New Zealand's largest fibre network keeps adding connections and shifting ever more data, and it pays a chunky dividend. But Chorus runs on a regulated revenue model, heavy debt and a looming price reset. We weigh the roughly 6 per cent yield against the risks.

A regulated utility hiding in plain sight

Chorus Limited (ASX: CNU; NZX: CNU) is not a telco in the everyday sense. It does not sell mobile plans or home broadband. Instead it owns and operates the wholesale fixed-line network — the fibre and remaining copper cables, exchanges and roadside cabinets — that retailers such as Spark, One NZ and 2degrees lease to reach roughly nine in ten New Zealand premises. Headquartered in Wellington, Chorus reports in New Zealand dollars, and every figure below is NZD unless stated. Australian investors buying on the ASX are exposed to the New Zealand dollar and receive dividends converted into Australian dollars.

Fibre growth and the data story

The network is essentially built. Chorus completed the government-sponsored Ultra-Fast Broadband rollout at the end of 2022, and its footprint now passes about 87 per cent of the population, with roughly three-quarters of those premises connected. That maturity means connection growth has slowed to a grind rather than a sprint: the active fibre base has climbed toward roughly 1.15 million connections as remaining copper users migrate across, but the era of rapid additions is over.

Where the momentum lies now is usage. In mid-2025 Chorus lifted default residential speeds — its "Big Fibre Boost" took more than 700,000 homes from 300 Mbps to 500 Mbps at no extra cost — and average household data consumption keeps climbing as streaming, gaming and remote work grow. Rising data does not automatically lift revenue under Chorus's regulated pricing model, but it reinforces the long-term case for fibre as essential infrastructure and gives the company a lever to sell higher-speed wholesale plans over time.

Latest results and the balance sheet

The most recent reported numbers are the half-year result for the six months to 31 December 2025, released on 23 February 2026. Revenue edged up about 1.2 per cent to NZ$506 million, and the company posted a net profit of roughly NZ$15 million, a turnaround from a small loss a year earlier. For the full year to 30 June 2025, Chorus generated EBITDA — earnings before interest, tax, depreciation and amortisation, a rough proxy for cash operating profit — of about NZ$715 million on revenue near NZ$1.01 billion, an EBITDA margin close to 69 per cent.

The catch sits below EBITDA. Building a national fibre network left Chorus with heavy borrowings — total debt of roughly NZ$4.06 billion against about NZ$161 million of cash at 30 June 2025 — plus large annual depreciation. Interest and depreciation absorb most of that EBITDA, which is why statutory net profit runs to only a few tens of millions. High gearing is normal for a regulated network whose asset base backs the debt, but it leaves Chorus sensitive to interest rates; interest cover sat near 1.2 times.

Regulation is the whole game

Chorus's economics are set by regulation, not the open market. Since 2022 its fibre business has operated under a "building-blocks" or regulated-asset-base (RAB) model overseen by New Zealand's Commerce Commission. In plain terms, the regulator values the network (the RAB), lets Chorus earn a permitted return on that value plus recovery of its costs and depreciation, and caps the maximum revenue it may collect over multi-year regulatory periods. The first period ran to the end of 2024; the current period spans 2025 to 2027, and Chorus lodged its 2025 fibre regulatory report on 29 May 2026. The next reset — and the allowed cost of capital baked into it — will shape returns more than any marketing campaign.

The bull case

For income-focused investors the appeal is straightforward: Chorus is a dominant, essential-infrastructure monopoly with predictable, largely inflation-linked regulated revenue, a network that is mostly paid for, and falling build capex that should free up cash. If the regulator's allowed return holds and data-hungry demand keeps fibre relevant, the roughly 6 per cent yield reads as a defensive income proposition with modest growth potential. Management guidance points to broadly stable EBITDA and continued distributions, and the full-year FY26 result due on 24 August 2026 will test that thesis.

The risks

The risks are the mirror image. A tougher regulatory reset — a lower allowed return or a tighter revenue cap — would hit cash flows directly. The balance sheet is heavily geared, so higher-for-longer interest rates raise refinancing costs and pressure a dividend already paid out of cash rather than profit. Connection growth is maturing, copper decommissioning carries execution and cost risk, and any capex overrun narrows the free cash flow that funds distributions. None of this is advice; it is a reminder that a regulated utility's "safe" yield is only as safe as its next regulatory decision, and that past performance and past dividends are no guarantee of future results.

Bottom line

Chorus offers what many investors want — an essential network, a defensible market position and a yield near 6 per cent — wrapped in what many fear: high debt, a payout that exceeds profit, and a regulator that holds the pen on future returns. The August full-year result and the looming price reset, not the raw connection count, will decide whether that yield keeps growing.