CNU - Chorus

[Aaron]

Somehow I am expecting interest rates to have risen above zero by FY2025 Aaron! If they rise to 2%, that would equate to a rate that Chorus has agreed to pay of 6% + 2% = 8%
On $86m worth of 'preference shares', that equates to a payment of:

0.08 x $86m = $6.88m or $6.88m / 444.041m = 1.5cps

That sounds affordable to me, although with borrowing rates as low as they are, it would make sense to replace the Crown Financed preferences share, with borrowed money at a much lower interest rate than 8%!

SNOOPY

Sorry I haven't responded sooner, had to think first which takes time. Thanks for the analysis, I did make the effort to read the 2020 financial statements but wonder at note 6 CIP Securities it states UFB1 is rolled out 31/12/2019 and they received $924mill of the $929 allowed although CIP securities are only $461mill in the accounts. This is probably a silly question but if they have drawn down $924mill for UFB1 shouldn't that be what is owing. Where is the other $463mill or has it already been repaid? hard to jump in when you haven't been following the company's progress.

Points of interest for me are

1/connections are their business since 30/06/2015 connections have dropped 21% from 1,794,000 to 1,415,000 although turnover has only dropped by 5%. I guess inflation and more profitable connections. Definitely not a growth company but I wonder what sort of stable dividend can be provided in the future then your buy share price could be based off your desired yield.

2/ margins have been maintained but interesting to see "Customer retention assets" pop up in the Statement of Financial Position in 2018. This appears to be a way of taking marketing costs out of EBITDA and adding them into Depreciation and amortization. Financial massaging for the benefit of who financiers/investors? Probably a realization that wireless networks are real competition and they need to get off their ar**s and promote fibre. Spark had it all over them trying to move people off chorus's fixed line networks to their wireless network. I suspect marketing will need to be a bigger part of their business than they imagined and should be treated as a regular cost of business.

3/ What is the expected dividend per share now that the rollout is over.

I have tried to read and understand the annual report a bit, mostly the financial section but I just get more confused and more questions get raised as I realise how little I understand.