Highlights

  • Chorus (ASX:CNU) reported higher FY26 profit and increased its Dividend as fibre connections continued expanding.
  • Fibre Revenue growth offset declining copper income, supporting a 3% increase in EBITDA to NZ$726 million.
  • The company accelerated its copper network retirement, with fibre representing around 96% of total connections.
  • Investors remain focused on regulatory settings, Debt levels, free Cash Flow and the Long-term Growth potential of fibre demand.

Chorus (ASX:CNU) delivered a steady FY26 result as the company moved closer to completing its transition into a regulated fibre infrastructure provider. Higher fibre adoption, lower Capital Expenditure and a larger dividend supported the Investment case, while slow revenue growth and elevated debt levels remained important constraints. The key question for investors is whether Chorus can create additional growth beyond its completed fibre build while operating within regulatory limits.

A completed fibre build changes the story

Chorus has reached an important stage in its transformation.

The company has shifted from a network construction Business toward a mature fibre infrastructure operator.

During FY26, Chorus retired approximately 48,000 copper lines and brought forward its nationwide copper switch-off target to 2028.

Fewer than 1,000 copper connections now remain within its fibre footprint.

The transition simplifies the operating model and reduces long-term maintenance requirements.

However, it also changes the growth profile.

With the majority of fibre infrastructure already built, future returns will increasingly depend on regulated pricing, customer utilisation and operating efficiency rather than network expansion.

The Key Development

The central development from FY26 was the continued move toward an all-fibre business.

Fibre connections increased to approximately 1.147 million, representing around 96% of total connections.

Fibre uptake across available premises reached 75.9%.

Average revenue per fibre user increased to NZ$59.51 in June 2026 from NZ$58.28 a year earlier.

Data usage also continued rising, with average monthly consumption increasing 9% to 731 gigabytes per connection.

Alongside the results, Chorus increased its full-year dividend to 60 cents per share from 57.5 cents in FY25.

The company guided to a minimum FY27 dividend of 62 cents per share.

The growing dividend remains central to the investment case, supported by regulated revenue streams and predictable infrastructure cash flows.

Financial Performance

Chorus delivered modest financial growth during FY26.

Operating revenue increased approximately 1% to NZ$1.029 billion.

The improvement was driven by a 6% increase in fibre revenue, which offset continued declines from legacy copper services.

EBITDA increased 3% to NZ$726 million.

Operating expenses declined by NZ$6 million to NZ$303 million, reflecting continued cost discipline.

Net profit after tax increased significantly to NZ$37 million from NZ$4 million in the prior year.

However, the percentage increase was amplified by the low previous-year base and does not fully represent the underlying Earnings trajectory.

Operating cash flow provided a clearer view of performance, increasing 4% to NZ$740 million.

Capital expenditure declined by NZ$40 million to NZ$375 million as the peak fibre construction phase moved further behind the company.

The Balance Sheet remains an important consideration.

Net debt stood at approximately NZ$3.174 billion.

Leverage remained high at 4.37 times EBITDA, only slightly improved from 4.40 times in FY25.

What Management Is Saying

Management has positioned FY26 as a step toward a simpler and more focused infrastructure business.

Chief executive Mark Aue highlighted the transition away from copper and toward a more efficient fibre network.

The company also pointed to longer-term Demand drivers beyond traditional broadband.

Increasing artificial intelligence workloads, cloud usage and data-centre expansion could support higher connectivity demand over time.

For FY27, Chorus guided to:

  • EBITDA of NZ$730–760 million;
  • gross capital expenditure of NZ$375–415 million.

The outlook suggests steady operational improvement rather than a major earnings acceleration.

Why Investors Are Reacting

The muted market response reflects the nature of Chorus' investment profile.

The company delivered the type of result expected from a mature infrastructure operator: stable earnings, improving costs and reliable dividends.

However, investors appear to be reassessing the growth ceiling.

Revenue growth remains modest, EBITDA expansion is incremental and Leverage remains elevated.

This positions Chorus more as an income-focused infrastructure asset than a high-growth technology company.

For income investors, the dividend remains attractive.

The guided FY27 dividend represents a meaningful Yield at current valuation levels.

However, the trade-off is limited earnings upside unless regulatory settings become more favourable or new demand drivers create additional growth.

What Could Drive the Stock Next

Regulatory decisions remain the most important potential catalyst.

Chorus operates under the Commerce Commission's fibre price-quality framework, which determines allowable returns and revenue settings.

The current regulatory period runs from 2025 to 2028.

The regulated asset base is approximately NZ$6.0 billion.

Chorus has previously reported revenue below its allowed maximum, creating potential future recovery opportunities through regulatory mechanisms.

Beyond regulation, investors will monitor:

  • further reductions in capital expenditure;
  • free cash flow improvement;
  • dividend growth potential;
  • fibre utilisation trends;
  • demand from AI and data-centre infrastructure.

The next regulatory framework will be particularly important for determining the company's long-term earnings capacity.

Risks to Watch

Regulation remains the largest company-specific risk.

Changes to allowed returns, regulated asset values or expenditure assumptions could affect earnings and dividend capacity.

The company's debt position is another important consideration.

Net debt remains above NZ$3 billion, and leverage above four times EBITDA limits financial flexibility.

Higher interest rates or refinancing costs could pressure cash distributions.

Growth risks also remain.

Fibre adoption is approaching maturity, meaning future connection growth may slow.

Competition from fixed wireless and satellite broadband could affect demand.

Broader New Zealand economic conditions may also influence consumer and business connectivity spending.

Investor Takeaway

Chorus (ASX:CNU) delivered a result consistent with a mature infrastructure business: stable revenue, controlled costs, lower capital expenditure and a growing dividend.

The completed fibre build and accelerated copper retirement have simplified the operating model and improved long-term cash visibility.

However, the company's future will be shaped less by expansion and more by regulation, leverage management and capital allocation.

The key questions are whether free cash flow can continue improving, whether debt can gradually decline and whether new demand sources such as AI and data centres can create additional growth.

For investors, Chorus represents a regulated income opportunity, but the upside will depend heavily on factors outside normal operational execution.