Chorus Limited (CNU) Earnings Call Transcript

[Foreign Language] Greetings and welcome to our Full Year Results Announcement for FY '22. I'm JB Rousselot, the CEO of Chorus, and with me is Andrew Carroll, who I'm sure many of you will recognize. Andy is back in the CFO seat as an acting capacity, while we finalize the recruitment of a replacement for David Collins. We're going to cover the usual areas as summarized on the slide, including key results, financials, guidance, and trends, and then will take questions from the phone at the end of our presentation. Our focus in FY '22 was to keep pushing towards our goal of 1 million fiber connections by December. COVID hasn't made that easy, with lengthy lockdowns and the ongoing effects of illness and isolation on our workforce and on consumer activity, but despite that, we grew total fiber connections by 88,000 to 959,000. So we remain on track. Net broadband connections grew by 9,000 connections, fueled by strong growth in our fiber area, about 27,000, and a slowdown in broadband losses in LFC areas as they get to high levels of fiber take-up. This also helped us significantly reduce the decline in total connections from 75,000 in FY '21 to 35,000 this year and we ended the year with just over 1.3 million total connections. This total excludes the 9,000 student households that we continue to support as part of our COVID response with the Ministry of Education. Underlying EBITDA was NZD 660 million, up NZD 3 million from the restated FY '21 EBITDA of NZD 657 million. When you allow for one-off revenues and the release of a holiday pay provision, reported EBITDA was NZD 675 million, and these one-off entries were already flagged in the half-year results. Net profit after tax was NZD 64 million compared to the restated of NZD 51 million in FY '21 and we've confirmed a final unimputed dividend of NZD 0.21, taking total dividends for the year to NZD 0.35. Fiber uptake continues to track well and grew from 65% to 69% within the UFB footprint. In our initial UFB1 area, uptake is at 74%, and Auckland, our largest region, is higher again at 79%. We're also really pleased with the uptake in Wellington where we have cable competition and uptake grew 6% to 68%. In the smaller UFB2 communities, we saw an uptake growth from 42% to 50% even with another 42,000 addresses passed by the rollout. Of the 117,000 fiber installations completed during the year, about 43,000 were generated through our managed migration program, that was down sharply from 60,000 managed installation in FY '21 and it reflects the challenges that COVID put on our suburban direct marketing. To help offset that, we switched our marketing focus to our base of pre-installed fiber sockets. And as you can see, that produced some really positive results. We lifted activations from managed migrations to about 32,000, of which 16,000, so half of them, were from off-net premises. So we are now seeing an activation rate of just under 60% within 12 months of our managed installation. This slide should be familiar from our last quarterly update. We're continuing to see good broadband growth in our UFB footprint as consumers migrate from copper to fiber and that is helping offset much of the reduction in copper voice lines. At a high level, we are seeing a slowdown in line loss in other fiber company areas or the LFCs as the pool of remaining copper customers reducers. In fact, we experienced a 45% reduction in connection losses in the last 12 months in the LFC footprint. And then in non-fiber area, we've seen a slight lift in line reduction, with some retailers moving consumers off copper voice services and also promoting wireless options, in areas with new government subsidized towers. Our fiber boost upgrade in December drove a huge change in the speed profile of consumers. Almost 70% of residential users went from 100 megabits to 300 megabits per second. We now have over 90% of our residential fiber consumers on speeds of 300 megabits per second and over. We've continued to see strong demand for 1 gigabit services, which now represents 23% of residential connections, but also represents about 30% of net fiber adds. And Hyperfibre connections are starting to come -- to get some traction, and I'll talk about that in more details later. Finally, business fiber connections grew by about 12% and we estimate that about 3 quarters of business market excluding small and home businesses have now moved to fiber. The rising data usage continues. This year, total network traffic grew by 23% or the equivalent of 1.3 billion gigabytes. As you can see from the chart on the left, most of this continues to be at peak time in the evening. Average peak time traffic in June was 3.3 terabits per second, up 18% on June last year. Average monthly data usage for fiber users grew from 500 gigabytes to 567 gigabytes during the year. And as this chart on the right shows, the average went over 600 gigabytes during the COVID lockdowns in the first half. And [ uptake ] traffic has also grown as working from home and services like video conferencing have become commonplace. So our network and fiber uptake has proved resilient in an operationally challenging year, and that has underpinned the solid financial results that Andy will now take us through.

Thanks, JB, and good morning, everyone. This slide is an overview of our earnings result, that features growth in revenues, careful cost management with a resulting EBITDA of NZD 675 million, up NZD 18 million on FY '21. It is worth noting that there are some one-offs in the mix, which I'll cover in the next slide. The purpose of this slide is to provide a view of underlying EBITDA. Excluding one-off items, underlying EBITDA was NZD 660 million relative to NZD 657 million and FY '21 on a restated basis. In terms of the one-offs, they are exactly the same as David described in the half year. The only change on this slide relative to the half-year presentation is the nature of the restatement from a half year to a full year. Revenues of NZD 965 million were up NZD 10 million versus FY '21, while this has some one-off items in the mix, the result does reflect underlying revenue growth, and I think this is a pretty significant milestone for Chorus. This is the first result featuring revenue growth, albeit modest since 2017. Fiber growth reflects fiber uptake in the proportion of customers on high-speed plans. GPON ARPU is up to NZD 50.67 from NZD 49.87 in June. The trend of declining copper revenues continues as fiber uptake grows. We also had a copper CPI increase of 4.93% flowing through the numbers, which applied from mid-December. And there are a few specific callouts from field services revenues; greenfields were NZD 29 million and roadworks, NZD 10 million. The slide on expenses covers off our key cost line items. In terms of quick call-outs, labor costs are down NZD 10 million, reflecting the release of a NZD 9 million holiday pay provision and some offsetting in efficiencies pre-COVID, where labor costs that would typically be capitalized or expensed. Full time employees were down to 799 from 817 over the period. Maintenance is down NZD 4 million. That continues historical trends as fiber grows and copper connections reduce. COVID lockdowns also provided a benefit by reducing network activity or hands in the network, and the appendix to this document provides a breakdown of those costs by zone and type. Gross CapEx for the year was NZD 492 million, down NZD 180 million on the previous year. UFB communal is trending down as we near the end of the rollout. Installations in layer 2 spend were affected by COVID, as JB mentioned earlier. So we completed only 117,000 connections, down from 172,000 in FY '21. Cost per premises connected is at the lower end of guidance for UFB2 and just below for UFB1. Greenfield spend was up a touch relative to FY '21 and customer retention costs reduced slightly due to COVID impacts. Moving to copper and common CapEx; copper CapEx continues to reduce in line with connections and our focus on optimization. Common CapEx was lower and we did have some planned building projects delayed by COVID. Financing; Crown financing now is 94% drawn and our next refinancing event is the NZD 785 million Eurobond, which matures in October next year. Net debt-to-EBITDA has reduced from 4.24 at the end of FY '21 to 4.08 times, reflecting the higher EBITDA and a reduction in the lease liability of NZD 77 million we talked about at the half year. We obviously sit comfortably below the revised rating thresholds. Moving to dividends, we are confirming a final FY '22 dividend of NZD 0.21 per share unimputed, and as JB mentioned, that brings the total dividend payout for FY '22 to NZD 0.35 per share. As we've noted previously, future dividends will be unimputed for the short to medium term. The DRP will be available at zero discount. Reflecting our positive free cash flow and the significant headroom available, we are increasing dividend guidance. So FY '23 dividend guidance is NZD 0.425 per share, up from a minimum of NZD 0.40 per share. FY '24 guidance has increased to a minimum of NZD 0.475 per share, up from a minimum of NZD 0.45 per share. So the -- this FY '23 and '24 payout profile is consistent with our dividend policy of planning to pay out 60% to 80% of free cash flow. Our share buyback remains in place and is now 25% complete. Moving on to guidance, our FY '23 EBITDA guidance is NZD 655 million to NZD 675 million. This compares to underlying FY '22 EBITDA of NZD 660 million. So our objective of modest EBITDA growth remains. FY '23 CapEx guidance is in the range of NZD 410 million to NZD 450 million. UFB2 completion is imminent and we're forecasting installations in the range of 90,000 to 110,000 relative to actual FY '22 of 117,000. So that continues that tapering trend of volumes, as uptake increases. FFLAS revenue, for those that like regulatory detail, here are indicative regulated revenue numbers for FY '22. Around 2/3 of our revenues are regulated fiber revenues. And just a quick reminder that capital contributions, mostly NPD, are netted off to RAB for regulatory purposes, so not included in FFLAS revenue. We continue to expect to be under the MAR in calendar year '22 and for RP1. Regulatory outlook. this is the final slide for me we are expecting confirmation of our final RAB post true-up in the coming months and the balance of the slide is a reminder of the items we have highlighted previously that are likely to be relevant for RP2. Back to you. Thanks, JB.

Thank you, Andy, and it really looks like you've done this before. As the slide shows, sorry, FY '22 was a crossroad year for Chorus, with key elements of our regulatory framework now settled, our focus now really shifts to a more operational future. We've refreshed our company purpose and our strategy and this involved getting inputs from a range of internal and external stakeholders, including investors. As the slide shows, our new purpose is connecting Aotearoa so that we can all live, learn, work and play. Achieving these means continuing to grow uptake of our networks, so its socioeconomic benefits help power the digital future of New Zealand. There are 3 pillars to our strategy, all of which should be familiar from last year, but with some changes in each of them, and I'll talk through some of these in more details in a minute, but in our most important pillar, winning in core fiber, the focus remains on increasing take-up, delivering great customer experience, and leveraging our new regulatory frameworks to benefit all stakeholders. Around these strategic pillars are other focus areas such as building an adaptive, diverse, and inclusive organization and growing the sustainability practices that are increasingly part of the way we operate. Employee engagement remains high at 8.5 out of 10, and we've made progress in areas such as diversity and gender pay gap, but there is plenty more that we can and are doing. Our primary strategic focus remains winning in core fiber. Each year that goes by, we are ever more confident that fiber is the right technology choice for consumers now and well into the future. And we're not alone in that view, OECD data shows how much fiber is growing. In fact, it has overtaken cable subscription for the first time this year. The U.S. government has also explicitly stated its preference for fiber in the guidelines for its multi-billion dollar broadband infrastructure funding. They recognize that fiber is best place to ensure that faster speed can continue to meet growing connectivity needs. After we boosted our 100 megabit services to 300 megabits in December, we've seen New Zealand jump up the global broadband rankings. Just this month, we've in fact reached 10th place in the Ookla Global Table. Consumer and business data consumption continues to grow, and broadband that is considered good enough today won't deliver a great experience in a few years. The Commerce Commission's independent monitoring is very helpful in highlighting the high speed and low latency benefits of fiber, relative to other technologies, and this is important for real-time applications like interactive web pages and video calling. As data usage keeps growing, network and individual line capacity becomes even more important, and with more people streaming video content, we're in fact already seeing an uplift in the number of what we call power users. It's about 15% of our fiber connections that today already use more than 1,000 gigabytes every months. In fact, we're forecasting that 1,000 gigabytes will become the average by 2025 and that will grow to 4,000 gigabytes by 2033. Now, some of you might think that this is really high, but as a comparison, in the U.S., with AT&T, they already estimate that their average usage is 900 gigabytes per month today and they forecast that it will be at 4,000 by 2025 and that is the drive for their program of deploying fiber. More data-hungry devices in the home, higher-spec content like live sports in 4K quality, cloud-based gaming, the metaverse, augmented and virtual reality, all of this contributes to sustained growth in data demand. And when you have multiple people in one place trying to do these things at the same time, you do need the burst capacity of a gigabit service or better. And that's why, for example, we're seeing school start to use our multi-gigabit Hyperfibre services to deal with the demands of multiple students online. This slide shows our updated product lineup starting with our new home fiber starter 50 megabits product. The wholesale price of it is capped at NZD 38, if retailers sell it for NZD 60 or less. So it helps scale a need for basic entry-level product. As I mentioned earlier, our fiber boost in December lifted most consumers from 100 megabits to 300 megabits. 1 gigabit uptakes continues to grow and our Hyperfibre speeds are the next growth area. In just a few months ago, we trialed 25 gigabit technology, which is delivered on the existing fiber alongside our existing services, and it really demonstrates how fiber is the most cost-effective and scalable technology. This need for higher speed and reliability is not limited to large urban areas. People in smaller communities also see value in fiber, and the chart on the right shows how the rollout of fiber, marked by the dotted green line, has provided a boost to fixed broadband connection in those communities after a prior period of decline, and that's possibly because consumers had been persuaded to try other networks, before fiber was made available. We've also seen some significant market changes this year. Mercury Energy has just joined other electricity retailers, such as Nova and Contact in bundling broadband services. This follows Mercury's acquisition of the retail business of Trustpower. The combined Mercury entity has almost 600,000 electricity customers, and that extends the reach of the non-traditional telcos, including Sky TV to about 80% of New Zealand homes. Another change were clearly the merger of Vocus and 2degrees, and this means now that the 3 largest traditional telco retailers have fixed wireless alternative. So diversification in the retail market is important, to help offset some of the competitive imbalance that is created by this vertical integration. But the continued growth in fiber take-up shows that we continue to be successful in promoting fiber, and the fact that over 90% of our fiber consumers are on speeds of 300 megabits and over, maintains a material performance advantage over the other technologies. And as the chart shows, non-traditional retailers have been particularly successful in growing their market share, with high-speed services of 1 gigabit. As fiber uptakes passes 80% and eventually slows in our UFB areas, greenfields will become a larger part of our ongoing connection program. New property orders are at their highest ever and we've put a lot of effort into our systems and processes to help support this pipeline. As you can see from the Stats New Zealand chart on the right, most of this demand is coming out of the Auckland region. Completed orders were slightly lower than last year and that reflects the impact that COVID has had on our workforce and probably also on the developers, but new property development remains a key priority. Another growing source of fiber connections comes from our second strategic pillar, which is optimizing our non-fiber assets. We've talked before about trialing our copper withdrawal program, and after some delays due to COVID, we've now moved into a regular cycle of activity. We have now issued just over 13,000 withdrawal notifications to consumers and about 7,000 consumers have ended their copper service. That's meant we can close 130 cabinets and we have another 456 cabinets on the notification. And as we withdraw copper services, we've seen a 90% broadband retention rate on fiber across the closed cabinets so far, which is a very, very pleasing result. That's given us the confidence to start shifting from our general managed installation program, to one that focuses on assisting customers to migrate to fiber, as we withdraw copper services in our fiber footprint. Another component of this pillar is optimizing our property assets. Our site optimization program also continues. We have 15 properties now in subdivision phase and we have over 100 other sites that are in our program. And we also expect to continue reducing our reliance on leased space enterprise exchange. Our third strategic pillar is to grow new regulated and unregulated revenues, and this is getting a lot more focus, now that the UFB build is almost behind us. In regulated new revenues, we've now passed 1,000 Hyperfibre connections. The majority of these are residential customers and these services are also becoming more widely [ overseas ]. So we expect that the uptake will follow a similar path to our 1 gig services. In fact, we've revised our pricing to help drive this and hope to see more retailers offer Hyperfibre as the service evolves. We're also seeing significant growth in our small business fiber products. And then in the unregulated revenues, we continue to see encouraging signs in our EdgeCentre services. This is an opportunity to leverage our exchange buildings as secure spaces for computing capacity. Our plans to develop further sites were a bit slowed by the COVID in FY '22, but we still doubled revenues in the year. There is a lot happening with large data center development, and we're not competing with these. Our service is in fact complementary offering in the regional and suburban space. And then finally, PowerSense is another exciting new product to come out of our innovation program. This service can detect when clusters of fiber terminals lose power at the same time, indicating a likely local power failure. And we share that with the electricity line companies who can then use that data to identify faster the geographic impact of power outages and then support faster service restoration. An increasingly recognized characteristic of fiber is its green credentials. As consumers migrate from copper to fiber, we reduce our electricity consumption and our related carbon emissions. We've committed to a new science-based target of 62% reduction in our Scope 1 and 2 emissions by 2030 compared to 2020. This is possible because fiber broadband requires less powered equipment than other technologies, and as efficiency increases with faster broadband speeds. That's why we've been able to absorb significant growth in data traffic without equivalent electricity consumption growth. Fiber is in fact the only technology that can cope with higher speeds, without increasing emissions. And our second Sustainability Report was published today and contains a lot more data on a range of sustainability topics, including this and also our focus on digital inclusion. As we look at the year ahead, our focus is very much on continuing to grow uptake on our network. That's how well -- that's how we'll grow the socio-economic benefits that will in turn, power Aotearoa's digital future. We believe we're providing consumers with the best broadband technology and our data forecast tells us that we're well placed into the future. There are about 160,000 consumers, who could switch on fiber in their home or their business today and there is another 250,000 who have fiber at their gate. That's why we need to keep refining our value proposition and making the customer experience as seamless as possible, especially when we expect COVID and the global environment to keep providing challenges at both an operational and cost level for our workforce and the wider economy. As demand grows, there is a renewed case for further increasing the reach of the fiber beyond the 87% current footprint. Other countries are going further because they recognize the need for fiber rather than solutions that require ongoing investments to keep up with demand. We believe that pragmatic, regulatory, and policy solutions could help us take fiber to another 3% of Kiwis, towards reaching 90% with fiber coverage. If we're serious about digital equity and sustainability for New Zealand, we do need to work together to try to get to those results. That's it for us today, and I think I'm now going to switch to Eddie for the questions.

[Operator Instructions] Your first question is from the line of Arie Dekker from Jarden.

Just on the dividend increase firstly, and appreciate it's obviously a relatively modest increase, but can you just sort of confirm that it's more reflective of your ongoing and perhaps increasing confidence in your post FY '24 guidance, where you have talked to 60% to 80% of free cash flow, then it is sort of a little bit of capital management given the buyback slow or the fact that you've got sort of lower CapEx than FY '22?

Sorry, Arie. We lost you a little bit at the end, but I think we've got the essence of it. So yes, it does reflect the cash flow position and where we sit relative to rating thresholds, and as you say, it's a modest increase and consistent with the guidance that David talked to earlier this year.

Sure. And then just an update, I mean, you've used consistent language short to medium term on the imputation credits. I mean -- I guess the bit I don't quite understand about, that is what would the swing factor be to make it short, like would short be -- is that 2 to 3 years whereas medium term is sort of 5 plus years and what would it sort of be the -- what's the unknown in that short to medium term range?

Yes. I don't think we're going to try and be more precise, Arie, around short to medium term. I mean, there are a few factors in the mix, including future regulatory settings. So we're not going to try and be more precise at this stage.

Sure. And just turning to the regulatory disclosure, you have previously provided indicative FFLAS OpEx, which I guess has been sort of useful to sort of look at what the non-FFLAS earnings are. It looks like you've sort of excluded it this time around, can you give an indication of what the FFLAS OpEx was, why you excluded it and then just a little bit on the non-FFLAS earnings profile in '22 versus '21?

Sure, Arie. So I mean, as you'll be aware, we are still working through the RAB trial process with the commission. So we've decided to hold on any OpEx updates as a consequence. So you've got the revenue story, but not an updated OpEx really.

Okay. So more visibility on that as you come through the -- that finalization?

Yes. And there might be someone else in this chair at that point, Arie. So you can speak to them about that math.

And just on the cost allocation, I mean, you make a reference to those needing to be addressed in RP2, all reflected in the policy framework for copper TSO. Can you, I guess, just sort of give any indication of like when you're looking to -- RP1 is only a 3-year period, when you're looking to progress things on the policy framework for copper TSO and is that going to be with government, industry, what sort of -- when can we expect to see a bit more detail on where that's heading?

Yes. I'll let Andy talk about the timing of when we'll make the RP2 submissions because there is a clear timing there. On the TSO, let me just say that our -- the thing that we're voicing, is the fact that longer-term, a standalone TSO policy is unlikely to deliver the right solutions for rural and regional New Zealand in particular. So what we are encouraging is a dialogue with multiple parties, the regulator, the policymakers, but also the rest of the industry to make sure that we do collectively come up with solutions that do provide the right connectivity to rural and regional New Zealand. We believe that there is room for further fiber coverage under the right reg and policy settings. We also believe that we need to work better with the rest of the industries, the retail service providers, the WISPs, to make sure that we do come up with solutions that do satisfy the long-term connectivity of rural and regional New Zealand, because a pure reliance on TSO copper services won't do that.

And in terms of the RP2 process, Arie, I think that's well known. So this is a process that takes us through to October next year.

Yes. I understand, what that is, I was sort of looking for that to be clarified. Just JB, on -- follow-up, just on the TSO policy work. I mean, are you finding that you're getting a good reception on the need from that -- for that from industry and government? And I guess, as you are not, I guess, on the user efficacy sort of side, are there parties there that you can partner with to progress this?

It's early days, but yes, we've started those conversations with a number of stakeholders, and as you say, they cover the rest of the industry, the policymakers, the regulators, and also consumer advocates.

Great. And then just a final question on the cost stream. I guess, when you sort of look at where the base cost load is at the moment in the business, just with the build completing and regulatory settings now broadly finalized, I mean, there's still ongoing stuff, I mean, what's sort of the expectation for the cost track over the next sort of 2 or 3 years? Do you think there is -- I mean, obviously you are fighting quite high inflation, but do you sort of see the cost base in absolute levels being sort of held, or do you sort of see scope for that to come down? And if so, what sort of levels over say 2 or 3 years?

Yes. So I'm not going to provide multi-year cost guidance, Arie, but I think you can expect to see continuation of recent trends. So the copper-fiber mix, how that flows through maintenance, yes, there are some cost line items, where there is pretty standard inflation that flows through. In terms of what we're looking at for FY '23, we've seen both revenue and cost growth, and that's the basis for the guidance that we've provided.

Sure. And then just a last one from me, just the CapEx guidance, I think, includes allowance for 90,000 to 110,000 connections. I guess at the lower end, that's sort of consistent with COVID impacted '22. The confidence to sort of connect in that sort of range, given where penetration is reaching, does that sort of, I guess, reflect the fact that there was a meaningful impact in '22 from COVID?

Yes. And we've got a growing copper withdrawal program, which obviously feeds the fiber installation engine, Arie. So yes, we've got a good degree of confidence around that range based on what we can see today.

And just follow-up on that, I mean, that...

Sorry. Arie, I was going to -- just going to say, if you look at the penetration numbers, despite the disruption in COVID, the fact that we've continuously grown uptakes through the year another 4% overall, the fact that Auckland itself is getting to 79%, will crack 80% probably this quarter or the next one, shows that there is still some good growth in our UFB footprint, that will fuel that CapEx assumptions.

Sure. I mean, yes, just to sort follow-up there, Andy. Just that -- I mean, that 90% retention of fiber broadband from the disconnects obviously, really good. Can you just give some color on how many connections is that related to? And then also to your point, what sort of level of copper withdrawal should we expect in FY '23?

So it's 90% of the numbers that Arie -- that JB talked to, Arie.

It was about 7,000 copper disconnection, as part of our disconnection program.

Yes. And the chunk of those that are broadband. So we do have a significant increase in plan for this year and we're targeting slightly different things. So last year was a trial. Now we're beginning to get BAU volumes.

Your next question is from the line of Phil Campbell from UBS.

Andy and JB, just a couple of questions from me. The first one was just, are you able to talk a bit about the buyback? Obviously you've done 25%, but most of that was done kind of when the share price was NZD 7 or lower, and obviously it's a lot higher now. So I was just interested in your views on kind of the outlook for the buyback going forward and whether there's any potential shift from the buyback to maybe some other way of capital management. And then the second question was just on -- interested, JB, just on your views on the of kind of rural strategy. We talked a little bit about obviously trying to extend UFB, but there was about 170,000 odd lines I think which were in rural. So I'd just be interested to see what the plan is there? Obviously, we've got wireless broadband intensification there, but also Starlink's becoming a lot more visible as well, putting up quite a lot of satellites. So I'd just be interested in your views on the rural kind of strategy for Chorus?

All right. Thanks, Phil. I'll have a go at the share buyback. So yes, it is still our plan to complete that program. We have been out of market for a wee while, because we've had RAB processes and then full year results. Ultimately, it is shareholders' money, and we think this is the most efficient way to return it. So yes, we still plan to complete the program.

Okay. And then on the rural strategy, as you said, there is about 170,000 lines in the footprint currently, with a slow decline there. We said that -- we think that it's definitely, under the right settings, reachable to add another 3% to that. So you can do the math. That's -- I think it's about another 30,000 -- just under 30,000 customers that we would put to the footprint for fiber. There is potentially room beyond that, but that would require significant support from the government. We see that happening in other geographies. In Europe in particular, they've started to set targets that are above 90%. So we think it's time to have that conversation. To your question about satellite, yes, we do see those services starting to appear. The cost of those are still quite expensive in terms of set up and then ongoing monthly fee, but we do think that ultimately they are part of the long-term solution for rural and regional New Zealand. Ultimately, a copper line ADSL will not provide the needs of a rural and regional property that needs good connectivity. So we do want that conversation with the industry, with the mobile operators, with the WISPs, with the satellite providers, to make sure that overall we do come up with an offering, that will meet the long-term needs of rural and regional New Zealand.

Just a quick follow-up on it. So what's the kind of timeframe do you think? Obviously we've got a potential election now, election next year, late next year. So what would be the timeframe of these kind of discussions?