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Chorus Ltd CNU

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Morningstar’s Analysis

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Economic Moat

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Chorus Falls an Octave Lower as Regulatory Progression Hits a Sour Note

Brian Han Director

Analyst Note

| Brian Han |

The 21% fall in Chorus' stock price over the past three months, versus a 4% New Zealand market decline, needs to be put in context. It is a partial rewind of the multiple expansion which, in the hunt for defensives leveraged to the "do-everything-from-home" thematic, pushed Chorus' multiple up to 12 times our forecast EBITDA last year. At current 10 times, it more adequately balances the potential reward from Chorus' metamorphosis from a capital-consuming copper telco to a cash-liberating fibre provider, against the risks from regulatory and technological threats.

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Company Profile

Business Description

Chorus is New Zealand’s largest fixed-line communications infrastructure entity, and was demerged in 2011 from Telecom New Zealand. Chorus offers wholesale access to its nationwide copper and fibre network to retail service providers. It also provides backhaul services to retail service providers and connects mobile phone towers. Chorus is currently involved in the government's rollout of ultra-fast broadband, a fibre-to-the-premises network to cover 87% of the population by the end of 2023.

Contact
1 Willis Street, Level 10, P.O. Box 632
Wellington, NTL, New Zealand
T +64 800600100
Sector Communication Services
Industry Telecom Services
Most Recent Earnings
Fiscal Year End Jun 30, 2021
Stock Type
Employees 870

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