite fast. Norway and Canada are both markets where fixed wireless access largely fits that complementary rather than challenger model. The latest quarterly indicators are that -- and in Norway, certainly, it's more or less peaked. Norwegians appear to up for fibre where it is available, even though it has to be said, the retail side is not especially competitive and prices are high. So let's look at these 2 countries. Australia, first, is a mix of complementary in the challenger model of national broadband network, FWA, NBN FWA and mobile operator FWA. And it's really the mobile operator FWA that actually accounts for the growth, and it is growing. The U.S.A. though, is the one developed economy where fixed wireless access is gaining market share very fast. In the next few slides, I will put a bit more color on this. But essentially, we believe that the conditions that have led to MNOs success in penetrating the fixed broadband market with fixed wireless access are unlikely to be replicated in many other markets. The main reasons FWA has surged in the past 4 years are: first, a lack of meaningful wireline competition; second, cable cos have had the largest market share. And then until 3 to 4 years ago, they faced very little serious competition. And hence, actually the retail prices are pretty high. And the Net Promoter Scores for cable are now really pretty poor, and I shall show that in the next slide, which shows Net Promoter Score from surveys that Analysys Mason conducted, a consumer survey and has just been published. The 2 broadband providers on the left are telcos with a mix of fibre, mostly fibre and FWA. And the 3 broadband providers on the right are cable cos. I think that graph pretty much speaks for itself. So let's come back to what's happening in FWA and mobile operator FWA. This is a picture of its share of fixed broadband. It's risen to 8% by 3Q 2024. And T-Mobile has just about over half of it. Some of these subscriptions are temporary or prepaid subscriptions or backup subscriptions and things like that. So they're not all pure sort of simple substitutive broadband consumer connections. And as I said, Verizon has a high proportion of business subscribers. So net adds have sort of flattened out in the last few quarters, but still that growth is still pretty strong. So the U.S. fixed wireless access is based on the fallow-capacity model. That is monetizing spare capacity that cannot be monetized as mobile broadband because there isn't demand. Now back in 2022, T-Mobile spelled this out saying that, in effect, 5G was a sunk cost and 5G fixed wireless access was CapEx free. And they raised the question as to whether they'd invest more than this. But at the time, they didn't commit. Now T-Mobile won't offer fixed wireless access everywhere. They constantly monitor traffic and performance levels so that fixed wireless access does not damage the performance of mobile broadband, which is worth 25x more than fixed wireless access on a per gigabyte basis. And in fact, fixed wireless access, we believe, now represents over half of all traffic on the T-Mobile network, and it accounts for about 40% of all mobile network traffic in the U.S.A. So going back to T-Mobile. Has it spent more? Well, yes, it has invested in carrier aggregation, 5G advanced MIMO software enhancements, particularly 5G stand-alone. And 5G stand-alone can assist in dynamically optimizing capacity allocation for mobile and fixed wireless and fixed wireless access has been an early and relatively simple use case for that technology. It's rather unclear whether T-Mobile has allocated that CapEx to fixed wireless. And it's really worth pointing out in these traffic patterns is that at a national level, we assume for T-Mobile as well, almost all of the additional traffic generated on mobile networks is fixed wireless access. True Mobile broadband growth, the kind of mobile broadband on your smartphone is sub-10%. Now this low growth in True Mobile does, as I've said, have a flip side for fibre operators, it prolongs the expected lifespan of fallow capacity, but it also raises the question, why invest in additional capacity if it is low-yield traffic that drives most of the need for that additional capacity? So moving on to what mobile operators are doing in the FTTP space, and it's really ramping up to 3 main MNOs in the U.S.A.; AT&T, Verizon and T-Mobile are all upping their investments in FTTP. AT&T has indicated up to 45 million premises passed, Verizon up to 40 million and T-Mobile up to 12 -- up to 15 million. That's a maximum of 100 million premises passed out of a total in the U.S.A. of 140 million premises. And that's just from the mobile operators. That doesn't include all the other fixed operators, the old net and so forth and the subsidies that will come in from BEAD. And I think that makes it pretty clear that MNOs do not believe in an all-purpose, mobile-only fixed wireless approach. In fact, they appear to believe very much in FTTP. In fact, the FWA approach may turn out, and we've done calculations on this, to be more expensive than fixed wireless access on a total cost of ownership basis because the FTTP assets you're building have far more extended useful asset lives. And in fact, T-Mobile increasingly sees the 2 technologies complementary. For it, the introduction of FTTP in any area and migration of many of its existing FWA customers to FTTP actually releases more capacity for FWA. So actually, I think they see it as a rolling synchronized choreography, not as a collision of 2 kinds of network. Their goal and the goal of Verizon and the others is to rest fixed market share away from cable operators who have been the biggest players in the market up to now. And FWA is a weapon they use in that battle. And in this respect, they're doing pretty well. So this is net adds for cable, fibre, fixed wireless access and DSL. Well, we can leave DSL to one side. It's obviously in rapid decline because it's obsolescent. But it's pretty clear that cable has shifted from net adds 2 or 3 years ago to net losses at the moment, and we expect that to continue. It's clear which technology is the winners and losers. And FWA and FTTP are both winning at churn in the U.S.A. Now this slide shows the measured downlink performance in the U.S.A. of fixed wireless services. Now U.S. operators, both fixed and mobile, are obliged to provide information about the actual performance of their networks. Now some don't actually market FWA on the basis of speed. T-Mobile doesn't. It just gives you these indicators. Verizon, well, you have to look quite hard to find an up-to indication, but it does provide them. So as a proportion of that up-to value, the variation in -- the typical variation in speeds that are actually achieved can vary down as far as 28% of the up-to speed. So an interesting other indication here is that T-Mobile has indicated that its median speed is 100 megabits a second. In other words, over half of its customers will actually be getting a peak time speed of under 100 megabits a second. Note that the higher speeds on the right are delivered over high band -- the ones for Verizon are delivered over high-band millimeter wave. This variance is not widely available. And I think it's quite clear that the sweet spot for fixed wireless access is not a high CapEx variance that tries, and according to these indicators, probably failed to be anything like fibre. The sweet spot for fixed wireless access is low cost and good enough for the time being. So what's the evidence that fibre is winning back from fixed wireless access? Well, an interesting example of that, is if we look at Finland now -- now Finland has always been an odd market, which is extremely mobile-centric. Supply and demand in Finnish telecom has historically been sort of a great outlier. It has huge mobile consumption, data consumption. The average consumption per capita in Finland on mobile networks is 73 gigabytes per month at the last count. And about 60% of that data traffic is fixed wireless access or other some non-smartphone traffic. However, in the last 2 years, I suppose, fibre investment, which has historically been extremely low, has belatedly picked up. And at the same time, data traffic on mobile networks has actually stopped growing in Finland. The figure for [indiscernible] on the left, 3Q 2024 was 0 growth in mobile year-on-year -- that's not quarter-on-quarter, that's year-on-year. And the data from the regulator, [ TrafficOn ], is backing that up as well. So at -- the latest information we have, the non-smartphone component of mobile-based traffic is actually in decline. And conversely, wireline broadband, and this is true wireline rather than -- a wired broadband access, data traffic is growing extremely fast. That last counter grew at 46%. So a final slide, where do we think traffic is heading? Basically, we expect fixed traffic growth rates to fall less rapidly than mobile in the long run. This is a schematized view to illustrate our basic thinking, which isn't any particular country, it's just a schematized view. But we think there will be likely be a crossover of growth rates on fixed and mobile at some point in this decade. And it's already happened in what we might see -- conventionally see as advanced markets in Korea, Japan, Finland. Now that could, of course, prolong for a while, the fallow capacity that fixed wireless access exploits. And for the time being, we don't necessarily forecast fixed traffic to grow particularly strongly in the next few years, although there may be local variations on that based on the time line of migration of linear TV to IP, the adoption of not so much of 4K TV sets, but actually, the way that, that adoption of equipment and the adoption of 4K -- paid for 4K services are actually -- eventually translate into a surge in traffic. But looking further out, we do expect that the most bandwidth hogging the most demanding applications that may appear or are likely to appear will be uniquely suited to indoor usage on FTTP, with advanced WiFi and not to mobile. Mobile may come as a further stage for augmented reality and things like that. But for virtual reality, we see that as an indoor application that is uniquely suited to the low latency and fibre-to-premises provide. And moreover, switching compute and rendering of VR content from bulky CPE headsets to the cloud will actually necessitate the kind of speed and latency characteristics that only fibre can supply. So I'll just wrap up and conclude that in the U.S.A., the very mobile operators that are pushing hardest on FWA and are getting all those net adds and FWA, treated essentially as a means rapidly to win customer share, particularly off a weakened and pretty vulnerable cable sector. It's becoming clearer that even in the U.S.A., challenger FWA is considered by those mobile operators as a staging post. Thank you.

So Rupert's presentation gives us an insight into what's happening elsewhere in the world, and we want to just note that these are indeed has views and Analysys Mason, not ours. We just asked to tell us what he was seeing in the space of 15 minutes to say. The recent trend in American mobile operators, either partnering, if not acquiring, fibre networks is something that we have been monitoring closely. There have been strong advocates of fixed wireless and deployed millimeter wave networks. So that shift that we're seeing in the U.S. now, as fibre is deployed further, added to the Polish and Finnish examples that Rupert talked to, really helped to validate the confidence that we already have in the future of fibre. Now perhaps to bring things back to a local context, I'm going to start now asking the Chorus team to bring our strategic pillars of leap to life. I'm going to start with Kurt Rodgers, our network strategy manager who's going to give you some insight on how we see both current and future data demand shaping up in New Zealand. Thank you again for the time. We'll have an opportunity for any specific questions.

Hi, everyone. I'm going to talk about data usage. What's been driving growth in the past what's going to continue driving growth in the future. And I'm also going to finish with a few technology issues that I think are really important for our consumers experience broadband in their home. Now if we look back 10 years ago, it's quite amazing to believe that the average monthly data usage per household only 44 gigabytes per month. So much has changed since then. Netflix, well -- and some of what's changed was predictable, but a lot of what changed was not predictable and came as a surprise. Netflix launched in 2015 and led the shift to streaming TV. Social media apps have transformed into video-sharing platforms, a global pandemic made working from home and back-to-back video calls the new norm. Who would have predicted that an online game would be hosting concerts and having launch events that would cause record traffic peaks on networks. So the growth rates have slowed down in recent years since the crazy 50% plus growth rates of last decade, and we're forecasting an average annual growth rate of 14% per annum over the next period, already 17% of our customers are using more than 1 terabyte a month, and we think that's going to be the average well before the end of this decade. Just one thing to note. Back then, our forecast is very much in line with what Rupert talked about on analysis, Mason, the one of our key benchmarks we use. If we look at data usage across different plan speeds, our major plan speeds, it's clear that high data usage households are pretty good at self-selecting the higher speed plans. Now a high data usage household is likely to be one that is a family with kids or adults with people working from home or even just tech-savvy millennials. We know from research that millennials in particular, value their time very highly and want things that save them time. If any of you have children, you will confirm children, school-age children are incredibly impatient. They press a button on their device, and they expect that to happen right now. So these younger generations, they get it, they get it that faster is better, they get it that fiber is better. Those are also the households that are early adopters were likely to be early adopters of the next generation of technology innovation. And so they are the households that today might be 1 terabyte households on Fiber Max and in the future will be multi-terabyte households on Hyperfibre. At the other end of the spectrum, there's plenty of households that are low data users, either on our 50 meg fiber plan or I would expect a lot on fixed wireless. Now they will typically be smaller households in the older age group demographic and probably still consuming the majority of their media through broadcast mechanisms. So they may not be early adopters of new technology, but they will eventually follow and become high data users over time, and I will come back and talk to that. One of the great things about fiber technology as we can literally dial up the speed and innovate around the speed plans. And Elaine will talk a little bit more about our plans in that space a bit later. So the New Zealand on Air, where are the audience survey paints a very good picture, I think, global video sharing platforms are the most popular with New Zealand audiences. YouTube, TikTok, Instagram, Facebook, man, they know how to maximize engagement and little features like pre-low video are some of the tools they use to support that engagement, and that's what drives bandwidth growth. Quickly behind them is the subscription video on-demand players. And also interestingly is BVOD, which stands for broadcaster video on demand, so basically TVNZ+ in New Zealand. That's actually the fastest-growing category in recent years. But the statistic and delayed survey, that surprised me the most is somehow 47% of adult New Zealanders are still watching linear broadcast TV on a daily basis. So clearly, the transition from linear to streaming has got a long way to go. This fascinates me. So I've done a bit of a model on the bottom left diagram where overlaid an annualized monthly data usage growth rate on our network with the uptake in minutes per day viewing time of Streaming TV and Linear TV. The correlation is clear and obvious when you think about it as Linear TV declines, Streaming TV goes up and so does data usage on our network. To really understand what's going to happen next. You need to look at the demographics on the top right-hand side the younger generation have already pretty much switched to streaming, the middle age group, I'm still in there. I'm trying to catch up with the kids on streaming. But it is that older 60-plus age group that has recently started shifting, but has still got a lot to go to shift their viewing habits. Now BVOD or broadcaster VOD is a lot more popular with those older age groups probably because you can watch the same TV shows on TVNZ+ that you can on linear broadcast. Another interesting fact in -- comment in the New Zealand On Air as they've seen a rapid increase in the number of people saying they have connected TVs in their home. So of course, a connected TV with a free view or TVNZ+ app means you can use the same remote control to play streaming that you did when you were using linear. And that just makes the transition for that less tech savvy older age group move their viewing habits from linear to streaming. So we've got this data from New Zealand On Air talking about a recent surge and streaming uptake by the older generation, particularly with BVOD, you add in the commentary from TVNZ in their annual report that they've seen a 25% year-on-year growth in streaming. And then you look at TVNZ's intent to exit digital terrestrial TV transition by 2030. That's really important for us to understand both from a network capacity perspective about what the completion of this linear to streaming transition is going to do for capacity on our network. But it's equally important to understand what this means for those households that we would currently call low data usage households. So the model on the right-hand side takes 200 gigabytes a month as just the baseline household data usage today, all the other things other than TV, you could say, then it simply adds on the data usage per hour of streaming TV. So a single person household watching 4 hours of TV a day, streaming instead of linear would automatically consume more than 500 gigabytes a month. No 4K here, just the TVNZ HD bit rates gives you over 500 gigabytes a month. A 2-person household may be empty nesters or retired couple, maybe they don't actually want to watch the same TV show in the evening all the time. One of the great things about streaming is it enables people to watch what they want. That household could easily consume several hundred gigabytes of data a month without really changing much about what they do, connected TV, same remote control. So you don't have to speculate about fencing new things to understand where our 14% compound annual growth bandwidth forecast comes from and why we think there's unlikely to be many low data usage households left in a few years because everyone watches TV. Now these households are going to need fiber, right? They're going to need the speed and the reliability of fiber and really, only the fiber network has the capacity to enable everyone to watch all of their TV all at the same time. Above and beyond that basic transition, a number of other things will add and drive bandwidth growth even more. Live sports streaming has got really popular in the U.S and Europe. And interestingly, Amazon and Netflix are getting amongst it and innovating. You'll see the article in the middle there, BT had their peak traffic surge when Amazon live streamed 6 Premier League games at the same time and a major file download, a game download happened at the same time as well. To incumbent content, sports holders are not standing still. In New Zealand, of course, that Sky they are making pretty good progress moving to streaming, making good progress rolling out their hybrid set-top boxes and streaming only pods modest but decent increases in the Sky Sports Now subscriptions, and they've announced they will be adding 4K quality to broadcast and streaming platforms next year. They've also got the rights to the 2027 Rugby World Cup. Now I mentioned that because it's in Australia. So we'll be watching it at peak time and I certainly hope to be able to watch it in 4K high frame rate when it comes. Overall, with 4K, I'm a bit disappointed by the progress that has made. I think Rupert mentioned it earlier. Pretty much everyone almost people have 4K TV sets in their home these days. And pretty much all content is produced in 4K, but domestic streamers don't yet offer 4K quality services and global streamers price it as a premium which doesn't do much for uptake in a cost of living crisis. So going forward, what's going to happen with 4K as the global economy gets better, if there is a change in the market that unlocks 4K for a mass market audience, that could cause -- or that would cause significant increase in data usage. Now we've modeled that to understand the scenario of that happening. And the 3 data points there. Firstly, is the status quo, the current situation, 600 gigabytes a month with not a lot of actual 4K streaming going on. The middle data point is if all streaming today was 4K because of pricing changes. The third one is if -- in addition to that, all the linear content that came over to streaming was also streamed in 4K. Now they are extreme scenarios our job is to -- well, my job is to model the ex scenarios, they are extreme scenario. So it's not going to happen overnight. But I think it does point to the direction of travel and a potential endpoint over time if 4K is really unlocked in the marketplace. Okay. So gaming. Game downloads, the file sizes keep getting bigger and they keep getting more frequent and I'll show you the latest one is here. I probably showed you a few of the latest download yesterday on our graph upstairs, and I'll show another graph tomorrow, but the other innovation that's happening with gaming as a different delivery model called game streaming, really solid growth there globally from a low base, and I expect to see both download and play and game streaming coexisting for many, many years to come driving demand in different ways, download and also streaming play. And then it gets to AI. Now we've not factored in any impact of AI into our monthly data usage forecast. It's definitely driving growth in the data center connectivity market, and Mike will talk about how we are taking advantage of that opportunity in his presentation. But it is just quite difficult to understand how that technology is going to land for consumers and business broadband customers. But I will give one thought to this. I've seen a lot of technologies like web pages, mobile phones and social media apps go through the same evolution process. They all started our text-based then they added images and photos, then they matured as video platforms focused on live streaming. I think we're seeing the same process occur with AI. The very first ChatGPT tool was text in, text out. Then it started adding in photos and images. Plenty of apps, AI apps these days that will take your photos and generate videos from that. But I think the real maturing of the technology for it to be truly useful is when the AI agent is able to see and engage in the real world in real time that will necessitate stereoscopic 360-degree live streaming video into the AI agent, right, so that it can -- and that needs to be ultra low latency. So it can engage in real time in the world. And as Rupert said, with virtual reality, most of the use cases are indoors. I think what I'm talking about is also indoor use cases factories, schools, hospitals, aged care facilities, when you have collaborative robots and other AI agents that are participating alongside us and need to be able to respond in real time. It's all about WiFi and fiber. So broadband is -- well, up until now, I've been talking about average monthly data usage as the metric. But actually, what's more important than that is what happens at peak time. Ewen is going to talk about why peak is more important than average when it comes to the way we capacity plan our network. But for the consumer, the speed plan, they get -- the plan they buy and the speed they get is actually much more important to understand what's happening at peak time rather than the average usage across the month. And there's a couple of -- and peak is growing way faster than average. So it's actually a bit of metric to look at. 21% growth rate is what we are looking at for peak traffic growth rate. There's some obvious things that are driving it. The tendency is for people to multiscreen, you've got one TV show streaming on your TV and you just can't help to get your phone out and scroll through your TikTok feed, don't you, Ari, I know. And also the number of devices and people's home is doubling every 5 years. And you would have seen the demos upstairs around the iPads and stuff. It's about sharing within the home, and it's very much concentrating into those busy hours in the evening where usage is also getting these over-the-top players doing these live events. A couple of ones I'm calling out there is Fortnite. That is the current thing that drives peaks on our network. There was another one yesterday, released at 4:00 in the afternoon, so it didn't cause a peak. Luckily, also, the new kid on the block, Netflix Live, the Tyson Pool boxing event, look at the size of that peak all afternoon. If that hadn't been time shifted a few hours, that would have again added to peak quite significantly. I think what you've seen in the BT live sports streaming and game downloading occurring at the same time. The frequency of these events is getting much more common. And I think what we're going to see is these starting to come together. Now we know fiber has the capacity to handle these events. Fiber has this amazing ability to keep going on and on. Whatever you throw at it in terms of demand, fiber keeps delivering the same speed, all of the time and the evidence from the [ MBNZ ] reports proves that fiber keeps delivering the same speed all the time. The contrast with wireless technology couldn't be more stark, it doesn't really have a speed. It just gives you whatever is available at the time. And if you saw from my demo upstairs, it fluctuates quite a lot. So my last slide here is in the home, there have been some constraints around consumers, getting the full experience of Fiber Max and Hyperfibre because WiFi has been a bottleneck. So we have had pretty decent in 2020, WiFi 6 hit the market and delivered a very respectable 40% increase and speed. But WiFi 7 coming out this year has absolutely blown me away with how awesome it is. It takes advantage of the new 6 gigahertz spectrum, which is fresh and clean and really high bandwidths. So it's able to deliver to an individual device around 3 gigabits a second of speed. It's also got a whole bunch of features that improves the way it delivers to multiple devices at the same time and lowest power consumption. We also been impressed on how quickly different price points have come out in the market. Often these things take a few years, but there's already some very competitively priced WiFi 7 capable routers in the market, all the new device technology like iPhone 16 are all WiFi 7 now. And one of our retail service providers is now offering WiFi 7 router with Hyperfibre. So I'll just leave you with that last thought, WiFi 7 is the real deal. It's definitely going to unlock the in-home networks to take advantage of a multi-gig experience. Thank you very much, everyone. [Presentation]

Well, welcome to Phase 2 of our new brand marketing campaign, which we call a VOID sharing. It launched last night, and it will be everywhere this week. We believe this gives Kiwis a compelling and relevant why to lock into or to come to fiber. We'll talk a little bit more later this morning around -- I guess we're afternoon now, aren't we, about a more assertive brand fiber positioning. But I believe that this advertisement really catches quite well that new market challenger position, taking the competition head on, on our road to 2030. I'm Elaine Campbell, and I'm the GM of the Access Value Stream. And I am delighted to be here with you today to talk to you about the L Lead and the new LEAP strategy. You've heard from Kurt immediately before me that fiber is the global gold standard for broadband technology. It provides superior capacity reliability and low latency. So whilst 80% uptake by 2030 is aspirational, it is also achievable with Chorus acquiring approximately 240,000 more connections over the next 6 years. We've got a clear pathway to get there are multiple acquisition poles available to us. Fiber is the only technology for the data growth that is coming. Kurt has explained what that growth looks like. And we have the future-proof products, and we are upping the ante and drawing attention to fixed wireless limitations. We've moved away from being an active wholesaler to being a market challenger. Working alongside our RSPs to go to market with them being smart, where we invest in our incentives or create offers, and that's all to get connections, because customer acquisition is our primary focus and it is the foundation of our Horizon 2 aspiration. Now some of the products that we will range to drive this fiber uptake will be lower average revenue per user than those in our current portfolio. But that enables us to reach customers not currently consuming fiber. We already have a significant Net Promoter Score lead to 5G fixed wireless and our focus on customer experience will maintain this. And we're growing our retention muscle to keep the customers that we've got. We will call out the superiority of our product like the advertisement just did, and this is supported by the greater role that the Commerce Commission is playing to level the playing field between competing broadband technologies. Now we have 3 strategic priorities to achieve our goal to get to 80% fiber uptake. The first is for us to maximize fiber uptake with a more nuanced and tailored approach to acquisition having a greater retention focus and underpinning that by our brand promotion. Our second priority is ensuring we've got the right products and propositions for those segments where we are currently underpenetrated or where we're not currently serving. The final priority is for us to win and the customer moments that matter, maintaining and expanding our NPS lead to 5G fixed wireless and tailoring our customer experiences. Now moving from 72% uptake today to 80% requires, as I said, around 240,000 more connections. We're going to get those over the next 6 years. Now I want to put that in a little bit of context for you. Over the past 3 years, we've averaged 70,000 connections growth per annum. Now I accept that these last 8% are going to be harder to get, but we still see significant addressable market polls. On the right hand of the slide, you can see that we -- it's right on the left, depending on what slide you're looking at, sorry, folks, will come from new builds and 110,000 from premises that we've already passed with fiber. Now where we are building to a new premises, we're closely aligning our acquisition approach to build that will make it easier for us to acquire them. And if I'm going to put this simply, if we don't believe that we can connect 80% of the premises and the build area, we will choose not to build it. We're improving our customer journey on the fiber frontier build. That's the 10,000 premises that we talked about last year with an ambitious aim at getting to 80% within 2 years of completion. Now this involves customers actively recording their connection expression of interest prior to us commencing build. And that enables us to immediately follow up to connect that customer post build completion. And Anna will talk a little bit more about that program later today. So the remaining 110,000 connections will come from our existing footprint. And we have confidence in the size and the convertibility of the connection pools available to us to drive customer acquisition. You can see in the waterfall that about 20,000 of these will come from copper to fiber as part of the remaining urban copper withdrawal. It's something that we've vastly experienced it. This leaves us with another approximately 90,000 connections to acquire. You can see the connection opportunity pools on the slide. Now some of them overlap that is the opportunities aren't cumulative, but they are significantly larger than the [ 110,000 ] that we need. Now I'm going to speak later to the opportunity in underpenetrated segments because this aligns really closely to our purpose that Mark spoke to in his remarks, and I want to spend a bit of time on that. So that takes us down to fixed wireless and HFC users. For us, that's the HFC 1 New Zealand network, which is in our Wellington fiber footprint. Now together, that represents a circa 220,000 acquisition pool for us. We've all said and listened this morning about the growing data consumption and increasing bandwidth demand, which will put significant pressure on fixed wireless capacity. We have already seen mobile network operators moving the high data use 4G fixed wireless customers back on to fiber to protect their total share of customer wallet. That is they want to prevent the churn risk on mobile. They need those customers to have a good broadband experience. Now whilst 5G may be new, fixed wireless is already highly penetrated in New Zealand. And would it not just be a question of time before that same thematic happened. Moving back to fiber, to manage capacity. Today, we're at circa 60% uptake in our UFB2, 2 build areas. And these premises provide a further sizable addressable pool of around 110,000 premises. Now demand for higher bandwidth broadband puts these areas uptake curves ahead of UFB 1 at the same time post build. And if I overlay that with the 220 unlet fiber boxes, now this is the unit that we install on the inside wall of the premises. It's called an optical network terminal, and from this point forward, I'm just going to call that an ONT. These present a material advantage to us as these premises are fiber ready. Now around 80,000 of those have yet to connect to our network. But past performance indicates that less than 2% of these will not connect 6 years post installation. So the remaining addresses have previously consumed fiber, and they present on back opportunities for us. We also have other channels for acquisition. 1.7 million users access our Chorus website per annum. And each month, around 50,000 users use the speed test and the broadband checker tools, which are available on our website. The broadband checker tool is a thing that you look at to see where the fiber is available at your address. And we're accelerating using these interactions when a customer is engaged with the category and engage with Chorus for acquisition and retention. I want to turn now to those underpenetrated segments I spoke about earlier. As we get closer to 80% uptake, we need to keep building propositions that will serve smaller and smaller customer groups. We see market pool opportunities of around 180,000 across businesses, large multi-dwelling units and holiday homes and across 2 priority segments, retirement villages and digitally excluded households that Mark referenced earlier. And we're changing our approach here with a view to further product and proposition development across Horizon 2. We already have work underway to enhance our SME portfolio to make it more attractive to businesses with consultation already complete, and the summer holidays provide us a great opportunity to target batch owners. We're also looking at large retirement villages working with retail providers to build suitable propositions and offers alongside them. We've had previous success with Sky at Summerset retirement villages, and we're looking to repeat this success with other RSPs in the new calendar year. And finally, in underpenetrated segments, I'm really pleased today to introduce you to our new digital equity proof of concept. As Mark said, our purpose at Chorus is central to everything that we do. Unleashing potential through connectivity, enabling better futures for [indiscernible]. Mark spoke to the number of Kiwis who are digitally excluded that equates to roughly 30,000 households in our fiber footprint. And we believe that we have a part to play in readdressing us. So that being the case, we will have a digital equity proof of concept and market this financial year, targeting those households who are a material hardship or who have very low income. This will see us working with social housing provider, Kainga Ora through FY '25 to reach these families and we have an ambition to grow connectivity through this cohort by 15,000 on Horizon 2. Mark spoke to our broader engagement on digital equity earlier, we know we can't solve this alone, but no one should be left behind in an increasingly digital economy. And therefore, we are seeking broader industry engagement to support us with this proof of concept. Now our partners are a mix of mobile network operators, bundlers and pure-play RSPs. And as you can see from the pie chart Chorus fiber market share is dominated currently by the 3 mobile network operators sitting at around 75%. Now these companies bring roughly 70% of our new to our fiber network connections. Now whilst they're smaller, and have a smaller share of 15%, the bundlers like Sky and tailors like Mercury and Contact are our fastest-growing RSPs, and they have significant underlying core product customer numbers for us to target with cross-sell. Now whilst we are always cognizant of our nondiscrimination obligations and being the former GC, none more so than me. We have pivoted our approach to working more closely with our RSPs to present offers to help them grow their fiber broadband in ways that better align to their own strategies. And we've had particular focus on cross-matching bundlers customer data with our own unlet premises data for fiber targeting of cross-sell. We are able to bring to the table our data analytic capabilities, and we work with them with their go-to-market approach. In addition to this, we have also run our baseline incentive program which wards RSPs for growing fiber. This program provides revenue certainty to them, and it makes it more attractive for them to range and promote fiber. We know that our base incentive program helped one.nz fund a fiber TV commercial. Now also new in FY '25 and to set us up for Horizon 2 is our retention strategy. In a market with intermodal competition, it's really important for Chorus to grow this muscle. We see circa 9% churn on a 4-week basis. However, 57% of these premises reconnect within 12 months, which drives a 4% churn outcome at 12 months. So for us to develop this strategy, we deepened our understanding on the triggers and drivers of fiber churn and in response adopted a test-and-learn approach with a couple of retention and win-back campaigns, you can see the campaign collateral on the screen. Be careful what you switch for directed to those fiber customers most likely to be targeted to MNOs to switch to fixed wireless. And as the grass really greener our targeted to customers who had disconnected from fiber and trying to win them back. It's going to take Chorus some time to mature our retention capability. So we need to experiment continually, fail fast and continue to build a healthy pipeline of initiatives so that we can improve our retention and win-back performance. We are very proud of our sizable average 35-point lead in NPS over 5G fixed wireless. What this means is that a customer is more likely to recommend fiber over 5G fixed wireless. Now gig customers have an astonishing 52-point lead. Now the likelihood to recommend is important given the significant preference that we as human beings have for word-of-mouth recommendation and the extent of word-of-mouth reach outlined on these slides. Now our goal is to increase our NPS lead, ensuring that those 1 point plus roughly million customers who use their fiber connection on a day-to-day basis, are fiber advocates and would recommend fiber. We're going to do this by delivering a program of work throughout Horizon 2 on those significant NPS drivers over which we, Chorus have the most control. The research that informs this work is close to completion. You can see on the screen that our CX also continues to improve through time. Now Intact CX which is where we do a connection at a premises that already has an ONT installed is currently at 7.9 out of 10. And this is an area of continuing focus for us because we have 225 roughly intact connection orders every year. It's our most frequent customer experience. Most of these are driven by house moves, and we've got further improvements planned for that customer journey enhancing -- sorry, harnessing data and analytics capability. We'll also continue to add value to fiber, reinforcing its value proposition. Got a few things underway here. First, you might be aware that our consultation with RSP closed on Friday on our second big fiber boost. This boost has us proposing to significantly increase the speed on both our Home Fibre Starter and mass market 300 megabits per second plans. We also sought feedback on -- with these plans being boosted whether a lower speed plan was required in the portfolio. We're targeting April 2025 for the Boost launch, but that subject was working through the feedback we've received and consultation. And secondly, we've long recognized that while fiber performance is strong, customer experience can nevertheless be impacted by issues within home network setups. So we're investigating the introduction of an in-home coverage check to address these types of performance issues, which are often caused by the in-home network or the quality of the router the customer is using. Thirdly, we are incredibly well positioned with our Hyperfibre product. We already have over 4,000 connections on Hyperfibre now and have done the work to make Hyperfibre 2, 4 and 8 gigabyte plans quicker to connect to across 30% of our network. As Kurt noted, we only see demand for data increasing and the Hyperfibre market is evolving. We're already seeing $100 price points in the market from challenger RSPs like 360 net for 2-gig Hyperfibre, including a WiFi 7 router. Now whilst Hyperfibre requires a new ONT to be installed, we have already successfully trialed a self-install option, which will save us the CapEx of a truck roll once this product is being consumed at scale. And finally, I want to end today where I started it. And that's to talk a little more about our bold shift to be more assertive educating the market the superiority of fiber and the limitations of Fixed Wireless. You saw that in our opening TV commercial. And on screen now, you can see an example of our fine print campaign, where we highlight the RSP's own fixed wireless terms and conditions to point out those limitations. We'll also be challenging fixed wireless providers to join the commission's measuring broadband New Zealand program. Mark spoke to that program in his opening remarks. Current reporting shows that 50% of Spark 5G users get speeds less than the peak time average speed advertised of 330 megabits per second and 13% get the equivalent of a 4G experience. So to ensure that consumers can make fully informed choices, we're seeking changes to the existing marketing guidelines asking for things like ensuring that specific performance information is provided to customers based on the location and the distance from the tower. That customers are told if their experience deteriorates and the other key performance metrics like upload and latency in addition to peak download time as also disclosed. And we're also going to advocate for the role that the commission has under Part 7 regarding retail transparency. Now that closes my section, and I would like to welcome both Mark and Kurt back on to the stage to take your questions.

Maybe a question for Elaine, just on the fiber boost. So I'm assuming they're those speed boost at the same price as the current wholesale prices. So is there a risk that you don't get a lot of people migrating up to 1 gig and then just go 500 megs is adequate for me. So you don't have that shift that we kind of talk about?

Yes. I mean, we're careful in terms of the gap that we've still left between the 500 and the gig and the retention benefits and the acquisition benefits that we see to come to the 500 into the Home Fibre Starter product will offset any potential down trade risk.

Yes, just quickly to Elaine as well. You talked about a lot of different opportunities on fixed wireless. I'm just curious if you're going down to the weeds and working with landlords. We found that quite a few SMEs even in the CBD, for instance, here in Auckland don't have access to fiber because of landlords finding it's too complicated to put it in there or just don't want to. Is that something you're considering on our little mini survey. We got to 1/3 of SMEs actually not having access to fiber?

Yes. The MDUs is an area where we are underpenetrated, and we are looking at the multitude of factors because there are different types of reasons depending on the landlord of the MDU, the type of tenant and the MDU, some of those are students, some of those MDUs are the retirement villages. So we need to really get to addressable customer segments within them. But to answer your question, yes, we're doing a lot of work in that space.

Yes. Just back to the fiber boost, just thinking also about the upspec of the Home Starter product. I mean, what sort of work have you done there? And have you sort of thought about what your response will be if you see too much trade down to that product given it has all the benefits, I guess, of fiber's reliability now the speeds got up to 100, maybe 80.

Yes. Arie, we think about our portfolio as a whole always when we are making changes to it. And the -- as I answered over here, we see that the potential acquisition benefits that we get from increasing that speed on both of those plans vastly outweigh any downgrade risk that might also exist, and there's quite a lot of elasticity in that.

Have you also thought about how much longer, like in your own planning as you look through the end of the decade, how much longer you'll necessarily maintain that price gap on the Home starter?

I think that question becomes a little more complex as we think about new products and propositions that we're also trying to introduce to target customers who don't currently have fiber at all. So our digital equity product as one of those, Arie. But I mean that is a product that we still want to be accessible to families and to perform well in the context that they use it.

Just last question. Just -- I mean, obviously, the new move to a sort of marketing can totally understand it from your perspective on that. I mean, obviously, you have given a lot of thought to this because you've essentially got 75% of your customers coming through the MNOs for whom there's a lot of gross margin dollars at stake in the fixed wireless basis. So can you just take us through any vulnerabilities you do think you're exposed to in terms of stepping up the approach there and how you're going to manage those?

Yes. The marketing that we're doing Arie is really about educating consumers around the different technologies, so this is really about enabling consumers to understand what is the difference between fixed wireless and fiber. So it's really geared about ensuring that the actual customers get the information that they need to be able to make the choices and pointing out the fundamental differences between the technologies. So we're not taking on any provider here is really just about making consumers aware of the differences between the technology choices that they have for them when they are selecting broadband.

Yes. So just on the churn that you are seeing and maybe also to Arie's question on the uptake you've seen to date on the fiber starter. Where are those? What's your insight into where those customers are coming from? What proportion of them roughly is coming down, shifting from a faster fiber and what is off-net, i.e., fixed wireless or just...

The vast majority of the customers on the Home Fibre Starter plan and new to fiber customers. There has been some, but not a great deal of trade down from the 300 to the Home Fibre Starter. It has provided us a really good defensive play and a cost of living crisis.

And maybe just related to the churn you're seeing of fiber, the 4% or 9% or whatever. Are these churn events? So people moving. Now one person in the room who's shifted from fiber to fixed wireless. But apart from that, do you have any insights into the customers you are seeing shifting away from fiber? What is the churn event driven by?

Many, many insights. Look, the tuck-up that you would have seen on screen at the moment, we see that there are 3 core drivers of that. We are now arranging products that directed towards a more mobile customer group. So our Home Fibre Starter product necessarily has a higher churn rate than our other products that makes sense, given the customer cohort at targets. And what I would say is as we try and target, for example, customers who are digitally excluded, we would expect to see higher churn rates there, too. So I think we need to kind of look through individual products. We've also know that we've got -- 2 MNOs is with very high fixed wireless uptake and a third MNO who is racing to catch up with them. So there has been a little bit of extra churn that we've seen there. And we are in a cost of living crisis. So there has been higher levels of economic churn, particularly in the SME segment. You will know the number of businesses who haven't managed to survive this particular cost of living crisis. So that bites us here too.

Yes. I mean clearly, your strategy about educating the user kind of understand that. But the defensive strategy from the other side might be, well, I don't need 330 megabits. And actually, we're only getting 75 and that's -- I'm not going to overpromise that, but that's enough for those users. I mean, have you got thought about strategies or what you think some of your distributors might do around that strategy or your marketing campaigns?

I have this one ago. Mark, if you got thoughts. Look, what the best, we need to work through all of the feedback that we've received, obviously, only closed on Friday close of business. But we have been signaling that we'd be boosting our products for some time. So this isn't kind of new news. And we think that the portfolio and its construction with the Home Fibre Starter with faster speed and then the 500 plan and then up to the gig, we're seeing that our portfolio needs to be more geared towards the high data usage that is coming, and that provides us with the advantage.

Yes. I'll just overlay too, Paul. I think if you look at the current customer mix and the acquisition, whilst there has been some trade down from the 300 into Home Fibre side of things, I think that's economy driven as well. We've seen just as many actually come back on into the 300 plan and then equally seeing the gig plan and above actually grow. So I think customers are actually seeing that benefit of having speed. Phil, you had question?

Yes. I suppose just following on from Paul's actually, I suppose, kind of what would we be determined as like adequate speed? Because obviously, fiber is positioning itself as a premium product at obviously a premium price, but some consumers might be happy with an adequate speed at a cheaper price?

But I think that's representative that there is a market for multiple broadband technologies. I think everyone's -- to Kurt's point on how they're actually being used, how demand has been used, the number of devices that are connected, how many people are being connected simultaneously. I think there is a market for multiple technologies.

Rupert is not here to answer this one, but New Zealand has got not very many people and a hell of a lot of capacity. So in terms of 5G networks filling up the level of fellow capacity that might exist. I mean have you done a country-by-country analysis of that about how far penetration might go in this country?

No. I mean it's really hard to determine that. I mean you're right, there's a lot of spectrum here and not many people. So I think that fellow capacity argument is a little bit like I talked to a 5G airplane. The seats are built, planes built, they're empty at the moment. Let's fill them up and worry about future demand and capacity at some point in the future. I think where we'd say and we'll consistently talk to raising that education and awareness about the superiority of fiber technology and how we see that evolving and usage evolving, that's what's key for us. If that future point rolls back off the same as 4G has with a 5G user that's using 5 seats on the plane, I think that's for us, we would see something that would happen again in the future.

I've got one online that will lead us nicely into the 15-minute break. So the question is, you mentioned the relationship with the commission is becoming more mature. Are you referring more to regulation on the fiber side? Or are you referring more to ComCom's view on copper withdrawal?

I think in broad terms, I think actually, the relationship has become a lot more constructive. It's maturing. I think as Chorus as we've rolled out. And equally, the commission have rolled out of the first regulatory period and now into the second. I think the conversations that we're having are very constructive. They're very rational. They're focused on what's best and sustainable for New Zealand in the future. Copper, in particular, I think, as I said earlier, the thematics have never been more positive. I think the commission have recognized through a review on property regulation, that's due out end of next year. I wouldn't be surprised if that happened earlier. I think the -- as I say, the thematics have never been more positive. For where we see fiber, I think our contention is that there is more competition here. We'd argue that we are overregulated from a fiber perspective and would like to see some of that change, probably most notably going to an ID reporting only. And we think that's feasible and where we should be. Okay. Thanks, everyone. We'll have another session for Q&A later. I think the plan is to have -- we're running slightly behind. We'll try to pick that up on the agenda after the break. But if we take -- maybe if we come back at 10:02 the hour, that work Bret -- where are we? Sorry, it's 15 minutes. So it 05:02 or 05:03. Everyone online will be back on. We'll just see a temporary screen. Thanks very much. [Break]

Okay. Welcome back, everybody. I hope you're enjoying the day. My name is Mike Shirley, and I'll be talking to you today about the expand pillar and our LEAP strategy. And firstly, it's great to be here. It's a privilege to have joined Chorus earlier this year with a mandate to lead the new operating model in the value stream -- at the value stream in the operating model. I have an extensive telco background. I came from -- previously came from Vector Fiber, where I spent 5 years running their business and led a transformation of their service construct and also build a customer portal and started to get some fiber connectivity into some of the new hyperscale centers, data centers that turned up here in Auckland. But I joined Chorus because I wanted to do something really big on a national scale and with the assets that we have, that was really attractive to me. The time is right for Chorus to establish the value stream, the infrastructure value stream. There's some addressable markets, which Chorus has been quite passive in to date, and I think there's real market opportunity there for us. Most notably, they are in the mobile backhaul or mobile infrastructure and the data center connectivity space. We've got a new vision. We've got a new dedicated -- sorry, dedicated resources with a new leadership team. And a lot of our focus this year has been analyzing the market and where our products and services can play because we want to capture some new revenues. And at the same time, we've been building a new sales culture and repositioning ourselves into the market because we realize there's a lot more competition. Over Horizon 2 of our LEAP strategy, we start off with some slight headwinds from an eroding legacy base, which I'll talk through shortly. But we do see further out our infrastructure revenues growing by as much as 25% into the order of -- towards the $180 million to $200 million mark. We can no longer rely on the new property development sector solely as our growth. We know that the peak of the New Zealand housing bubble has ended, and we've got to look for new market opportunities. And we've made the shift to actively explore adjacent market opportunities where we believe we have a right to play and we can add new value for our shareholders. So we'll talk a bit about more on that soon. But firstly, let's take a look at the tremendous assets that Chorus has. And this is what you need to know. We've got over 200,000 kilometers of fiber connecting 87% of all the homes and commercial buildings around the moto. You'll see from Ewen's presentation shortly that our network has diverse national paths capable of carrying up to 400 gigabits of traffic. We own over 600 exchanges, 212,000 poles. We connect over 2,700 cell sites and over 2,000 smart locations. And when you compare that to our nearest competitors, you'll quickly find we really do have the superior assets. So how are we looking at all this? And where do we see the 25% growth in our revenues coming from to get -- before we get to 2030? We're focused on three key areas. The first one is markets where we currently have proven expertise but we see essentially new opportunity. And a great example there is in mobile infrastructure and backhaul. A market opportunity that we've been quite passive in the past but we see ourselves taking a lot more of an assertive and active role in is the data center connectivity space and exploring new adjacent market opportunities that better utilize our property assets, like converting exchange space to create new opportunity like you saw at the Mount Eden Exchange this morning. We think that we have a great opportunity there to work with the data center market. And Neura, our recently launched IoT service that utilizes many of our poles. But before we dive into that, all those new opportunities, let's take a look at the size of the infrastructure portfolio. Today, it sits at around $155 million and we face the immediate challenge of $20 million of what we term legacy revenues needed to be migrated off our soon-to-be end-of-life regional Ethernet network. And that results in us retaining some of that revenue but we need to replace it. And not only that, we need to grow revenue. So a lot of those customers have moved to essentially networks that they've built over the last decade and also passive optical network new access products that are a lot cheaper than what they had been on previously. So we're looking for new poles of opportunity to not only fill that gap, but basically grow. And our work gives us confidence that we think we can grow to a range of around $180 million to $200 million by 2030. So let's take a look at where we see all that new revenue coming from. An existing market we currently have expertise and operate within is mobile infrastructure. And mobile operators face the challenge of 5G densification as basically the vast amounts of video streaming that Kiwis will watch in the future comes to be a reality. Kurt talked before about the evolution of technology from text to video and to AI. And so mobile operators will need to figure out where they place their micro cells and how they backhaul it back to their networks. Chorus is uniquely placed to be able to help mobile operators here and also the new telcos as they have committed new builds for their infrastructure. And we'll look at aerial deployment to reduce costs and better utilize our assets again, for example, poles. We're also exploring an option to solution the time synchronization issue faced by the mobile operators as they move from the prior 4G GPS services to 5G. And we've been trialing what we call precision timing option, which -- with these operators, and we're getting great interest from the industry. But the days of build and they will come are over, and as our Chairman, Mark talked before about, we'll be very disciplined around our future capital spend. So we need a commercial deal with one of the major mobile operators to make this a reality. New property development is something we have mastered over the last few years. And as you saw in the earlier slides, if you go back to 2022, we had record consenting volumes of 50,000, and that posed a major challenge for Chorus over the next year or 2. We had to meet all of that demand. And through that period, we had to streamline our processes. We had to build a new customer portal and that resulted in an increase in our NPS scores moving from around the low 6s to now being in the low 8s. However, we do see this revenue stream moderating back as the economy improves. We see some pressure coming on prices as new entrants have come into the market and developers also consider other technology options these days. Our smart locations connections have grown to over 2,000, and we have a steady pipeline of works. Around 3,000 existing copper connections over -- will be migrated over to fiber shortly as well. Let's start stepping into some of the activity that we've been doing to explore new market opportunity for Chorus. And our first opportunity is in the IoT space. And here, we see a really good example of the new Chorus in action being a lot more commercial and thinking how we can better utilize our assets. We think using a technology called LoRaWAN and our assets provides great opportunity for us. And we stood up a new brand called Neura. It's alternative technology to what the mobile operators use, which is NB-IoT. And we think what we have to offer over our assets is different and better than the competition, and we're focused on industry verticals like utilities to help them overcome some of their industry challenges. We see water and electricity as our immediate opportunities as those industries face massive challenges to ensure that their services remain affordable for Kiwis like [ UME ] into the future. We're close to signing some what we call proof of value contracts with some of the councils to help them understand the solution and how it can help them reduce their costs. We think that will naturally lead on to them starting to consume the service. And we'll keep you informed throughout 2025 as we take this to market through new channel partners who specialize working with these industries. And I think that's a bit of a key theme you're going to see during my presentation today is figuring out who the new right channels are to get to the end users and understand the markets they operate to see where we can help. Cloud connectivity is an emerging market that Chorus to date has been quite passive in. And we all know cloud migration and AI is driving exponential growth of fiber connectivity. It's an area that we've explored a lot, and we think it presents a really large opportunity for us, been trying to figure out where the medium- to long-term sort of major -- what the major data growth drivers are. And we think data centers is where we believe fiber providers like us need to be in the future. And today, New Zealand has around 53 data centers right across the country. In fact, 27 of them reside right here in Auckland. And the recent arrival of some of the large hyperscalers on our shores suggests that AI has arrived here at Aotearoa. AI is also new and evolving, which makes data center design complex, and these hyperscalers are innovating to enable flexibility and scale. That's what they're trying to figure out over around the globe as AI evolves. And whilst they're doing that, they're also trying to meet their sustainability goals. And we know that New Zealand and Australia lags what we're seeing in the U.S. by a good 2 to 3 years. And we think that AI training is likely to be separated out into new data centers and there's also a future likely trend where we'll see distributed data centers throughout geographic zones, meaning we see a future where there'll be a lot more data centers across New Zealand. And Chorus is well placed to service the data center market, and we want to work with all data center operators to explore creating an end-to-end connectivity solution and hopefully, with a portal. This along with exploring each center is the second opportunity that we're exploring. And we believe we can assist the emerging data center market by helping create edge center solutions around the regions. We've already established a presence like the one you saw in Mount Eden this morning. We have one in Tauranga. It's been very successful. We have one in Wellington and we have one in Christchurch. But we're not going to do this ourselves. And our new strategy does not involve us building data centers in the Tier 2 to 3 range. We simply want to better utilize our vast assets and enable data centers. So we're in the connectivity game. So we have been working with some new potential players who have come to our facilities and have looked at them and they think they're talking about spending their capital to basically build and operate the racks within them. And what's even better about that is that they have the right channel partners and connections into the end user market who want to migrate to a hybrid private and public cloud environment. So these customers obviously value having their private servers local and what we're trying to do is facilitate a solution where the channel partner can work with those customers to migrate to a private cloud presence locally and our exchanges that have been retrofitted, and they provide a solution that allows them to get to -- through a hybrid cloud environment to public cloud data centers in Auckland. And we believe that this is the best way and it's our best shot at scaling the service. So we're continuing to explore this opportunity, and we'll update you on progress. In the meantime, the team is actively continuing to focus on filling all those racks like you saw today at Mount Eden to fill the 4 data edge centers we have at the moment. Finally, and we've saved our third and most exciting opportunity to last. I said at the start of the presentation that I came to do something really big at Chorus. And we've been actively looking at large adjacent market opportunities that we can materially scale, okay? And our work in the emerging data center and AI landscape means that we now see a need to provide integrated international and domestic connectivity solutions. And we believe that trans-Tasman connectivity is a natural adjacency to our core domestic fiber network. So we've entered into an exclusive memorandum of understanding with Datagrid to explore demand for a trans-Tasman ring that leverages our extensive domestic road map, including building multiple new landing stations throughout New Zealand and Australia. We think the time is right for New Zealand to prepare for what we're starting to see in the United States. And this could provide our country with new infrastructure that won't just keep us connected to the rest of the world for decades to come, but importantly, will provide the South Island with the much needed diversity they require. Of course, this is all predicated on presales demand. So we're now starting a 12-month exploration for single-digit million investment. So why Chorus? Well, you heard earlier about Chorus' new purpose, unleashing potential through connectivity, enabling better futures for Aotearoa. And we are a neutral fiber provider, and this project is very aligned to our core business. And we can also see the intentions of some of the other parties now operating in the wholesale market in New Zealand and believe they would want to do something similar. So we think we owe it to our shareholders to explore this opportunity. We also see this as an enabler for our domestic data center solution strategy. And this is also incremental to the current plan to get to our infrastructure revenues into that range of $180 million to $200 million by 2030. So who's Datagrid and why DataGrid? Well, Remi Galasso is the Chairman of Datagrid. And previously, he founded and delivered the Hawaiki project, breaking the Southern Cross' dominance of the New Zealand to Australia to U.S.A. connectivity market. And he's very, very well respected. He's a technology entrepreneur, and he's really passionate about technology and helping that advance New Zealand. And he and his team are now focused on building an AI training center in Vicago. So what are the next steps? We will have checkpoints along our new journey. And we think it will take us around 12 months to really understand the demand for the capacity and what the presales appetite is. And our first checkpoint is us attending the upcoming PTC conference in Hawaii in January, along with the Datagrid team. But what I can tell you today is that initial discussions with potential customers is very encouraging. Again, this is why I came to Chorus. It's really exciting for a new value stream. And so to summarize, we hope you can see a different Chorus emerging from the establishment of this new value stream and one that's a lot more active in pursuing -- sorry, a lot more active in pursuing not just what we have in the core fiber, but also in adjacent markets. We think our growth aspirations are very achievable. And we think that we simply just need to prioritize our resources and focus on getting to the outcomes that I've laid out today. Now before I hand over to Ewen, we're going to take you through a quick video on how Chorus is helping the rural sector digitize their businesses. [Presentation]

I think that's a great example of how the confluence of technologies come together to help businesses reimagine how they do things and increase productivity. First in this instance, our ability to scale from 1 gig to 8 gig to 25 gig service enables a cherry farm to look at how they can leverage the likes of the hyperscalers coming online to remove that compute power off-site and look at how that scales as it's needed over the short period that they actually need it during the production time. So [indiscernible], I'm Ewen Powell, I'm the Chief Technology Officer here at Chorus. Kurt and Elaine have talked to you earlier around the increased growth, both in terms of the number of customers and in terms of the speed and usage that they're going to require. Mike's talked around the increased focus on the opportunities to leverage our core assets across the network. So I'm going to spend a little bit of time now just to give a better understanding of the breadth and reach of our networks in terms of the ongoing investment in it. The commission recently approved our RP2 expenditure proposal. So that validating our approach to the ongoing investment and reflecting the maturing of our asset management. So this gives us certainty around the medium-term allowances and also confidence in the long-run approach to supporting and upgrading our assets. You would have noted there were two areas of adjustments with the commission. First was around the level of investment and resilience. So that's finding the right balance between spend and customer benefit over time. And the second was around the belief about hyperfiber uptake. Obviously, we're early in the adoption curve and we're all learning in that. So we do see sustaining investment remaining in that $200 million to $240 million range through Horizon 2 and aim to give a bit more color to that over the next few minutes. As a technology guy, look, I was allowed one techy slide to calm my nerves, so bear with me here. But the intent of this is to give you an idea of the scale of the network and the architecture that supports taking traffic through our network. A number of you would have been to Mount Eden this morning, seen a vast array of yellow cables and blinky lights. So this is trying to put that into context and into the context of our wider network and how we think about investing in it. So we'll start down in the bottom right corner. So we've got 1.3 million ONTs sitting in people's houses. This is what connects to their WiFi router or directly into their equipment to provide broadband services. And that's paired through the network to an optical line terminator. And that's important because it's this relationship that delivers the broadband to the customers. And this is -- these are the 2 elements we upgrade as we upgrade service and speed to them. So as you move to 8 or 25 gig, these are the 2 bits of equipment that we need to invest in. In terms of scaling, so you would have seen this morning, so one port can support up to 16 customers. There's 16 ports in a card, there's 8 cards in a shelf. So that sort of goes to the building block nature of the network that we've got. So as growth arrives, we get to expand. So moving up the diagram, the transport nodes consolidate and move the traffic from the edges of our country through the network and deliver it to where the RSP partners want it delivered to. And that's where we start to see the greater resilience introduced into the network, both in terms of the exchange infrastructure, but probably more importantly, in terms of those fiber rings that connect customers. And that enables any break in those rings, the customer service to continue unimpeded, so it will be unnoticed. So how that shows up for customers. So through the fiber network, we expect an average of 1 fault per customer every 25 years. That's pretty impressive. So it's about a five-fold improvement over our copper network. And I think as we saw through Cyclone Gabrielle and the Auckland floods, it also takes us around half the time to restore those faults. To illustrate the upgradability of the network, so that transport network when we built it, it increased in multiples of 10 gigabits per second to move traffic around our network. And we recently -- we're now coming to the end of an upgrade cycle where we now move traffic in multiples of 100 gigabits per second around our network. And we aggregate that as we go further back into the network and our metro networks and move it at multiples of 400 gigabits per second around our network. I'll speak shortly about the asset lives, but suffice to say that there's a complex set of interdependencies driven by the life cycle of those assets, the capacity requirements and the technology advancements that occur. Moving back into the network, the element managers. So these are the control boxes that provide the configuration to the network. So this is what sends instructions. It says this end customer has a 1 gigabit per second service. It goes through -- one is an RSP and one wants that delivered to Mount Eden. So that manages the configuration. It also manages the in-life performance. So we measure that line every 5 minutes over its life cycle to understand its traffic performance as well as the performance of the fiber itself. And then we move back into the IT network. So this is the provisioning and assurance stacks. And here being a wholesaler, it's about making those -- making our services and capabilities transparent to RSPs and integrating into their processes as efficiently as possible. So we manage about 2 million transactions a month with RSPs through this and about 95% of those would be automated. So the building block nature of the network makes it easy to upgrade and expand the network with demand. But looking back on the transport network example there in terms of both the intensity of capital and the resources required to upgrade 1,000 nodes, you'll understand why we smooth the phasing in alignment with the demand growth. So these are multiyear programs with the offset driven either by geography or technology domain. So early in the replacement cycle, we focus on the highest areas of growth, then peak as we broaden the reach. And then the tail reflects the smaller and more geographically remote areas. And then we think about offsetting that with the other technology platforms to get that smoother capital across the period. Little bit of relief, you don't need to look at that picture anymore. In terms of asset management, Mike cross talked earlier around capital allocation framework to support the growth initiatives that Mike and Elaine talked to. And there's no less discipline as we talk through the sustaining CapEx required to keep the network current, meet traffic demand of both the existing and forecasted customer and manage the long-run health of our assets. To reiterate, our key drivers for investment remain connection growth, data growth and keeping our assets current and supported, enabling those growth opportunities. So we're managing the network for both -- for network performance as determined by price quality standard as well as the long-run asset health of those assets. And the regulatory regime supports a long-run view of investment driven by that database planning that we have. So in terms of the buckets of investment in here, so around 35% of our spend is on network electronics. So this is the breadth, reach and capacity to take traffic through our network. Around 40% of that sustaining investment relates to our physical assets. So this is the exchanges, the legacy fiber and the like and 24% -- 25% around the business processes and IT that supports that. Copper investment is included in the sustaining CapEx for those of you that have read PQP2 to see the difference. And the profile of this will change as we shut down the copper network. There's actually very little dedicated spend to copper over that period. But when you think about the investment allocations in some of our physical assets like exchanges, like some of the fiber cable that supports copper services over time, the profile of that allocation of that will change as we move into RP3. So while the investment in each of those categories may fluctuate over the period, we do see that remaining -- investment remaining consistent and steady within that $200 million to $240 million range. So largely, the life cycle investment is planned and predictable. The capacity investment is predictable and the expenditure follows demand and new capabilities such as hyperfiber, which is a little harder to predict during the early phases of their adoption. So just a little double-click quickly through those 3 categories. So there's 2 key drivers for capacity. So first is the speed of plans for customers. So it's ensuring that we can take that speed all the way through our network and manage that as service end-to-end through the network. Second is the volume of data, and Kurt talked quite a bit about this. So this is managing the aggregate of all of our customers' usage through the network and we need to design for the peak rather than that average traffic in our network. And we've seen that growing faster than the average. So the peak demand is continuing to grow around that 21% per annum. The quality standard requires us to maintain all of our links through our networks, the 6,000-odd links we manage at less than 90% utilization to ensure that congestion-free commitment that we have to customers. So this drives us to start expanding our network when we hit that 60% utilization threshold to take into account that peaking nature of traffic. Building block nature of our network does mean that it's relatively easy to expand that, whether it's through cards, whether it's through shelves or whether it's through migrating to new capabilities. Touched a little bit before. So network hardware has asset lives around that 5 to 10 years for the hardware. We do look to extend that through support arrangements and the pace of investment is actually primarily driven through capacity and new capability demand. So as I talked earlier, that enables us to smooth the investment and particularly the physical implementation of that. We see with each iteration of technology, the equipment brings more capacity and capability while having less power requirements. And Kurt talked to you this morning that the equivalent in terms of customers is it takes about 1 watt to support a fiber customer versus 10 watts for a copper customer. So while the network is really upgradable to support new customer speeds, there's less predictability, as I said, around hyperfiber demand across the period, but we're well placed to add capacity as that demand turns up. We currently have around 30% of our network is hyperfiber capable with an upgrade required at both ends in terms of that OLT and the network and that end customer ONT. We'd expect to see price erosion in that ONT space over Horizon 2 and alignment with other consumer electronics there. And I think Elaine touched before, we also want to simplify that in-home experience to save a truck roll when we do upgrade those customers. Physical network assets. So we inherited a large number of physical assets through demerger that predate UFB. This includes exchanges, legacy fiber and remote rural buildings and towers, and Drew will talk a little to this later. These have varying ages and conditions and operational requirements. So our focus is on the assets we're going to need in the long run and how do we invest in the maturity of those. Much of legacy fiber network continues to perform well, supporting both copper and fiber services across the country, and we monitor the condition of that fiber to look to replace it as it degrades. We continue to learn and evolve our condition-based models based on age, location and environmental conditions. Many of those legacy fiber routes are shared with Spark, and we have a shared interest in their ongoing performance and replacement. When we go to replace them, we do look to optimize how we replace those in terms of partnering. A good example of this was last year -- earlier this year, sorry, where we've replaced a strand of slotted core fiber around the Coromandel, and we've shared that with PowerCo to half the costs in there. We're anticipating around 574 kilometers of that fiber will be replaced during RP2. Spending on exchange infrastructure is a planned activity, and this does increase across Horizon 2 as we replace and upgrade environmental systems and strengthen buildings to meet council requirements. We also have a comprehensive test program for both our poles, pits and manholes to manage the health of these assets with a strong focus on health and safety in the field. There's a portion of investment that also follows third-party requirements, which is a little bit less predictable. So this is -- and a good example of this is a roadworks activity where we need to move our network to accommodate either local or regional transport requirements with roading authorities or we go underground with our network as local power authorities take power poles out of the environment. Final spend bucket, IT investment. So this is about 25% of our sustaining spend and is consistent across the period. Around half of that is around managing the life cycle of legacy capabilities. So core system is now 10 to 12 years old. There's an ongoing period of refreshment, both in terms of the software and the hardware associated with that. We do see an increasing move to cloud-based and Software-as-a-Service solutions. And while these remove investment in the underlying hardware, they do see an increase in the frequency of vendor-driven upgrades as these integrate across a number of systems embedded in our network. Remainder of the IT spend is split into two areas. One is obviously from an enterprise perspective, supporting our business to do business and the other is around product development. So this is Elaine talked earlier. So this is the product development aspect associated with taking those big fiber boosts, the new plans, the new pricing proposals to market. That all comes out of this bucket. Not immune to machine learning and AI. So we do see that playing a key role in operational processes at the moment to predict and optimize those processes as we scale. We continue to see AI being more increasingly embedded in the software solutions that are emerging. And we see the benefits of that arising in terms of employee experience, customer experience and that network management and optimization over time. Obviously, not alone in that. So thinking back to the Cherry Farm example, you can sort of see how AI becoming pervasive across industries, driving usage in the network, and we're really uniquely positioned in terms of our ability to scale in terms of capacity and speed through that. So in reflection, we've seen the benefits in maturing our asset management practice to be more data-driven in our decision-making and disciplined in our investment decision-making. So this is reflected in RP2 outcome, giving us confidence in our long-term planning. I'll now hand over to Julian, who's going to talk more around our future regulatory journey.

I hope that I don't lose my voice. I don't want to sound like I'm doing a bad RFK junior impersonation. I'm Julian Kersey, I'm our Chief Corporate and Regulatory Officer. I am going to talk about our regulatory outlook. Phil asked me at lunch time, RP2 is nearly done. What's next? It was a great question and the one that I'm hoping to answer today. So I'll give you an update on where we're positioned. Overall, we're well positioned, we think. Decisions on our second regulatory period, PQP2, provide us with certainty and stability. International benchmarking shows that we're doing really well on price, speed and coverage. We've got line of sight to copper deregulation to support our exit aspirations. There are significant opportunities ahead for simplification in the fiber space. And we're pushing the commission to do more in support of consumer transparency. So to PQP2, the final decision we expect to be issued next week. This is a culmination of 18 months of developing our expenditure proposal. As Ewen indicated, a lot of work from his team goes into that and a year-long process for the commission to work through its assessment. So these are big processes. We're really confident that the final decision will set us well for the coming years and provide the certainty and stability we need to deliver on our strategy. The key inputs for the final price path are the final expenditure allowances. These were released in August and were in line with our expectations. The commission approved $790 million OpEx over the period and $1.14 billion in CapEx, both nominal. Just as a reminder, if you are trying to do the math between what Ewen was talking about and what I'm talking about, these spend numbers are totals for that 4 calendar years to December 2028. So that's a slightly shorter time line than Horizon 2. And then the CapEx is total regulated fiber CapEx in our price quality areas, so a further tilt to that. It's also subject to wash up through the regulatory period. So they're not quite apples-for-apples comparisons. As the chart shows, our final allowances were significantly better than the draft allowances. We did a lot of work with the commission over that period between draft and final decisions to provide the evidence that they needed to approve those final allowances. And it's the right thing for the commission to be doing to be pushing us hard to make sure that our spending is both prudent and efficient. WACC is confirmed for PQP2 at 7.68%. So that's about 3% higher than PQP1. That's a big driver of what will be a higher maximum allowable revenue for PQP2. So with allowances settled, the remaining elements for next week's decisions that we're looking out for are how the maximum allowable revenues will be smoothed over the period to ensure that there is a smooth transition between RP1 and RP2 and that we're not having big washups into RP3. And the second thing we're looking out for the quality settings. So in May, we proposed to smooth our allowable revenues by tilting depreciation in some core assets, which the commission accepted. This smoothing has to be updated on the basis of our final allowances. So we're looking out for what that looks like. Our objective here is to ensure that the final price path remains above our projected revenues to incentivize growth and minimizes under recovery over the regulatory period to avoid large washouts. On quality settings, the key outstanding element is how the commission addresses provisioning. In the draft decision, it proposed regulating our provisioning. That was off the back of a post-COVID shortage of technicians, which meant that provisioning performance was not great a couple of years ago. We've shown the commission that we've had a step change over that time and our customer experience ratings are at an all-time high. So we don't think new regulation is needed and we'll be looking out for that when the decision comes out. We welcome the commission's pragmatism in choosing not to review anchor service regulations for this period. The current set of anchor services will remain in place. A review would have driven a lot of work and complexity in what is already a very complex and busy regulatory agenda. And we've already got every incentive, as Elaine showed earlier, to evolve our services to make sure they meet customers' needs. Overall, as Mark indicated, our relationship with the commission is maturing as we work together on the implementation of this regime. We've really appreciated the constructive engagement with the commission and acknowledge the work that goes in to land these big price path setting decisions. And as Ewen noted earlier, we're focusing on improving our asset management. This regime rewards mature asset management processes and this is an area we're investing in to build capability. We understand the commission's desire to see us investing in the right things at the right time and ensure we're maintaining our assets in the most efficient and cost-effective manner. So with PQP2 largely settled, we've got the opportunity to step back and look at where we sit within the global context and consider how the market has developed and how we're performing. As the industry evolved in New Zealand, regulatory debates focused a lot on international benchmarking, and we hear much less of that now, which is a sign that things are going well. For fixed line broadband, we compare well internationally on speed and price. We are at the OECD average for our 300 megabits per second service and cheaper than the OECD average for our gig service. That's particularly remarkable given what a large sparsely populated country we are and given that we have 87% coverage with fiber to the premises. In addition to looking at international benchmarking, we should be looking across the industry to sense check whether the balance of regulation is right. If we look at Chorus compared with other market participants, we see a real imbalance that needs to be addressed. The rise of alternative access technologies and the withdrawal of urban copper services means that some of the assumptions about technology that underpinned the 2015 telecommunications review no longer hold true. If we start with Chorus' regulatory constraints, there's an overlay of requirements arising from structural separation, which we share with the other fiber companies. Then we have price quality regulation, including anchor service requirements and geographically consistent pricing. On top of that, we have legacy TSO requirements in areas where we don't provide fiber and a 10% ownership cap, which dates back to before the more up-to-date overseas investment regime came into place in New Zealand. In contrast, other fiber companies with similar structural remedies arising from the UFB process don't have price quality regulation, but have the lighter touch information disclosure only. In contrast, again, the fixed wireless providers are vertically integrated, don't have any of the structural reporting, TSO or ownership requirements when operating in fixed line markets. Given these factors, we think that a rebalancing is required, and we see significant opportunities for simplification in both copper and fiber regulatory regimes, and I'll talk through those now after I have a... So our aim for Horizon 2 and our strategy is regulatory simplification, starting with copper. So the commission is required to review whether to deregulate copper services and make a recommendation to the minister by the end of 2025. That work is well underway and we're expecting a draft decision early next year. This builds on the commission's recent rural connectivity study, which found that 97% of rural connections have access to alternative connectivity. That's even when you exclude the near ubiquitous coverage of satellite. That shows that the market has moved on. Copper is no longer meeting consumers' needs. We don't have market power and the provision of copper services, and there's no case for continued regulation. In our view, the economic analysis clearly shows that a deregulation decision for copper is the only reasonable outcome. In parallel, we're engaging with ministers and officials on the need to review the TSO next year so that we can move into 2026 with certainty and coherent policy settings. Anna will speak to this in more detail, but in short, the TSO, the Telecommunication Service Obligation is an instrument from a different era and needs to be scrapped. We're working through a limited change to the TSOD to support the much-needed retirement of our customer multi-access radio or CMAR network, but this is a stop gap measure ahead of a more fulsome TSO review. Letting go of this outdated construct sets us up for better industry conversations on how we identify and support the small number of households that won't have access to affordable, modern fit-for-purpose technology. If we move on to fiber, we also think the regime needs to evolve significantly. The current regulatory framework has helped us move from the UFB contracts into price quality regulation without pricing shocks and has been successful in that regard. But the market and technology have evolved significantly since the act was passed in 2018. With PQP2 decisions done, we're encouraging the commission to step back, look at how the market is evolving and help plan its work in fiber regulation over the coming years. Taking the time to do this in early 2025 would help it to plan its work program and evolve the framework as it moves through PQP2. In process is underway, the commission is currently considering whether there are reasonable grounds to investigate fiber deregulation. A decision on this is due before Christmas, we think in the last week before Christmas. It's clear to us that a reasonable grounds exist now, though the commission may want to take some time to see how markets develop before it undertakes a full review. We've encouraged the commission to consider deregulation in 2026. By then, it will have better information on market developments, in particular, the growth of 5G network demand and the development of LEOSat services. We think there are strong grounds to move Chorus to information disclosure only. This would provide better flexibility, lower compliance costs and would still allow the commission to monitor our performance and step in if there are any concerns. Depending on the direction of lighter touch regulation, there are also opportunities through the important methodologies review in 2027 to consider ways to refine the framework further. While that's not our first preference as a framework, there are plenty of opportunities to streamline and simplify price quality regulation. For example, we don't need such complex rules for allocating costs between the copper and fiber businesses now that copper is such a small and shrinking part of Chorus. Finally, I'll turn to consumer transparency. To reiterate a point made by Elaine earlier, we invest a significant amount of time with the commission to drive and support fair competition through consumer transparency. Our current focus is on updating the marketing guidelines and supporting the commission to get all of the mobile operators to participate in the measuring broadband program because we see that as a key input into consumer transparency outcomes. Competition between fiber and 5G fixed wireless is a great thing, but it needs to be fair, and that means consumers need to be able to make fair comparisons. We'll continue to advocate for consumers to have full and accurate information to choose the right broadband product for them. Over the medium term, we'll be engaging with the commission's retail service quality work program and taking every opportunity to drive improvements to support our objectives. So in summary, subject to the final decision next week, we're comfortable with where PQP decisions are likely to land. This provides a strong platform for us to step back and consider how the regulatory framework can be simplified. Our key focus for calendar year 2025 will be on copper deregulation and TSO reform, and we'll be pushing the commission to keep a close eye on market evolution so it can build its fiber work program for the coming years. Our view is that information disclosure would be more proportionate given market developments, and that will be our key focus as we engage with the commission on fiber settings. At the same time, we'll remain a vocal supporter of greater transparency in the retail space. So I hope that answers your question, Phil. And with that, I'll hand to Anna and she can take you through our plans for copper retirement and our thoughts on fiber expansion.

Thanks, Julian. Good afternoon. I'm Anna Mitchell, the Executive General Manager for Fiber Frontier in Chorus. You're in the home stretch. Fiber Frontier is delivering the final pillar of our LEAP strategy, pioneer in all fiber network, and we are responsible for the end-to-end retirement of the copper network as well as realizing opportunities for Chorus-led commercial fiber expansion. So today, I'll outline how we're delivering on our ambition to retire the copper network by 2030. We've set a date to provide clarity and certainty -- both for us, but also for end users, stakeholders and government. I'll share our approach for copper retirement, how we'll deliver it and the sequencing and pacing we see over the coming 5 years. As Julian mentioned, the broadband market has shifted substantially over the past decade, particularly in rural New Zealand, and customers now have a range of superior affordable options. Keeping those customers and their needs at the heart of the work we do is essential to undertaking a balanced exit program, allowing them to transition to alternatives with confidence. As we act on our plan, we're aiming to stay free cash flow positive over the period, reducing costs in line with declining customer numbers. This requires tight discipline and an end-to-end approach, which has been enabled by our new operating model. We're also well underway with our fiber frontier build, as Elaine mentioned, I'll provide an update both on this and the wider opportunity that we see for New Zealand to continue to expand the fiber network in coming years as well as the role that Chorus could play in this. Successfully retiring the copper network is central to us executing on our new strategy to be a simplified all-fiber business with 80% uptake by 2030. Over the year, within Chorus, we have aligned all copper activity within a single end-to-end cross-functional team leading the work across the business to deliver on this strategy. This evolution of our approach to copper within Chorus reflects the tipping point we see. The value proposition from the copper network has shifted from being one of fiber acquisition to cost and asset optimization. We'll be looking to deliver on our plan through customer transition, optimizing our assets and undertaking decommissioning and disposal. But our first priority is customer transition activity. While we are well off our heights of nearly 1.8 million copper connections around a decade ago, achieving our exit date still requires 133,000 copper customers to make the switch by 2030, and we see likely a greater need to actively support those in later years. We're really confident that this is achievable, particularly in the context of us having already sent out 95,000 notices to copper customers in urban areas and shifting over 65,000 customers in just a couple of years. We're also going to be smarter about how we use our data to realize opportunities to realize cost savings and asset optimization opportunities, focusing on areas where forecast connections and network costs can help shape when and where we look to exit cabinets, exchanges and legacy technology. So what does it look like? So we want to act really deliberately to achieve a balanced exit. We've set a date. And as you can see, we have a plan. We're going to be collaborating on an ongoing basis with our retailer partners, government and stakeholders on delivering this plan. We'll also be reaching out directly to end users around how we can help them make the transition as we look to execute on these initiatives. So our roadmap outlines a number of key work streams. Firstly, in Chorus fiber areas, we remain focused on securing that last block of fiber connections that Elaine mentioned with all copper services to be notified for withdrawal within the next 6 months. Secondly, we're now approaching the point at which cost optimization will become a focus in local fiber company areas. And our activity there over the next few years will be focused around our ability to realize cabinet and exchange savings. We've already begun the exit of complex legacy equipment with our retirement of the customer multi-access radio, CMAR and Country Set systems. So these are some of the oldest and most poorly performing pieces of our network. As well as providing business simplification benefits, given the remote nature of where a lot of these services are provided, prioritizing these addresses for migration is also just the right thing to do. Next year, we also plan to give notice on legacy enterprise copper services. So these are business services provided on commercial terms. As we know, many of these will be to enterprise customers, and we want to provide enough notice so they can work with their RSP to move to an alternative. And finally, we'll be undertaking a staged rural exit over the coming years for residential rural users. This is initially taking a bit of an outside-in approach. So we're going to be focused particularly on poorly performing lines or where maintaining service is becoming increasingly difficult. And underpinning all of this activity will be a comprehensive program of education and engagement, working with stakeholders, RSP customers, the government and end user groups aimed at supporting confident migration to alternatives. So our roadmap and strategy are really enabled by the shift in the rural market in particular. So as Julian noted, the case for copper deregulation is now incredibly strong, and that's due in a large part to the significant shifts we've seen in the rural market over the last decade. So a few of us have shared the step today, but it's a key one to note. The Commerce Commission's own rural connectivity study showed that 97% of remaining rural copper customers are able to access at least one alternative terrestrial service, meaning that combined with satellite, nearly all remaining copper customers have multiple options to transition to. And that's not an accident, right? The government has spent $270 million on wireless and mobile coverage extensions over the past 8 years. And that's before you consider the allocation of the 5G network that they -- as 5G spectrum rather, which they allocated and return for accelerated regional rollout. So while wireless is obviously inferior to fiber, to date, the government has backed wireless as the solution for rural customers, resulting in near complete overbuild of our network. It's almost become a bit of a cliche to talk about Starlink as a game changer, but that $79 price point for the residential light product really is one. So when we're engaging with customers and we say that you can add a $10 voice over IP product and get broadband and a landline for less than $100 per month anywhere in New Zealand that is a really great way to convince customers that it's time to make the switch. And then finally, I wanted to discuss and expand a little bit on the telecommunication service obligation. So just to provide some context, this requires Chorus to provide a network input just to spark to support voice, dial-up internet and fax services. As you can see on the slide, the vast majority, so 73% of our remaining connections are not subject to the TSO, either because they're within a fiber area or because of the way the TSO footprint works. So the TSO applies to customers who took a residential telephone service from telecom on the 20th of December 2001. So it was a footprint frozen nearly 25 years ago. And it's also really important to note on the TSO that it's technology agnostic, so it doesn't require the service to be provided over the copper network. This legacy regulation, as Julian mentioned, well overdue for reform, and we're hopeful the government will look to review this in the coming year. So within this wider market context, customer decline is inevitable, and we need to make sure that we are reducing our costs in line with this. So as I said at the outset, we're seeking to stay free cash flow positive as we retire the copper network. And given the steady customer decline, this is requiring focused and deliberate management of costs within Chorus. Copper cabinets represent one of our most obvious realizable benefits once they are no longer providing copper services. We saved around $2,500 per annum per cabinet once it is shut down, made up of electricity and network maintenance savings. We're pretty well practiced at this now. We have emptied over 1,500 cabinets and powered down the vast majority of those. And these savings really start to add up. So we estimate over the period between FY '25 and FY '30, combined, we will save around $50 million purely from the Cabinet shutdown program. And as we shut down cabinets, the associated exchanges also provide another opportunity to realize benefits. So we now have over 100 exchanges in Chorus fiber areas with fewer than 50 connections. You may have seen one today. We recently had our first copper and fiber exchange, go fiber only and Birkdale, and we have a project underway to track the savings we see from copper retirement and net exchange. And then finally, in line with our accelerated exit, we obviously see copper CapEx steadily decline to 2030. So now I'd like to touch on a current project we have, which is focused on exiting some particularly poor performing technology within our network. So this is CMAR, one of my favorite acronym, people hear me say a lot. We have recently launched a proactive program to shut down this part of our network. So this began in September. CMAR and Country Set systems were rolled out 30, 40, some even 50 years ago and are a radio-based voice-only system that has been far surpassed by model alternatives like fixed wireless, mobile and low earth orbit satellite. Given their age, maintaining service has become increasingly challenging with spears harvested from decommissioned systems in order to be able to continue to repair them when they fail. Ewen talked about fiber company -- fiber customer is experiencing a fault once every 25 years. The failure rate on our CMAR systems is 15x higher than that. We began the retirement migration program for the residual customers in September, and we now have just 1,300 connections remaining or addresses rather. And as we undertake this work, we're focused on providing really good information to these customers, including having rural customer support specialists, which customers can call to talk through their options. Interestingly, what we found in the early part of this retirement is that many customers already had an alternative service, and they've kept their legacy service because they weren't sure that they could get a landline on an alternatives. So in these cases, being able to explain how Wi-Fi calling over mobile works or how to set up a third-party voice over IP service for a landline has enabled these consumers to make the switch. I also pictured one of our brochures there. So we are developing a range of brochures and collateral for rural customers focused on issues that are important to them. So this includes how to stay connected in a power outage. And importantly, busting some of the myths around copper, yes, it does require electricity. You'd be surprised how often we get that one. And so now shifting from one of the oldest parts of our network to one of the newest and update on the Fiber Frontier build. So this is the 10,000 premises we are building around New Zealand. This build is currently tracking to complete mid-2025 within budget. Despite the bulk of the build ramping up in the first half of next calendar year, we already have 10 build areas complete with over 1,000 premises passed. There are currently another 25 builds under construction across the country. And we've taken the 80% uptake really seriously on this build. As Mike said, the days of build it and they will come, are absolutely over within Chorus. So we're looking to secure connections as quickly as possible on the network, and we've done that by -- as Elaine alluded to running a really intensive expression of interest program. And so what we've seen is that well over 3,000 households, I think it's nearly 1/3 now, have preregistered their interest in getting fiber installed off the back of receiving our collateral. In the first 10 build areas, the expression of interest rate was close to 70%, giving us a fantastic start on achieving that 80% uptake. So what this process has allowed us to do is engage directly with consumers to ensure that we are converting interest to installations to connections. So we already have over 500 installations complete and there's a backlog that we're currently working through on those and over 300 paying connections. And so what our builders showing us is that where they can get it, customers value fiber. And we think this also speaks to the wider opportunity for New Zealand. So as many speakers before me have outlined, fiber is an unmatched technology, not just in terms of what it can do, but if the productivity benefits it unlocks. We've now seen 2 reports by both the New Zealand Institute of Economic Research and Deloitte, showing that there are multibillion dollar benefits to the New Zealand economy of taking fiber to 95% of New Zealanders, potentially $17 billion over the next decade. We've been clear that our purpose is unleashing potential through connectivity, enabling better futures for Aotearoa. And the vision within the government of the time to undertake the initial UFB program enabled that potential to be unleashed for those lucky enough to be on the right side of the digital divide. And our economy benefited to the tune of $31 billion off the back of that decision. We think there's a similarly strong case to take fiber even further. The government is currently establishing an infrastructure priorities pipeline of key projects for New Zealand, and we'll be urging them to consider, including fiber expansion as one of those opportunities. If you look at the numbers on the slide, the cost of building fiber are high but so are the benefits. If you consider that the government's roads of national significance pipeline has been estimated to cost north of $30 billion for less than 10% of that. You could see fiber rolled out to over 1,000 communities around New Zealand, delivering an economic boost to every single region in our country. To be clear, we see this as an opportunity for New Zealand rather than a commercial opportunity for Chorus. So our contribution towards any fiber expansion project wouldn't absolutely need to stack up commercially for us and meet our investment thresholds. Due to the more rural nature of these premises, the cost per address are higher. And while the economic benefits are significant, they go to the wider New Zealand economy rather than Chorus. And as such, any government funding arrangements would obviously need to reflect this. And with that, I would like to hand over to Drew Davies to take us through the financial outlook.

Good afternoon, everyone. I'm Drew Davies. And as Mark said, I've been here 6 weeks. I have -- this is some background. I have about 30 years of telecom experience, mostly in the U.S. with mobile network operators and lastly, as CFO of 2degrees. So that's where I've worked with some of you before. So -- but today, I'm going to summarize some of our key focus areas that we're doing at Chorus. Now this chart just gives a quick rundown. We're continuing to streamline our go-to-market capabilities and operations for all value streams. And supporting functions to align to our new and enhanced play to win objectives, which Mark spoke to earlier. There's a program of work. We have continuing right now, which is to focus on further simplification, automation and efficiency to realize the benefits of being a great network operator. You hear about we're exploring some several asset optimization opportunities in the years ahead. I'll provide some clarity on future copper retirement benefits in corporate depreciation through Horizon 2, which Anna kind of started up nicely. And I'll provide a summary of our core RAB outlook for PQP2. And then I'll conclude with our reminder of our capital management principles and discipline that drive our investment criteria and returns to shareholders. Okay. So Chorus is a very stable growth business. Just for clarity, I want to say that nothing I'm going to say today or what you've heard previously changes our previously released guidance for fiscal year '25. Our outlook on EBITDA, CapEx and dividends remains the same as listed on this page. Now in my role as COO, our focus in the near-term is getting Chorus future fit across the enterprise operationally. So we're hitting the ground running in Horizon 2. Now there are a number of activities underway to feed into this. First, bundling fiber products is one of the most effective methods of reducing churn for our retail service partners. And this is borne out with recent international announcements by mobile network operators that bundling fiber with their pay monthly mobility products leads to a 50 basis point reduction in their mobility churn. So that's a huge churn savings, whereas they did not call out the same churn benefit when they bundled mobility with wireless broadband. And one of our key partners that Mark spoke to earlier that Sky TV, they reported a 13% reduction in customer churn when they bundle fiber with their content services. Therefore, we're continually working with our RSPs and updating our incentives and our go-to-market processes from proposition development through to commercial launch to realize -- to ensure, it realizes the outcomes we plan to achieve for each value stream and our target customers. Now there were some recent examples is what Elaine talked to in the access channel proposed fiber boost, speeds and what we're working on for '25. And then the next month, we'll have copper and fiber pricing changes that flow through to the market in January. To support Mike and the enterprise and infrastructure value stream. We're updating our go-to-market capabilities required to achieve each of those opportunities that he's delivering. And then for the enterprise, our new operating model has been in place since February, following delivery of our refreshed strategy. And we're continuing our focus on further simplification, automation and efficiency within the company. There is a focused program in place across the remainder of fiscal year '25 to ensure the expected simplification and efficiencies are realized, which is a natural evolution in our journey to become a great network operator in Horizon 2. So copper cost outlook. As you heard from Anna, we're working hard collectively to extract cost efficiency on copper, given our intention to exit by fiscal year '30. The table summarizes some of the trends we expect to see against each line item for our fiscal year '24 after results of copper. Whereby in total, we had direct copper operating costs of $54 million and CapEx, $15 million net of contributions. Our plan means that during the next 5 years, we managed the reduction of direct copper costs such that we keep copper free cash flow positive through to 2030. Now we achieved this in a couple of ways. Copper CapEx, net of contributions is going to drop from $15 million last year and keep declining, as Anna talked to. Part of that change is driven like things like roadworks. Activity in our fiber area is no longer being attributed to copper. Copper OpEx, as the table shows, there are 4 main expense lines which generated $54 million of direct copper costs last year. The cumulative cabinet savings, Anna talked to earlier, fall within this total. We have a dedicated team led by Anna focused on achieving these savings and outcomes to 2030. In addition, we've informed you in the past that we've accelerated depreciation of copper assets for a few years now, and that's been a drag to our NPAT and as well as our retained earnings. To give you transparency on the outlook, this chart shows copper-related depreciation was just under $100 million in fiscal year '24, be approximately $90 million in this current fiscal year and then continues to decline quickly into 2027. Therefore, the drag on NPAT from accelerated copper depreciation ends in fiscal '27 based on our current plans. So we want to provide a little bit more detail on our asset portfolio, which Mike alluded to earlier. So this table summarizes a selection of assets in our portfolio, which we are actively evaluating, whether they are core for us in the long-term or other alternative uses, which may include selling some to other interested parties. Firstly, we have approximately 600 exchange buildings. Now Mike said earlier one alternate use that they could be an edge center or other colocation opportunities or alternatively, we may sell non-RAB exchanges as the copper is removed. Secondly, we have 1,100 high sites. They're used mainly for remote network connectivity and wireless colocation and they're located across a mix of areas, including some cities since it is a diverse portfolio in the high sites. They have a range of effective values in the future. Some of the sites might be of more value to alternate owners such as tower companies. Therefore, we will decide over time, either the sale of some of the high sites where possible or on exit upon retirement. Thirdly, we have 130,000 kilometers of copper cable in our network, of which approximately 4,000 kilometers is the thickest gauge so we're evaluating how to recycle this copper, where economically feasible over the next 3 to 7 years. Fourth, we have 212,000 poles across New Zealand. So we will evaluate if some are appropriate for 5G infill sites for tower companies or MNOs directly or any other alternate uses and ultimately, we will sell or exit some of the non-fiber areas in the non-fiber areas. Fifth, there are 14,700 cabinets nationally. As copper cabinets are further emptied, we can start to think about alternate uses in the future since they have fiber to the cabinet and can pair it up when necessary. As examples, in the U.K., Openreach and BT have been using them as EV charging stations and you're actually seeing that concept rolling out to other countries internationally. Lastly, we have 60,000 kilometers of duct, so we will evaluate if there are other users who could utilize some of the emptied ducts such as urban telco or utility companies given the high cost of digging urban areas. Overall, we have a significant portfolio of infrastructure assets, which we'll be evaluating best uses for Chorus or alternate owners in the next few years. I'm going to give you some more examples on some of those in the next few slides. So I mentioned before, we have 4,000 kilometers of large gauge copper cables within ducts that we estimate could be economically recycled based on current pricing. We're about to begin an initial trial in the second half of fiscal year '25 with a view to ramping that up in the next 3 to 7 years as a copper network is shut down. Now the trial will help us understand the complexity and actual cost of cable removal relative to copper pricing. At a high level, this 3- to 7-year program may generate between $30 million to $50 million of net proceeds at current copper pricing. As you may have heard from Mark earlier, Chorus is one of the larger property owners in New Zealand with a range of network sites across the country. At June 30, we have $375 million of land and buildings at net book value, which was just revalued a few years ago. The chart on the slide gives you a general sense of where the value sits by geographic area with roughly 1/4 outside of our fiber UFB areas. Now this includes $20 million of net book value for the high sites. I mentioned the $1,100 million. As copper services continue to reduce, we are assessing options for their sale and disposal, and we have an expression of interest in the market right now with some positive feedback to date on some of the sites. Another $75 million of book value for land -- book value for land and buildings are either in the local fiber company areas or in our copper-only areas, which we will evaluate on best future use for Chorus and any potential sales as copper is retired. This program will take time to complete, but we believe some of our asset portfolio have more accretive or strategic value to other owners. So given -- just a update on RAB and MAR outlook. As you've heard earlier, our business outlook has been derisked for the next 4 years with workable outcomes on our regulatory allowances. The draft MAR released in July this year started at just over $900 million and increases to over $1 billion by 2028. We now expect the final MAR to be released in the next few weeks and that will be updated for the final OpEx and CapEx allowances released in August. There are strong tailwinds lifting the MAR. So we propose a tilt in the depreciation rate on core fiber assets to shift approximately $300 million of depreciation into the next regulatory period. Those tailwinds include a WACC of 7.68%. That's up from 4.27% in PQP1, about $20 million of wash-ups, tax building block of $85 million that kicks in from 2028 introduction of CPI on MAR in year 1, which was excluded in PQP1. So therefore -- and we also expect copper shutdown in our fiber areas to add between $10 million to $20 million to our annual regulatory OpEx. And that will go into the wash-up in the next period. We expect the core RAB to grow through PQP2 to $5.2 billion, subject to the depreciation tilt. And this is my last slide. Most of you will be familiar with this one from our fiscal year '24 results, so I won't repeat the detail. We are a digital infrastructure company. And our focus is on maximizing long-term value for all of our stakeholders. A core pillar of our capital management framework is a sustainable, growing dividend. And our intention is to maintain that dividend growth at the rate of inflation. We're therefore very disciplined in our capital investment programs with minimum IRR hurdle rates required to be met, which also applied to all the various initiatives that we are exploring that you've heard about today. I wanted to end on this slide, as you've heard, a lot of work is underway across the enterprise, but we assure you we will continue to be very disciplined in our approach to investment decisions and optimization of our balance sheet and operations ahead. And on the final note, I'll ask my colleagues to come on stage to answer any questions you may have. Thank you.

Kick off, Matt?

Yes.

Great. I'll just start maybe just with a line of questioning on the copper and the free cash flow objective just under the current regulatory settings thinking pre-deregulation and with the TSO still in place, I mean, are you sort of seeing you're moving into negative free cash flow on sort of current trajectories in the next couple of years? Or have you got enough offsetting initiatives even within the existing regulatory framework. So status quo on regulatory to stay cash flow positive.

So the regulatory framework still provides a lot of flexibility for us to undertake rational commercial activity. And of course, we are expecting the draft decision from the commission early in the new year, and we're hopeful that they'll look to accelerate following that. So our focus here has been on undertaking a balanced exit. And when we're engaging with government, I think we should be able to find a way that enables us to continue to stay free cash flow positive over the Horizon 2.

So just perhaps just digging into that a little bit, just on the copper deregulation piece, what is it specifically that you're looking to get out of that process that will support your capacity to do that?

Having certainty around timing and phasing would be really useful. So when we talk to stakeholders, that's actually one of the things they value most highly is that we would undertake this in a kind of well-organized way. And if you look at what we've been able to do in urban areas, the systemic approach we're able to target cabinets and exchanges has allowed us both to realize savings, but also in a way that works for stakeholders and end consumers in particular where we would have choices would be around going a bit further in terms of working with some of our partners in rural areas where they too were looking to exit. But primarily working with government is around finding a balanced exit where everyone in the wider community knows what is happening and it's on a steady stream. And that's the best opportunity for us to have that decision to realize those cost savings.

I mean there is a bit of a mix, I think, just on what you answered there between what ComCom can support and what you need from government, I guess, are you looking for the ability to be freed up in terms of your pricing of copper through the phase out through to 2030? Or are you quite happy with the current pricing mechanisms?

We're not going to get into pricing at all. Really for us, our first objective is really having that certainty around the timing to be able to undertake the exit on our timeframe and on our accelerated timeframe to 2030.

So then just moving to the government piece. I mean, I guess, lots of companies have waited for government regulation and laws to change and that sort of thing. What are sort of the first gates that we should be looking for that, I guess, would suggest that the government is going to be open to reviewing the TSO and then also for people, I guess, with experience in that, that they're also willing to sort of, I guess, prioritize it so it doesn't happen the next legislative term and that sort of thing, given that you have got a 5-year timeframe.

Do you want to...

Yes, sure. I mean the first gate on that is an announcement that it's willing to do a TSO review. So we're engaging a lot on that, and we think there are some opportunities there. So it's about announcing that review and then getting on with the timeframe. So I think there is a recognition in government that you need to align deregulation with TSO. Otherwise, you could have confusion for consumers at the end of that process.

And then just lastly then, in terms of, I guess, for the government to, I guess, commit some of their political capital, are they looking for anything can return from you just in terms of what they would like to kick it off or in the first step, will it just be an announcement that they are actually willing to review it?

I think for us, we just want to see the first step that they're willing to review it. But in terms of political capital, the way we see it is having a framework where we can actually get better connectivity for rural consumers because they're not being well served by copper at the moment. And so it's -- so we don't see it as a sort of a negative thing where the government is having to put down kind of significant political capital.

Now I'll leave it from here.

Good. Thanks, Arie. Maybe if I just sort of overlays obviously, you obviously have a lot of discussions with government and with ComCom about this as well. Look, I think they're very receptive. I think equally, Anna talked to it earlier around the CMAR exit, that's establishing a precedent that we're able to go to market, raise education, create awareness, there are better alternatives available. And actually, the commission, as I said earlier, is already doing a good job in this space as well with their own reports showing 97% of premises outside fiber areas can already be covered by another technology. So I think the conversations have been very positive. We're also very mindful of not setting precedents that we would subsidize to step to satellite, for example, right? There's -- the TSO is an outdated construct. There are better alternatives available now. We need to help the market and help customers to actually understand it.

While you're on that, on that topic. I mean, you mentioned before about moving to an information disclosure regime only. I mean that's a much bigger step. How open do you think the Commence Commission will be to that?

I mean that is something that we have pushed. I think Julian did a great job of showing on that one slide that there's the regulatory balance seems to be a better skew, I think, towards us. We are seeing competition in the market. 5G is very different to 4G. I think the likelihood is the commission needs to see a bit more time on that and how that plays out probably over the next 12 months. The focus for us in the short-term at the moment is on copper and having a balanced exit from that with, as Anna said, as a set date.

On the growth you talked about with the infrastructure revenues, $155 million up to sort of $180 million, $200 million. A lot of that appears to be leveraging the current infrastructure assets. How much of that is split between sort of regulated assets and nonregulated? In other words, how much of that revenue will effectively fall within the MAR?

Yes. Great question. We project that probably I think sort of 50% to 60% of that would be -- not on the MAR so it would be commercial or adjacent revenues.

Yes. Most slide tape, yes, on balance, more nonregulated. And I think to be clear, too, and when we've looked at those options, there's 6 of them that we're exploring, I think in Mike's space for infrastructure, that last one for the potential for a Tasman ring, that is outside any numbers right now?

Yes, I was going to ask on just the color on the sort of investment size in that we're talking about.

Look, I mean, sort of Mike's trying to step through these, and this is early days. We've signed an MOU with DataGrid. We think there's a clear opportunity there. I think we've all talked in the past about adjacencies. As Chorus, we're not about to go and build data centers. We're not about to build solar farms, but that represents a potential adjacency that builds on to our core backbone for the domestic network. So the first step of that was securing exclusivity for us. As Mike said, the conversations so far with industry players have been very encouraging. The next step for that is the January conference and PTC conference in Hawaii that really get -- will really assess that sort of demand and future capacity and will set out the build requirements as well. So great to be able to step into that space and leverage the great network that we already have, but probably comes more in the half year results as an update. Aaron?

Yes. Just a couple of questions for me. So one of them is just, Mark, if you could -- just if we think forward to PQP3. And the MAR, if you achieve your 80% in your infrastructure adjacencies, et cetera, how should we think about MAR with potential WACC coming down a little bit, maybe not a lot. Your core RAB might be going up, but your total RAB probably not. How should we think about end wholesale prices? Do you think there's a -- sort of a scenario where you have to start to cut prices a little bit? And if so, how would you prioritize?

I might flip it the other way and say there might be more incentive to invest. But look, I think -- and if you were to follow the trend at the moment, PQP3, market maturing, regime maturing, let's assume that regulation doesn't change by then. Then I say actually, we'd see the MAR becoming more constrained, which then there's an incentive there and encouragement to actually invest what I say on a pricing basis. I think from a pricing perspective, as Elaine sort of talked to earlier as well, we've got some time to play out and see what's happening actually in the market. We're cognizant of the price differential between 5G, in particular, in fiber at the lower end. But equally, we obviously see that future forward forecast on demand and the superiority of fiber.

Okay. And then final question just on your bid to change the regulation quite materially for -- to just have information disclosures. So first of all, how are you pitching this as a benefit to the end consumer, which is quite sort of important building blocks of the Telecom Act and all of these things? And maybe secondly, are you potentially playing with fire a little bit in the sense that Spark and One starts to then build their own fiber networks in Auckland and Wellington, why not, if you're not properly regulated, they maybe feel like they should go out and build their own competing consumer networks.

Look, I mean, I don't -- we don't have overbuilt in New Zealand. I don't think that's just because of the regulatory framework. There's only 5 million of us here as well. So look, I don't see that we are playing with fire there personally. Look equally on the regulatory point, we'd like to see some movement. And as I said, the conversations with the commission have matured. They're a lot more collaborative, and we're thinking about the long-term sustainability of the industry in New Zealand. I just think it was a stark picture again, when you compare Chorus, LFCs wireless network on regulation, and it's heavily tipped to Chorus. And I think you've got a lot of archaic settings that were inherited post-demerger that it's time to actually look at it particularly when there's competition in the market. I think we did live with an ID reporting only.

Just one thing I'd add though to that contention that it's a huge regulatory change. I think the framework is specifically designed so that in regulatory periods, the commission is looking at the development of competition and can reduce or change the regulation. So we see it as more an evolution of the framework that was designed there in the first place. That's kind of the point of having that deregulation kind of review framework that the commission has to go through in order to check whether the settings are right through for every regulatory period.

And it's quite a burden to from a people perspective, time perspective to the amount of work that actually goes into preparing, submitting, then reviewing to then do the final determinations on a regulatory period is pretty significant. Arie, is there anyone else? Arie, it's all yours.

Yes. I mean, obviously, a pretty strong statement of intent from you guys today in terms of a change of direction on that. I guess one of the questions I had was just in terms of some of the initiatives you sort of outlined, I guess the one thing that's sort of missing in today's presentation, you talked to capital discipline, but there wasn't a capital allocation framework per se. Is that sort of a reflection that at this stage, particularly being early in that next Horizon that you're not looking or suggesting that will be significant or meaningful amounts of investment that you're looking to make outside of the sustaining CapEx. And it's also a reflection of going back perhaps Mark's comments that you do pretty high up in the hierarchy is a low-beta dividend paying stock with low growth? I'm just trying to sort of square away the absence of that capital allocation framework.

Yes. I mean I think our core objective for a growing and sustainable dividend is paramount. That hasn't changed. We know we've talked recently in the road shows about being comfortable to operate to our internal leverage to 4.75x, still have sufficient room to our 5x down driver. That does give us room to actually invest though. I think the options that we are exploring, some are more advanced than others, but they're still exploring options, right? Some of them are capital investments, some of them we see is cash generating as funding back into the business as well. But to be clear, through all of these, we're not saying there would be a substantive change in the capital management framework that we've already announced.

But in terms of return hurdles and risk and that sort of things...

So yes, I mean, I think from a -- as you would expect on a regulated basis, you could probably take the WACC plus as direction for nonregulated, you would expect a premium on that and where's higher risk, a further premium as well. There's a couple of those in the nonregulated space, particularly that opportunity with Tasman-ring that we're keen to play out, not only because I think it's an adjacency -- natural adjacency for us that leverages the great network that we've already got, but it's actually where you could see some of our competitors actually stepping into that space, too. And I think if it's not us, it's going to be somebody else. Paul?

We've had the 97% of people have an alternate use or alternate technology outside of -- well, in the rural area. If you got that much alternate use and you still got all these people on there. It's obviously not that compelling, that alternate provision?

I think a lot of it is -- sorry, Anna, you're probably better at answering this. I just -- I think it goes back again to the education and awareness. And there's a belief still that copper will always work. You don't need power to run copper what you do. And copper and water don't tend to mix too well together either in severe weather events. That's a dependency here on us being able to drive awareness and educate that better alternatives are available. You're right. There's still a bunch of people. They're migrating off in record numbers though. Part of that is to Starlink. There has been some migration, obviously, in the past to mobile providers or alternative WISP providers as well. I think there's a lot more that we're building momentum. We're working with other advocacy groups as well, like federated farmers as well as an example, just to try and raise the awareness. You could today use Starlink and have your own mobile number on a VoIP solution. And I think that's often that the last best in almost -- I can't get rid of my copper because I won't have a landline. And that's purely that education and awareness. And I think what we actually have to do as an industry as well as to step into the exit from these legacy technologies a lot better. The same goes for a mobile world when looking at exits from 3G, you're seeing the mess that's happening in Australia now, too, that happened with 2G and it will keep happening. We need to have government buy in an agreement, which for us is like setting that final date and working backwards as joint stakeholders, we don't want to leave anybody stranded. But at the same time, we've also been clear we're not going to get to a point where we're running a copper network that's uneconomic. So we actually -- it's not, I don't think, all on Chorus to have to try and convince everybody that they need to move. I think we need to take an industry-wide approach to it.

And my other question was you spent most of the day saying you've got a superior technology. But on the other hand, it should be deregulated. And I'm not sure why the regulator would think you've got the only network of a certain capacity and quality and therefore, it needs to be open slather for yourselves?

Yes, I don't think it's open slather, I think it's just trying to find a balance on regulation, as I say, it's an overly cumbersome framework. And we've got some archaic settings. It's like we want to ensure that perhaps some of that regulation actually disappears. One of those is an example we've talked about in the past is around the share cap ownership at 10%. There's not a rational reason that I can see that that's still required. We have the [ OIO ] in place as well. We have a regulated industry. But on top of that, we have a 10% share cap holding when none of our other peers have anything like that.

You mentioned a little while back that you're cognizant of the ongoing or expanding price gap between fiber and 5G fixed wireless. What would have to happen for you to act on that cognizance and stop being quite so aggressive on price increases each year.

Yes. Well, I mean, look, I mean, I'd look at what we're doing today, which is the ad that we showed that started last night. That's about us stepping in to try and raise awareness and education again about the differences in technology because the industry itself isn't doing that, right? So we are taking a role and trying to drive that awareness. So we're trying to do things that are positive in the first sense so that people know what they're actually getting and buying. In terms of your question, David, I think you'd have to see that there was a material churn correction that actually more customers were going over to 5G. Will it happen? Look, I think if you look at the market dynamics, New Zealand, as we know, is quite unique. We're already relatively highly penetrated on a benchmark basis for fixed wireless, but that's primarily 4G. And I think at the moment, you're naturally seeing 2 degrees as a mobile operator that has lower penetration of fixed wireless into their broadband base marketing pretty strongly. There's not too much movement from the other 2 operators at the moment. But that would be your principal driver. You'd have to be seeing that there's been a distinct shift in the market. Phil?

I mean, I was just wondering if you could give us a little bit more information around the MOU with DataGrid, the Trans-Tasman Ring. I'm not quite sure exactly what you're looking at trying to do there.

Yes. It's -- essentially, we are entering a period where we're testing the appetite for presales. So the idea is that we can essentially work together to assist the demand and understand what presales activity we can make to allow us to make a decision down the track as to whether we wanted to pursue together to a partnership.

But it's an exclusive MOU. We're essentially looking at over a 12-month period. There are several milestones. So the conference in Hawaii is a key milestone to be an assessment of future demand and therefore, capacity build because the ring itself is not just one fiber peer, how that actually shows up connecting from Melbourne and to McGill then up using our backbone and then back up to landing stations to Auckland and across to Sydney. There's different capacity requirements, and that would determine a different build factor as well. But that Hawaii conference is a key milestone to do an assessment for that. But you're seeing -- again, you'll see the same as we do every day or every other day, there is another announcement about data connectivity and connecting data centers, the evolution of AI, et cetera. So we think it would be remiss of us not to actually be looking at this as an opportunity.

Just [indiscernible] where you end up being a shareholder...

Could be -- look, I mean, it's the type of business where there are high margins traditionally on IRUs and particularly, the pre-ability through presales to help fund some of the build if they're as attractive as we think they might be. And there's a particularly unique opportunity to build this ring here, particularly with a number of the hyperscalers looking at New Zealand, lower ambient temperatures, high renewable synergy, then that's something that we would likely want to take a majority ownership and if not entire. But again, completely subject to stepping through some of these milestones, getting the assessment of future demand and capacity build.

I'll jump in with an online one around credit ratings agencies. Do the credit ratings agencies agree with the superior demand and technological traits of fiber over other forms of broadband? And if they do, what are the implications for Chorus' capital management framework?

Well, I think we've had a question like this or a discussion in the past about would there be a change in the credit rating agencies view on our down drivers and whether there was potential for that to extend. And that's, in essence, being linked to regulatory consistency. And ensuring that there was a high degree of predictability as the regime actually matures and also that there was a high degree of defense to fixed wireless substitution. I think we're saying, as we've talked through a number of times today that we're seeing a maturing relationship in regime. We'd expect that only to continue through PQP3. I think on the fixed wireless side, there's some movement that we're seeing through 2degrees in particular. But I think we've got a -- well -- S&P would likely want to see that play out over the next 12 months.

So just back to David's question. Maybe if you look at the chart that Rupert put up, there seem to be a correlation between speed of fiber rollout and fixed wireless share, whereas New Zealand is way ahead on fixed wireless and fiber rollout, which implies that there's a price gap that's created the opportunity for these guys.

In New Zealand?

In New Zealand.

Look, I think -- and I actually look at the U.S. like this as well, I think the primary driver behind fix wireless penetration in New Zealand was the advent of copper. And where you had copper and you could migrate to fiber, you would migrate to fiber. But actually, copper was so bad, particularly ADSL that 4G fixed wireless provided a step change. And back then, you paid a little bit more for a great experience. You could get 50 Mb/s of downlink, that's fantastic. But equally, over time, that network has become congested as more people have used it, usage patterns stage. And so it's a very different product now, which we're seeing in a similar cycle, perhaps different with the amount of spectrum of 5G of that happening as well. So I think that's the dynamic that's played out for New Zealand being so unique. And to look to give Spark credit, they've done very well in migrating those copper customers into fixed wireless. I think the U.S. is not dissimilar. You're just replacing copper with cable. Cable is now deteriorating. It's not a great service, so they actually had a high cost already. You're now seeing the advent of fiber and fixed wireless. But a lot of that fixed wireless uptake is also where there hasn't been fiber built out already. And that was one of the other pieces that you Rupert was calling out as well. You've got a significant amount of capital going into building fiber to the premise. Would that ultimately is likely to then be replacing fixed wireless. Okay. Thank you. Well, just for me to close out. I genuinely want to thank everyone again for making the time today with us particularly to those that have traveled. We hope you found it informative, insightful that you've got greater transparency on what our future looks like and where there's a step change in how we're now actively exploring new options that are adjacent to our core network. I also want to thank our speakers today. As I noted earlier, there's a lot that we can feel incredibly proud of through the UFB deployment, both as Chorus and as a nation. We've had several solid years of results. And again, especially in light of broader macro market downsides, we see that's the demonstration of fiber as resilience and predictability and lower risk both New Zealand and the global trends back Fiber as a essential digital infrastructure, as high-quality and differentiated connectivity. And it's the one that can scale. We've reset our strategy with the clarity and specificity of what it is that we're wanting to achieve and what success looks like in that future. And through our focus on purpose, we're also enabling better futures for Aotearoa at the same time. We're now moving rapidly to becoming an all-fiber business exiting from copper technologies completely. There are growth opportunities that are addressable for us, and there are efficiencies that are realizable and we see a regulatory environment that has provided greater clarity and stability. And finally, as we've said, fiber is the gold standard. There is no fiber like. You are either on it or you are not. Thanks again, everyone. Thanks for your time. Safe travels. Thank you.