Chorus Limited

Thank you for standing by and welcome to the Chorus FY26 results. All participants are in a listen-only mode. There will be a presentation followed by a question and answer session. If you would like to ask a question, you will need to press the start key followed by the number 1 on your telephone keypad. I would now like to hand the conference over to Mr Marco Ware, CEO. Please go ahead.

Good morning and welcome to the Chorus Results presentation for the 12 months end of 30 June 2026. I'm Mark Owek, Chief Executive and joining me is Drew Davies, our Chief Operating Officer. I'll begin today with an overview of our results for the FY26 year and cover the progress we're making on our strategy. Drew will cover the financials and FY27 guidance before I close out with our outlook and the role we see Corus playing as core infrastructure for New Zealand's rapidly evolving AI future. We characterise FY26 as strong financial and operational performance, reflecting the resilience of our business model, disciplined execution and focus on driving simplicity and efficiency as we transition to an all-fibre business. Fibre connections increased by 3% at over 1.1 million connections. Uptake continued to strengthen, reaching 75.9% with Fibre revenue growth of 6% during the year. EBITDA increased 3% to $726 million, underpinned by continued revenue growth and disciplined cost management. We delivered further efficiencies across the business and maintained tight control of discretionary spend, helping offset persistent inflationary pressure, particularly in non-tradable costs. Net profit improved significantly to $37 million and strong cash generation reinforced the quality of earnings with operating cash flow up 4% to $740 million. Gross capex was $375 million and while lower than FY25, this primarily reflected the timing and phasing of projects rather than any change in our commitment to maintaining and enhancing network quality. Reflecting our confidence in the business and consistent with our previously signalled The total FY26 dividend increased 4.3% to 60 cents per share. We're now firmly in Horizon 2 of our multi-phase strategy, a four-year program through to the end of FY29 focused on driving growth, simplicity and efficiency. Fibre uptake continues to progress during the year. Our opportunity still sits with around 400,000 addresses where fibre is available but not yet connected. We've taken further steps to simplify the business, streamlining our plan suite and introducing new retailer incentives, whilst retaining a strong debt profile and our BBB or equivalent credit rating. We're encouraged by the positive regulatory change and we're accelerating copper retirement, with fewer than 1,000 copper lines now remaining in fibre areas. In parallel, our copper recycling programme is fully operational and our multi-year property optimisation programme is underway. We're also building momentum across a number of infrastructure initiatives, with the launch and expansion of new products like Express Connect and Unified Transport, and the recent announcement of TimeSync, a precision timing service, all of which creating future growth opportunities. Finally, while maintaining our disciplined investment approach, we're evaluating several medium-term infrastructure opportunities, including a potential inter-island subsea cable and a trial for the deployment of distributed battery energy storage systems. While the financial results this year are important, they also reflect something deeper, how we're bringing our purpose to life and embedding it in the way we work. Our core purpose, unleashing potential through connectivity, enabling better futures for Aotearoa, resonates widely. During the year we clarified the purpose-led areas that matter most for Chorus. That work has shaped three interconnected pillars for connectivity, being future fit, resilient and equitable. Together these bring focus where Chorus' strengths align with the needs of our wider ecosystem and where we can create the most meaningful shared value. So we're continuing to deliver value beyond financial performance. One example is our focus on driving digital inclusion. with the launch of our Equity Fibre product. Fundamentally, we believe everyone deserves to benefit from the potential that connectivity unlocks. By combining affordable fibre access alongside community partners, we can help remove barriers to digital participation and create lasting benefits for New Zealanders. Feedback to date has been positive and we have over 3,000 connections on plan. With climate, we've reduced scope 1 and 2 emissions by 43% from our FY20 baseline. Almost all waste has been diverted from landfill, and electricity consumption has reduced by 7% compared with prior year, despite the growth in data traffic. Our people remain central to our success. Employee engagement remains strong, with a score of 8.4 out of 10, well within top quartile, and we continue to compare favourably with industry on safety performance. Turning now to performance across our four strategic lead pillars. First, in LEED, fibre uptake increased to 75.9%. Original UFB1 areas increased to 77.3%, and UFB2 areas at 67.5%, with major urban areas like Wellington and Dunedin now close to our 80% fibre uptake target. Encouragingly, as the right-hand chart shows, without the copper withdrawal tailwind of past, we're still maintaining new fibre connection growth. As we noted previously, we have two clear fibre growth pools, around 200,000 premises where an ONT is already installed and we can win the customer back to fibre, and another 200,000 brownfield and infill addresses where fibre has passed the premise but the ONT still needs to be installed. Turning to connection trends. With ongoing cost of living pressures, our home fibre starter plan continues to play an important role in keeping customers on fibre, while demand for higher speeds continue to grow. More than four out of five customers are now on a 500 megabit plan or faster. Hyperfibre continues to gain momentum as our premium growth platform, offering symmetrical plans from 2 to 8 gigabits, with around 54% of total addresses already network ready. we expect ongoing growth in high-speed services supported by increasing household data usage and emerging AI-driven requirements. Our medium-term ambition is to reach 80% address availability with 70,000 hyperfibre connections by 2030. In parallel, we continue to be buoyed by research highlighting the relative differences in broadband technology, with first-choice preference for fibre at 66% compared to 12% for fixed wireless. Data consumption continues to grow strongly, reinforcing the importance of high-capacity fibre infrastructure. Average monthly fibre usage reached 731GB per connection in June 2026, up 9% on prior year. Heavy usage is also increasing, with 21% of fibre customers now consuming more than 1TB of data per month, and 5% of those customers using over 2TB per month. Total network traffic grew nearly 10% on FY25, and I often like to put this in context. That increase alone is the equivalent of over 30,000 years of continuous HD video streaming. Speaking of streaming, our congratulations to TVNZ, successfully running the recent FIFA World Cup tournament predominantly online. This demonstrated delivery credibility and bodes well for the future with a retirement of legacy broadcast services. And this represents another growth opportunity for fibre uptake that we've highlighted as services increasingly move to IP-based delivery. During the tournament, we were pleased but unsurprised by the fibre network's performance, peaking at over 180,000 concurrent streams for the final, with each game in high resolution accounting for about five gigabytes of data. We continue to drive the expansion of fibre. Whilst new property development was subdued in FY26, we're still past 22,000 new lots, strengthening relationships with developers and renewing key partnership agreements. Beyond our core fibre network, we're continuing to expand and diversify our infrastructure portfolio. As I noted, we've launched several new products with Express Connect, Unified Transport, and more recently, TimeSync, the precision timing service. With the intent of expanding further through FY27, all are designed to simplify our offering and speed to market for customers. In mobile infrastructure, demand for fibre backhaul remains strong as operators continue investing in network densification and we see steady demand for rack space in our regional edge centres where access diversity is becoming more prevalent. Together these initiatives broaden our addressable market, increase utilisation of existing network assets and support sustainable long-term growth beyond traditional fibre connections. To our ADAPT pillar, we've continued to evolve our operating model and capabilities. In Q4, Matt Bolton was appointed as Executive GM for Infrastructure, further strengthening our leadership team. In Regulation, we've made a material step forward. The final report from the Telco Sector Review highlighted opportunities to simplify legacy record tree settings with the prior shareholder caps to be removed. This is an outcome we've been advocating for over some time and removes an unnecessary layer of complexity. There are still formal steps to work through, including seeking shareholder approval at our annual shareholder meeting later this year. We're also seeing progress in copper services when we continue to work with government and industry stakeholders to establish a clear and efficient pathway for retiring copper services in areas where fibre is not available. This obviously has a benefit to us, but equally provides certainty to the market and to customers. And finally to our pioneer pillar. Copper to fibre transition is now largely complete across New Zealand's fibre footprint, with fewer than 1,000 copper connections remaining to migrate. A total of 48,000 copper lines disconnected in the year, leaving roughly 44,000 services, nearly all in areas where fibre is not available. Given the rate of decline, we announced earlier this year that we would bring forward the estimated date of the copper network retirement to the end of 2028. The right-hand chart continues to show the efficiency gains from retirement with a $7 million reduction in reactive fault spend this year. Progress continues on a number of other initiatives to highlight two. Copper recycling has transitioned from a successful trial to a scaled operational program, contributing $4 million in EBITDA for the year. With metals pricing at historic highs, our estimates for cumulative returns are now in the $50 to $70 million range from where we started the program out to 2030. We're also progressing our property optimization program. If the copper network is retired, the focus is not only on value realization, but also on reducing future operating costs and avoiding unnecessary capital expenditure. I'll now hand over to Drew to take us through the financials.

Thank you, Mark, and kia ora, everyone. Overall, we delivered a strong set of financial results. Looking firstly at our income statement, which aligns to the IFRS 18 standard presentation, EBIT was $726 million, in line with the upper end of guidance and ahead of FY25 by $21 million. For operating expenses, which declined by $6 million from the prior year, we made cost savings from the changed operating model, incurred lower consulting costs, and reduced copper costs. That helped us absorb inflation in a number of cost lines. Accelerated depreciation on our copper assets in chorus UFB areas occurred in the prior period, resulting in lower depreciation and amortization in FY26 of $439 million. Net finance expense was $5 million higher year on year. While our weighted average interest rate on debt reduced to 4.95%, we repaid the majority of our Euro 300 million notes early with 9 million of settlement costs. Income tax expense was up 15 million from FY25, primarily driven by higher profits. The FY26 effective tax rate was 46% versus 81% in FY25, and higher than the statutory rate of 28%, mainly due to permanent differences arising from the tax treatment of the grants received from the Crown project-related funding. As a result, we recorded $37 million of net profit after tax for the year, compared to $4 million in FY25. Looking in more detail at our revenue categories, total fiber broadband revenues were up 6%, or $47 million from FY25, driven by fiber connections up 32,000 lines, along with an approximate 2% increase in ARPU to end at $59.51 for the year. With total copper connections down 48,000, or 52%, This resulted in combined copper broadband, voice and data revenues being down $34 million or 45% lower annually as we continue to execute our multi-year copper exit strategy. Field service revenues were up slightly with higher brownfields projects and roadworks and was partly offset by lower MPD revenue given the lower volume of development activity across New Zealand and FY26. Other revenues were stable annually and included approximately a $4 million net gain from copper cable recycling sales as activity started to ramp up in the second half. In the prior year, $3 million was from that trial undertaken. Total operating expenses were $303 million for the year and were $6 million or 2% lower than the prior period. We continue to drive strong cost management disciplines to offset the persistent inflationary pressures, mainly from non-tradables, such as rent, rates, and electricity lines costs. Labor costs were $81 million, down approximately 5% annually as a result of a new operating model. The lower capitalization rate of 42% was mainly from fewer fiber footprint expansion projects. Network maintenance costs were $11 million lower year on year. The key driver was lower copper fault volumes to premises as copper connections continued to decline, resulting in a 23% reduction in truck rolls. As we noted at the half year, Second half network maintenance costs did not decline as much as prior periods, as contractual CPI increases occurred, along with a seasonal increase in weather-related faults, which impact network-related fault volumes, especially in more rural areas. Other network costs were up $9 million, higher than FY25. This was mainly due to the higher engineering activity as a result of weather events and higher payments to service companies from better service levels. We also saw timing differences on project spend annually, including the 1F copper cabinet shutdown costs we incurred to power down each cabinet. While electricity consumption declined annually by approximately 7%, electricity expense was up $2 million due to higher lines charges. Consultants' expense was $4 million lower with spend relating to specific investments to explore potential new revenue opportunities. Meanwhile, we focus on lowering discretionary spends, which helps reduce other expenses by $5 million. Moving now to CapEx, gross CapEx for the year was $375 million, down $35 million from the prior year, and in line with the bottom end of the guidance range. Within gross CapEx, $205 million was sustaining CapEx, and $170 million was for growth. Gross CapEx was supported by $41 million of customer contributions for roadworks, new property development, and rural broadband upgrades. As signaled previously and as noted in the chart, the half-year phasing shows total second half CapEx was in line with the prior year second half. This included phasing of large national fiber bill projects underway, major network property refurbishment projects, and large IT project deliveries. This slide shows CapEx using regulated categories for the fiber regulated asset base, RAB. with the tables noting FY26 allocations, which are subject to audit at the end of the calendar year. CapEx attributable to investing in the RAB, which excludes capital contributions, is estimated to be about $297 million for the year. For the non-RAB CapEx, Copper CapEx was $6 million down annually and was mainly third-party funded. As reported in our information disclosure update in May, total RAB increased by $101 million over the 25 years calendar year to $6 billion, with core RAB increasing to $5.1 billion, up $221 million, partly offset by the financial loss asset declining by $130 million to $862 million as the flood appreciates further. Our net debt as of June 30 was $3.2 billion, up $72 million from the prior year, primarily as a result of issuing $400 million in Euronotes in November. Proceeds were used to repay €243 million of the EMTN 300 notes due in December 26, along with paying down entirely the revolving credit facility. Moody's rates chorus as BAA2 stable, with a threshold of 5.25 times debt to EBITDA, which we are currently at approximately 4.75 times. S&P rating is BBB positive outlook, with a threshold of 9% funds from operations to debt ratio, which we are currently well above at 17.2%. The table on the slide provides our bank covenant calculation under the revolving credit facility, and we are currently at 4.37 times. Moody's rating trigger of 5.25 times debt to EBITDA is the focus of our capital management policy. The board considers that a credit rating of at least triple D, or equivalent credit rating, is appropriate for a company such as Corus. It intends to maintain capital management and financial policies consistent with these credit ratings. Lastly, about 65% of our interest rate exposure is fixed for the next three years. On August 7th, the New Zealand government announced that it agreed to the sale of the securities NIF held in course to a select group of domestic and international institutional investors with settlement recurring by the end of August 2026. For reference, the key terms of the securities are set out in the left-hand side of the slide, and the face value of the combined securities is $1.16 billion. Coarse's obligations remain the same as pre-sale, but those obligations will now be owed to a number of parties and not just NIFs. From a ratings agency perspective, we expect S&P may treat the $683 million equity securities as debt rather than equity, which will increase our calculated leverage per S&P towards 5.5 times debt to EBITDA.

Meanwhile, we believe Moody's will maintain the status quo with their equity attribution of 50% to debt and 50% to equity.

This year, we adopted the fair value approach for our network assets. We completed our first independent valuation of these assets. This resulted in a $983 million uplift in asset values and a $708 million increase in equity through the asset revaluation reserve net of deferred tax. Turning now to the year ahead, FY27 will be transition year for the copper business. We expect copper connections revenue in this year to be in the high teens of millions of dollars, reflecting the ongoing decline of copper customers in non-UEF areas. At the same time, net copper recycling gains are expected to be in the low teens of millions of dollars, supported by the continued retirement of legacy infrastructure. We are also seeing a continued reduction in copper maintenance costs as the network footprint shrinks. There will be a further step down in copper depreciation in FY27, as illustrated in this chart, and we expect copper assets to be fully depreciated by 2028. Finally, we're progressing plans to exit high-cost sites and exchanges that are no longer required in a fiber-first environment, with a further update anticipated at the half-year 27 result in February. Overall, the copper business is becoming smaller, simpler, and less capital-intensive, while the benefits of lower depreciation and reduced operating costs support the transition to a fully fiber-focused network over the next few years. Finally, on dividend and guidance for the year ahead. The Board has approved a final dividend of $0.36 per share, unimputed, to be paid in October. This brings the total dividend for the fiscal year 26 to $0.60 per share. Noting our adoption of IFRS 18 means that our net cash flows marketing activities now exclude net interest. In the table, we show how we arrive at our free cash flows for capital allocation. For the fiscal year 27, year ahead, our EBITDA guidance range is $730 million to $760 million. For total CapEx, Guidance is $375 million to $415 million, and sustaining capex is between $195 million to $215 million, remaining the same for both as in the prior year. For dividends, we are guiding to a minimum of $0.62 per share, partially imputed. At $0.62 per share, this would be an increase of 3.3% over fiscal year 26 and maintains our policy of a growing dividend in real terms. Overall, we continue to track well, and we're pleased with the progress we are making in the early phase of our strategic objectives for Horizon 2 through fiscal year 29. I'll now hand back to Mark to run through the outlook.

Thank you, Drew. Looking to our outlook, thematically, we see data centers and AI creating the next major wave of demand for network connectivity. These long-term demand drivers continue to support fiber growth opportunities. While AI isn't yet a significant contributor to traffic volumes in New Zealand, the direction of travel is clear. We're seeing growing investment in local data centre capacity, increasing use of cloud-based AI applications, and we forecast the material shift in upload-intensive data traffic. Combined with ongoing growth in streaming quality and the number of connected devices, these trends support a sustained increase in bandwidth demand over time. Importantly, fibre is the only access technology with a proven roadmap to multi-gigabit plans, defined by low latency and symmetrical speeds, positioning Chorus well for the next generation of digital demand. The scaling of AI requires four key infrastructure components, land, power, cooling and fibre. While the first three are often spoken about, fibre is the connecting enabler as a digital highway. The announcements for major data centre developments for Makarewa and Stratford are a clear signal that this is no longer a hypothetical scenario. Large-scale computing infrastructure is being planned and built here, bringing significant new requirements for power, connectivity and network capacity, with estimates forecasting the quadrupling of capacity over the next decade. The Corus fibre network gives us the ability to move enormous amounts of data at scale, with the resilience, speed latency and capacity to grow as demand grows. And unlike compute capacity, which can be added relatively quickly, building new fibre routes takes time, capital and access to infrastructure corridors. Thematically, as this evolves, there is a clear opportunity and advantage for Corus. A strong fibre footprint, one with over 200,000 kilometres of existing fibre, is a strategic asset that is very difficult to replicate. Our expectations of network speed keep changing, and it's worth remembering just how quickly that occurs. There was a time when 56 kilobits per second was standard, and we had to accept that down or uploading a file could take hours, because that's simply what the technology allowed. Fiber changed the equation. Now we're moving into the next phase, where we see multi-gigabit fiber becoming mainstream. As users, when we have more capacity, we find new things to do with it. higher quality video, cloud applications, connected devices, massive file transfers, and now AI. What seemed like more capacity yesterday becomes the baseline for tomorrow. As the table shows, a one gigabyte file that could take over 40 hours to upload over a dial-up connection can now happen in around four seconds over a two gigabit fiber connection. Even with alternate technologies today, that might take two and a half minutes or more on a fixed wireless or Leosat link. On fibre, that's not just the faster connection. It truly changes what is practical and repeatable. Again, noting where Corus has an advantage through coverage and availability of high capacity fibre. Not just giving people more speed, but creating the headroom for the next generation of applications, businesses and experiences that we haven't even imagined yet. The key point is that New Zealand's fibre network is already built for the AI era. with the scale and performance required to support next-generation digital services without significant network redesign. As we look ahead, we see multiple pathways to growth and becoming an all-fibre business. In LEED, underpenetrated segment growth in windbacks, brownfields and infill remain live shorter-term opportunities, and we expect to benefit from the structural demand growth driven by AI. In EXPAND, we're building a pipeline of adjacent growth opportunities, We enter FY27 with a strong order book among previous product launches. TimeSync has also moved into the build phase and we're advancing opportunities, including the battery energy storage and the feasibility of the inter-island subsidy cable. In ADAPT, we see favourable pathways emerging on regulation. We'll seek shareholder approval to remove legacy ownership restrictions whilst continuing to refine our operating model as our Horizon 2 gathers momentum. And finally in Pioneer, Full copper retirement remains on track for completion by 2028 and we're focused on unlocking value from legacy assets. To close, FY26 demonstrates the strength of the Corus business model. We delivered growth in fibre connections, solid earnings and cash flow, increased the value of our asset base and returned more value to shareholders through a higher dividend. As we move further into Horizon 2, our focus remains clear. Driving fibre uptake, simplifying the business, improving efficiency and pursuing disciplined growth opportunities. We're increasingly an all-fiber business. With copper retirement firmly in sight, we're unlocking new opportunities to simplify our operation and realise further value from our asset portfolio. We have a clear view of where future growth can come from. We're building a pipeline of opportunities beyond our core business, but we'll remain disciplined. Any investment must leverage our core capabilities, be strategically aligned, and deliver scalable returns. We remain very confident in the long-term outlook for fibre. Data consumption continues to grow, AI is accelerating demand for high capacity, low latency connectivity, and fibre remains the technology best placed to meet those needs. The future itself is increasingly digital, AI enabled, and dependent on fibre. And Corus is uniquely positioned to power that digital future. Thank you. Let's go to the phone line operator, please, for any questions.

Thank you. If you would like to ask a question, please press Star 1 on your telephone and wait for your name to be announced. If you would like to cancel your request, please press Star 2. If you are on a speakerphone, please pick up the handset to ask your question. Your first question today comes from Ben Crozier from Fawcett Bar. Please go ahead.

Good morning, guys. Just keen to touch on the rationale for the price increases this year being slightly smaller than the last couple of price increases. you're still under-earning the maximum regulatory revenue in my estimate this year. When do you expect that gap to close and why was there slightly lower price increases this year?

Morning Ben, thank you. We obviously take a number of factors when we're looking at pricing. It's been a pretty volatile time over the last few years from a macro perspective and headwinds. At the half we were seeing some signs of economic recovery, and obviously that flips back around with more of the geopolitical sensitivity and Middle East conflict. So we're always mindful of a number of things that are happening in market. We use CPI as a reference, both historic and forward-looking, and so we take a view across the plain. So on a weighted average basis, we're at 3.8%. At the top end, we've actually held our multi-gigabit plans or prices flat, so they're a 0% increase, and that's indicative of us wanting to move customers in the market actually into a symmetrical multi-gigabit plans as well. You're right, from a MAR perspective, it's something that we look at over the course of the regulatory period and in actual fact for this regulatory period for RP2, we were asking them a commission to actually smooth some of that headroom based on the wash-ups, etc. I think, again, go back to the broader economy perspective, I think 3.8% we would see on a weighted basis is reasonable at the moment. Again, it also is reflective of the ongoing cost of living pressures that we're all going through.

That's clear. Thank you. Maybe just touch on the size of these investment opportunities around that subsea cable and the battery energy storage systems, like not just in FY27, but if the trials and the feasibility studies are successful, what's the capex required and the revenue opportunities from them?

Yeah, look, I think we've been talking about this for a while now when we reset the strategy and the opportunity to move what we see as our infrastructure value stream from more of a passive model to being more active. And given the asset base that we have, I think Cora should absolutely be part of those growth opportunities. I referred to several of the products we've launched this year. I think they're indicative. They're smaller in scale at the moment, but they'll build momentum with ExpressConnect. We're in eight data centres now. We'll look to expand that over the coming year. Unified Transport's been received really well as a product and providing faster and simpler access as well to high-capacity fibre. TimeSync, not that you'd ever want anything to happen in your marketing technology, but some of the timing issues that related issues we had in Australia recently with Telstra, I think, indicative of an opportunity around precision timing and looking at atomic clock use. So the feedback on that has been really positive to date as well. And those are the ones that we've launched in market. They'll take time to scale, obviously. The two that we're exploring that there's excitement about, on BEZ, for battery energy. We've had a number of conversations with partners and there's a lot of excitement around that. Corus is one of the largest property owners in the country and that gives us a line of sites opportunities to diversify and look at how we might use our properties in a different way. So we've got five sites that we're looking at a trial. These will be low, sort of three to five megawatt base installations. but again quite excited about that potential opportunity and when you look at other markets overseas and then the other is obviously the subsea cable with an inter-island cable and that's in feasibility now we've contracted a technical partner to undertake the feasibility and that will happen over the next three years or so but again see that as a natural fit to the core it's essentially linking the two islands for terrestrial fibre and we just think about that as wet fibre. But coming to your question, and I'll go through it in detail because there is a lot there. From a CapEx perspective, the big one with the subsidy cable, that's in a ballpark at the moment of 60 to 80 million that we would see over the three years. The previous product launches would be a lot smaller and BEZ would be dependent on whether there's that successful trial and could you take that a lot further. I mean, you know, we are trialling this, but we can see a future where you could scale this significantly, and obviously we have several hundred properties that we could potentially do that through.

That's a good colour. Thank you. And maybe last, just a short one, like Homestarter Connections, sort of the entry-level fibre product has been growing super strong the last couple of years. Do you expect, again, pretty strong growth in FY27 and beyond, or do you expect that to sort of stabilise from here going forward?

I think some of that again is relative to the economy and some of the broader macro headwinds. Again, we feel very validated of putting that entry-level fibre product in market. It was originally a 50 meg and we boosted it to 100. The appeal of that continues to grow. Just looking at numbers again this morning and the premises that have been off-net for over a year are continuing to reconnect. So there's a 30% annual growth in those premises reconnecting. So the plan is appealing, and it's appealing to premises that you would say weren't coming back to fibre previously, whether that was because of fixed wireless availability or other alternatives, or whether the 50MIG plan for fibre wasn't hitting the mark. And that's certainly our sense. From the growth in home fibre starter, it's still two-thirds new connects, one-third downgrades. Again, I think that's partly reflective of the economy, and we'd rather provide that optionality. But it is stabilised. We're not seeing any particular movement, and obviously we would hope with going forward, as the economy stabilises and returns to growth again, that actually our push is to move people up the speed stack. Yeah, that's good. Thank you. Thanks, Dean.

Thank you. Once again, if you'd like to ask a question, please press star 1 on your telephone and write your name to be announced. Your next question comes from Emcho Rakowski from E&P. Please go ahead.

Hi, Mike. Hi, Drew. Hey, Emcho. Morning, Emcho.

So maybe I'll start with a question on connections. I was conscious that your connections growth just slowed a little in Q4 after a stronger Q3 and I'm just curious if you can just talk about some of the factors impacting that slowdown. I don't know if it was mainly price increases by the RASPs and perhaps some seasonal factors which drive this and then as part of the answer to that question, can you talk to how that impacts your connections outlook into FY27? the key for run rate continues, or do you think there's a level of pickup?

Thanks, Ancho. As you said, there is seasonality in our quarterly connections run rates, and I'd say what we've seen in the last year will be kind of consistent for the year ahead. We see, you know, we work with all of our retail service partners, so it's based on the programs of work they have underway. we had a good July, so we're pleased with the start to the year. But we would see that as we typically see in Q2, you know, you have the college students, you know, turning off and so you always see reductions there, but also then a Q3 is always stronger. So that kind of connections, trends is what we continue to see going ahead.

Okay, thanks Drew. And then my next question is around the dividend. I wonder if you considered increasing the dividend... Well... ...remained lower than the Moody's threshold.

You just cut out there and show. Can you repeat the question?

Yeah, sorry, can you hear me okay now?

Yeah, can you? Go ahead.

Okay, sorry. I wondered whether you considered increasing the dividend further, given that you're lower than the Moody's threshold of 5.25 times F2, and also the fact that your covenants have been relaxed. And I guess if you're not considering... Well, you've obviously spoken to a floor of $0.62, so there seems to be some scope for an increase. But if not increasing at $0.30, then any scope for other capital management given the room to the Moody's threshold?

Well, let me... OK, I understand your question. So Moody's has not changed their thresholds. It's still at 5.25 times and we're at 4.75 times. in terms of what we're managing to. You know, we don't anticipate, you know, again, them changing anything to the equity attribution, you know, with the NIFCO sales. So, we don't think that will change those numbers. For us, the 62 cents, just a reminder of our capital management policy is that we have a growing sustainable dividend in real terms. So, and the reason we set the minimum 62 cents is given the current geopolitical uncertainty, and the impact that has on forecasting CPI for the year ahead. If CPI is higher than the 3.3%, which is the 62 cents over 60 cents growth, if it's higher than the 3.3%, then the board will review the annual CPI at the end of the fiscal year to determine if an adjustment is needed. I think if, you know, to us, I mean, I think we've said this analogy before, just because the bank increases your credit card limit doesn't mean we'll spend up to that limit. We look for growth opportunities and appropriate investments and that's why we set out dividend for the year ahead and how we use the word minimum.

Okay, perhaps I wasn't so clear necessarily. Is that half a turn gap to the Moody threshold, is that something that you feel comfortable with or do you think that there's scope to narrow that a little bit?

No, we're comfortable with that gap.

Okay, got it. And then finally, I mean, I sort of queried whether that's necessarily so relevant, but the SpaceX IPO has made a topic also. I wanted to ask how you view the threat from satellite, particularly given that Starlink now makes up 27% of broadband connections. Is there anything you think you need to do from a product perspective to ensure you remain ahead of the satellite product, or do you think that sort of usage and capacity provides you with a level of protection?

Yeah, Angel, I think you're right. I mean, when we consider the outlook and evolving trends around AI, evolution, data centre growth, et cetera, consumer behaviour changing, always wanting more capacity, and demand continues to grow as they connect to devices. Every... Every characteristic, you would think, in our mind, lends itself to the fibre network. Starlink's seen significant growth, as you note, but it has essentially been in rural. And in many ways, it's helped us with the copper migration out and copper retirement. So that doesn't mean to say that there aren't any Starlink connections or Leosat connections in urban areas, and particularly urban fringe. where fibre may not have been as presently available. But we still see a significant differential between the technologies, between fibre and Starlink. And so, look, for us, I think a lot of that, you ask what we would do, it's not really a product change, it's actually more an awareness piece. Fibre's been around for a while and I think there's a risk that maybe there's some complacency around what fibre is and whether it's ageing versus the new technology. And the reality is fibre's fit for a lifetime. It runs at the speed of light. So whilst you can line all these broadband technologies up against each other, they are significantly different, and even so when you come to the difference between fibre and stowing. But we'll remain vigilant, obviously, in urban areas. As I say, there are some places where that makes sense, but I think a lot of what we've talked to is driving the awareness, again, about fibre being fit for a lifetime.

And is there... I might just follow on to that. Is there any opportunity for you to work with satellite operators in terms of providing backhaul to some of their ground station infrastructure? Is that something that you're considering at the moment?

No, no, there is. Absolutely.

OK, great. Thank you.

Thanks, enjoy.

Thank you. Your next question comes from Phil Campbell from UBS. Please go ahead.

Yeah, morning guys. Just on the network revaluation, Drew, I was just wondering, is there like an implied EV to RAB multiple that was derived from that revaluation? Just to make sure I check my numbers.

No, Phil, it was done independently as a DCF model. And in the annual report, you'll see the methodology that was used to do the DCF.

Yeah, okay. Awesome. Great. So coming back, the second question is just coming back on terms of the, I suppose, the gearing of the business. I suppose the board is committed to a BBB rating. But I suppose when you look at the ratios, like, with the S&P threshold. I think their down drive is going to be six times. So you should be reasonably comfortable within that. And then there is a possibility that Moody's obviously is going through the same evaluation of their methodology. They could see their 5.25 times going up a little bit. So you could end up potentially kind of reasonably within those kind of thresholds. I suppose with S&P, there's even a chance you could get a rating upgrade. So is the board... you know, mindful of that and does that drive any dividend policy or are they just pretty much taking a more conservative view at the moment?

Well, a dividend policy is set through Horizon 2, right, growing dividend in real terms. As to S&P, obviously they haven't come out with their final determination of the NIF code equity attribution to debt where I said earlier that we'd be at approximately 5.5 times. So again, if they come out with and they're at six times, we'd be about half turn underneath that number But again, we're waiting for their final determination. Under Moody's, yeah, I haven't seen the request for comment period is open for another number of months. So we don't want to speculate, you know, in terms of what they may do. But at this point, we're at five and a quarter times down driver, and that's what we're focused on.

Great. Awesome. And then I suppose just coming back on the subsea issue, CapEx. How much is, because obviously themes as though within the FY27 guidance, it does seem as though there is some CapEx for some of these new projects contained within it. Do we know how much of the CapEx within the guidance range is attributable to the new projects?

There is some allocation for a variety of the projects, not just the ones that Mark talked to you on subsea and BAS, but the ones we've already previously announced. But it's not a material driver of the 27 CapEx.

Phil, just an overlay to that as well, I think we see a real opportunity for the, you know, I talked to the brownfields and infill opportunity, so the 200,000 or so premises that we've passed the premise with fibre today, but it hasn't had an installation. So our ability to go back now and look at where those infill is or look at where premises that weren't installed previously, now that fibre is really well known and the market has changed, So that's another opportunity we see for the installed CapEx. Okay, awesome.

And then just the last one, just at the ASM with the shareholder vote on the shareholder cap, is that a 50% voting threshold or is it a 75% voting threshold?

75%. Okay, awesome.

Great. Thanks, guys. Thanks, Bill.

Thanks, Bill.

Thank you. There are no further questions at this time. I'm going to hand back to Mr O'Weir for any closing remarks.

Thanks, Darcy. And thank you to everyone who's joined today. Thank you to those that have also asked questions. Appreciate that this is a really busy time of year. So again, we all appreciate you taking that time to join us. So thanks again. And we look forward to meeting with some of you over the coming days and weeks. Thanks very much. Take care. That does conclude our conference for today thank you for participating you may now disconnect.