The Chorus Ltd (ASX: CNU) share price has rocketed out of the gates this morning, gaining 3.78% in early trade following the release of its results for the half year ended 31 December 2019.
Chorus is a telecommunication business operating a nationwide fixed line access network infrastructure in New Zealand.
Flat revenue and earnings growth
Chorus reported relatively flat revenue and earnings growth for the first half of FY20. Operating revenue for the period was $483 million, a slight decrease on the $489 million achieved in the prior corresponding period (pcp). Earnings before interest, tax, depreciation and amortisation (EBITDA) came in at $332 million, compared to $318 million in 1H 2019. Operating expenses were $151 million, down $20 million on pcp.
Depreciation and amortisation for the period were $198 million, marginally higher than the $196 million achieved in 1H 2019.
Fibre build is winding down
The completion of the first phase of the ultra-fast broadband (UFB) rollout last year saw the beginning of the wind-down of Chorus’ communal fibre build program.
Chorus CEO JB Rousselot said:
In November we celebrated the completion of our nine-year contract with the Government in bringing fibre to 28 towns and cities.
The second phase of our fibre build, UFB2, is already about 40 percent complete and there are now just 150,000 premises remaining to be passed by December 2022.
Chorus is now focused on connecting as many customers as possible. The number of disconnections from its fixed line network slowed significantly in the first 6 months of FY20. The company noted that it hasn’t announced any timeline of the switching off of its legacy copper fixed broadband network.
Gigabit fibre has hit mainstream residential customers
In January this year, the company reported that average household data usage on Chorus’ fibre network was 372 gigabytes, up from 342 gigabytes in June 2019.
Chorus expects bandwidth demand to increase further, with streaming services like Disney+ increasingly making ultra-high definition, or 4K, content available to customers at no additional cost.
Outlook and dividend
Chorus’ strong performance in rolling out its network gave it the confidence to increase its FY20 EBITDA guidance to a new range of $640 million to $655 million. The prior range was $625 million to $645 million.
The company’s gross capital expenditure guidance is unchanged at $660–$700 million, while fibre connections and layer 2 capex have been increased by Chorus to $295–$315 million.
Dividend guidance for FY20 has been unchanged by Chorus at 24 cents per share, subject to no significant adverse changes in circumstances or outlook.
These 3 stocks could be the next big movers in 2020
When investing expert Scott Phillips has a stock tip, it can pay to listen. After all, the flagship Motley Fool Share Advisor newsletter he has run for more than eight years has provided thousands of paying members with stock picks that have doubled, tripled or even more.*
In this FREE STOCK REPORT, Scott just revealed what he believes are the 3 ASX stocks for the post COVID world that investors should buy right now while they still can. These stocks are trading at dirt-cheap prices and Scott thinks these could really go gangbusters as we move into ‘the new normal’.
*Returns as of 6/8/2020
Motley Fool contributor Phil Harpur has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.
- Why I’d buy Wesfarmers and 1 other quality ASX dividend right now – August 31, 2020 12:30pm
- Elixinol share price edges higher on half year earnings release – August 31, 2020 11:54am
- 2 top ASX tech shares to buy and hold beyond 2025 – August 28, 2020 8:33am