Hello! Hi. Hello, everyone.
Hey, what's this about?
Is everyone here? Yeah, almost three million of us so far.
Wow. Bet Tony's late. Tony from Gizzy? Tony from Timaru. Grumpy Tony.
I'm not grumpy. I've just got one of those faces. Anyway, what's this meeting about, Carl? I heard everyone's using fibre. Just wondered what you're up to.
Nothing out of the ordinary. Action!
I'm doing a live webinar in three minutes. How do I fix this?
We're exploring a frog's anatomy.
Gross.
I'm... parenting?
I'm getting owned by some guy named DevilRage23. Ah!
Sucking up.
We're launching a rocket tomorrow.
Ooh, you might need to rethink that.
One job, Hugo. One job!
Fibre's milking my cows. That reminds me. Hey, Fridge, add milk to my shopping list. Adding milk. Lucky you. Fancy, Nana. I'm learning Te Reo Māori.
Doing yoga. Well, New Zealand runs on fibre, eh? A little help here, anyone?
[Foreign language] . Good morning, and welcome to Chorus's 2024 Annual Shareholders' Meeting. I'm Mark Cross, Chorus's Chair. We're joining you virtually this morning from the Chorus Network Lab in Auckland. On the information conveyed to me, I confirm that a quorum of shareholders is present and declare the meeting open. The minutes of the last annual shareholders' meeting have been approved. The notice of meeting, including the explanatory notes, has been circulated to all shareholders, and I intend to take it as read. We have a fairly short agenda today in terms of the formal business of the meeting. As the TV ad we played just before shows, our network helps Kiwis across the country meet every day, so we think it's only appropriate that we showcase our own technology for today's meeting.
This is actually our third virtual meeting, and the administrative nature of today's resolutions is part of our rationale for holding it virtually, as allowed under the NZX Listing Rules. A virtual meeting also makes sense given the very small number of attendees at our recent meetings and the positive difference it makes to the costs and associated carbon emissions for director and staff travel. We're always open to feedback from shareholders on how we can improve the format of the meeting next year. On to today's agenda. I'll start today's agenda with a short summary of the year and some of the things the board has been focused on to deliver value to shareholders. Chief Executive Mark Aue will then cover what's happening at an operational and market level. Mark stepped into the CEO role in April when we said farewell to JB Rousselot.
I've previously acknowledged JB's outstanding contribution to Chorus over his nearly five years as CEO. Mark brings extensive telecommunications experience, having previously served as CEO of 2d egrees and CFO of Vodafone New Zealand. Directors Kate Jorgensen and Sue Bailey, as chairs of our board committees, will then update you on the work carried out by the Audit and Risk Management Committee and the People, Performance, and Culture Committee. After that, we'll move to resolutions, questions, and voting. First, some information on how to ask questions and vote. Shareholders and proxies have the ability to ask questions and submit votes. If you have a question to submit during the live meeting, the Q&A is always open, so please feel free to submit questions throughout the meeting. These will be addressed at the relevant time.
To submit a question, simply select the Q&A tab on the right half of your screen, type your question into the field, and press Submit. Please be as concise as possible and ensure they relate directly to the matter being considered. We will not edit questions unless inappropriate language is used and will aim to provide the opportunity for follow-up questions. Voting today will be conducted by way of a poll on all items of business, and I'll shortly open the voting for all resolutions. To give you enough time to vote, you'll shortly be able to cast your vote on all resolutions under the Vote tab. Your vote has been cast when the tick appears against the available options. You can change your vote up until the time I declare voting closed. Simply select Change Your Vote to do so.
I now declare voting open on all items of business. I'll give you a warning before I move to close voting near the end of the meeting. If you need assistance at any time, simply type your query into the question field via the Q&A tab, and someone from Computershare will respond, or you can call Computershare on 0800-650-034. With the exception of Resolution 3, which relates to the proposed increase in the director fee pool, I and my fellow directors intend to vote all undirected proxies we hold in favor of the resolutions. I'll call for voting once I've given an overview of each resolution and each director standing for re-election and election has addressed you. I'd firstly like to introduce your directors to you.
Joining us online are Sue Bailey, Neal Barclay, who was appointed by the board in August this year, Will Irving, Kate Jorgensen, and Jack Matthews. Director Miriam Dean also joins me here at the Auckland Lab. Miriam's standing for re-election today in accordance with the NZX Listing Rules, and Neal Barclay is standing for election to the board as a new director. Neal brings a wealth of experience from the energy and communications infrastructure sectors. If elected, Neal will replace Murray Jordan, who retired from the board in September. We thank Murray for his valuable contributions to the board over the past nine years.... We also have with us today key personnel, including Drew Davies, our recently appointed Chief Operating Officer, Katrina Smith, our Deputy Chief Financial Officer, and Kristel McMeekin, our General Counsel, as well as representatives from our auditors, KPMG, and our legal provider, Chapman Tripp.
At the outset, I'd like to thank and acknowledge our people and our partners. Through their collective efforts, we've enabled 1.2 million New Zealanders to connect to the internet so that they can live, learn, work, and play. That's our purpose, and is the driving force behind what we do. As you'll have seen from the August results announcement, Chorus delivered another steady financial result despite the challenging macroeconomic environment. We maintained solid momentum in our transformation into a simpler, all-fibre digital infrastructure company. Fibre connections grew by 83,000, and fibre made up 87% of our total fixed-line connections at 30 June. The continued growth in fibre demand helped lift revenues to more than $ 1 billion for the first time. Tight cost management and reducing copper network costs helped offset inflationary pressure across various expense lines.
This meant we achieved EBITDA of $ 700 million, up from $ 682 million last year, and at the top of our guidance range. These results enabled total unimputed dividends for the year of $ 0.475 per share. That was up from $ 0.425 in FY 2023, and for FY 2025, we've provided dividend guidance of a 21% increase to $ 0.575 per share unimputed, subject to no significant adverse changes in circumstances or outlook. Last year, I summarized various beliefs that the board considers important to Chorus' success. These are shown on the slide here. I noted that prioritizing long-term value through capital allocation was a key area of focus for the board. During the year, we undertook a review to ensure our capital management framework is fit for purpose as we approach the new regulatory period in 2025.
This review included a consideration of regulatory settings, shareholder feedback, market benchmarks, and Chorus's financial outlook. This slide summarizes the capital management principles that we identified through our capital management review. First, we see ourselves as operating an essential regulated infrastructure asset. We have clarity for the upcoming regulatory period, and our capital allocation is underpinned by the free cash flow we see these assets now generating. The step up in dividend has, in part, been driven by our solid FY 2024 results, confidence in our future operating cash flows, and a more efficient use of our balance sheet to invest in the business. A core pillar of our capital management framework is a sustainable, growing dividend. That was paramount in all shareholder feedback. Our intention is to maintain that dividend growth, at least at the rate of inflation.
We maintain the view that an investment-grade rating of BB B is appropriate for Chorus as a digital infrastructure company. Based on the ratings down driver of five times EBITDA, we remain of the view that four point seven five times is an appropriate internal limit that allows sufficient buffer, and we're comfortable to operate up to that level. Net debt was four point four times EBITDA at the end of FY 2024, and we'll continue to use the balance sheet to fund CapEx where it meets our investment hurdle rates. Any growth investment must deliver greater shareholder value than returning it to shareholders. Capital discipline is an important focus point for us and was demonstrated by our decision to not proceed with $ 200 million of investment in extending fibre that was initially part of our regulatory submission.
As a result of this review, we decided to target a higher dividend payout range of 70%-90% of our net operating free cash flows after sustaining capital expenditures. This is an increase from the previous range of 60%-80% and reflects the confidence we have in our cash flows over the next and following regulatory periods for fibre. That confidence reflects the end of the UFB rollout and the peak of fibre installations, as well as clarity on future fibre expansion and expenditure allowances for the next regulatory period. That period runs for four years from January 2025. You may recall at last year's meeting that we'd just submitted our expenditure proposals to the Commerce Commission for this period.
The Commission has now approved capital expenditure of $ 1.14 billion and operating expenditure of $ 790 million for this next period. We appreciate the Commerce, the Commission's engagement through this process and its careful consideration of the further evidence we provided that resulted in an uplift from their initial draft decision. This final expenditure decision now becomes an input into the setting of our maximum allowable revenue, or MAR, for each regulatory year. This revenue cap is increasing as a natural function of the cost of capital being set at a much higher rate than the record COVID lows when our first regulatory WACC was set in mid-2021. With the regulatory settings for fibre now close to being finalized through to 2029, our focus is turning to the need for greater clarity on the outlook for copper.
The fibre regime means we cannot cross-subsidize rural network costs with urban revenues. As we've said before, copper is an old technology. Copper networks are approaching obsolescence and are being switched off in Europe, with discussion about a 2030 end date. We believe the trends are clear, and Chorus's new business strategy forecasts that copper will be shut down in New Zealand by 2030. In 2012, when we started building our fibre network, Chorus had nearly 1.8 million copper connections. That number has now fallen to just 139,000, with many of these remaining connections located in areas where other network providers already have a greater market share. Given the rapidly diminishing market share of copper and the wide availability of other network technologies, we think the regulatory regime is no longer fit for purpose.
The Commerce Commission has commenced an investigation into the deregulation of copper services. It will report its results later next year. We believe fibre can reduce the digital divide between urban and rural areas. However, any expansion beyond the 10,000 premises rollout we announced in January requires more clarity on pricing, market, and regulatory changes. As I referenced earlier, capital discipline requires that we need further clarity and benefits to make the commercial case for further investment stack up for our shareholders. I'm very encouraged by the current state of the business, our leadership, our momentum, and the clear direction ahead. The evolution and simplification, of course, will require a different pace and focus, and I'm confident our people are up for that.
It will also involve taking a more proactive stance in the market to ensure that customers fully understand fibre as a choice, recognizing the reality that most customers don't understand the complexities of the underlying technology that delivers the internet to their device. So in conclusion, I want to thank our customers, our shareholders, our team, and my board colleagues for your continuing support of Chorus. Together, we're enabling a stronger, simpler, all-fibre future for New Zealand. I'll now hand to Mark Aue for the CEO's address.
[Foreign language] . Greetings and welcome, everyone. I've been in the Chorus business now for the past eighteen months, with the most recent six months as the Chief Executive role. As Mark has noted, we're pleased with our solid FY 2024 financial result, one that demonstrates the resilience of our core fibre business as essential digital infrastructure. With our step change in strategy and in our operating model to being a more simple, more efficient, and more competitive operator, we feel emboldened by the opportunities that we see in front of us. In the wake of the COVID pandemic and as usage behavior changes, many countries are now switching to fibre because of its quality, consistency, reliability, and most importantly, the scalability.
We're encouraged by the strong global push for fibre, with OECD data showing fibre connections almost doubling to more than 200 million between late 2019 and 2023, with cable and copper connections in material decline. New Zealand had the foresight long before and was fortunate to begin investing in fibre since 2011. A vision to provide high-speed fibre connectivity to now over 87% of our population has fundamentally changed the way we live today and delivered tens of billions of dollars in economic and productivity benefits. Today, we rank amongst global leaders at seventeenth in the world, according to the Fibre to the Home Council in Europe, and fibre has been a key digital enabler for New Zealand. Their September 2023 data places us just behind Sweden and Japan, but more importantly, shows that fibre uptake of 80% and above is very achievable.
Our latest quarterly connections update shows our fibre footprint now covers more than 1.5 million addresses. Of those, 1.084 million are connected. That's close to 72% fibre uptake. Within that total, uptake rates vary from region to region. For example, the uptake rate is higher again at over 76% in Auckland and Dunedin. Wellington, however, is lower at around 70.6%, where we have faced fixed-line competition from the old TelstraClear coax cable network. In those UFB 2 areas where the fibre rollout was completed in the last few years, uptake is now at 59%, up from 53% a year ago, and clearly shows there is more opportunity to grow. As Mark mentioned, we're also expanding our fibre footprint to another 10,000 existing premises across 59 communities of New Zealand by mid-2025.
We've already had over 3,000 registrations of interest from customers and installed fibre into about half of the nine hundred addresses that have been passed by fibre so far. With the ten-year UFB fibre rollout now finished, Chorus needs to transition from being the great network builder to become the great network operator. To enable this, we've undertaken a reset in our strategy and developed a horizon model over ten years with three distinct phases. We also now have a clear aspiration, one that provides the clarity and specificity of what we want to become and what success looks like. And that is as a simplified all-fibre business with 80% uptake by 2030. That speaks to driving efficiency and operational excellence, a need to exit from legacy copper technology completely and transition to fibre only, and to drive an 80% uptake of fibre and premises passed.
We believe that's ambitious, but equally, we see that as achievable and is anchoring everything that we do, and it's also time-bound, and we look to achieve that by 2030. The three horizons create a distinct shift in our strategy to be simpler, more focused, more competitive. Horizon 1 is our financial year 2025. This year is about getting future fit for purpose and embedding our new operating model. Horizon 2 runs from FY 2026 to the end of FY 2029 and is about accelerating the benefits from our transition to an all-fibre business with growth, simplicity, and efficiency. Finally, in Horizon 3, from FY 2030 and beyond, is our future state with one single technology: fibre. Now, our strategy is underpinned by our belief that fibre will continue to serve consumer needs well into the future.
Ten years ago, I can say annual data usage on the network was just 400 PB. Annual traffic this year on our network grew to almost 8,000 PB. That's the equivalent of 8 billion GB . To put that in context, we now consume the annual usage on network from ten years ago, today, in just over two weeks. Our fibre network carried 94% of that traffic, and it can carry even more at a much lower cost than other broadband technologies. Most traffic occurs still at peak times in the evening, when we're seeing some evenings with traffic about a third higher than the average, usually when major gaming updates or online events occur. Despite this growth, fibre's greater efficiency enabled us to reduce our net electricity use by 3% in FY 2024 by shutting down legacy network equipment.
This transition means we're well on our way to reducing our electricity consumption by 25% between FY 2020 and FY 2028. This reduction also supports our target of a 62% reduction in our Scope 1 and Scope 2 emissions from FY 2020 levels by 2030. With the cost of living pressures on customers, it is no surprise really, that we've seen our entry-level 50 Mb plan, as we call it Home Fibre Starter, grow strongly over the last year. It now connects close to 60,000 customers. We introduced this plan to help low-usage and price-sensitive consumers, as well as provide a defense to fixed wireless, and it has worked well. At the other end of our product mix, we continue to see good growth and demand for our 1Gb and multi-gigabit Hyperfibre services that are now over 25% of our total customer base.
Our Hyperfibre services are still niche and in their infancy, but they've passed now 4,000 connections as more retailers promote those services, and there are some sharp offers in market for consumers that are shopping around. We expect demand to evolve over time with greater use case applications. As context and as a part of their Digital Connectivity Blueprint, we look at Singapore, who are offering a SGD 100 million grant to support service provider investment into a 10Gb capability. This is to prepare for the city-state's infrastructure for their expected growth in internet-linked appliances and data-intensive applications. They expect 500,000 households to sign up to these 10Gb plans by 2028. We'd recognize we're certainly in a competitive market today. We've said before that when comparing broadband technologies, there is no such thing as Fibre-like.
The Commerce Commission's quarterly report shows this across a range of factors such as speed, latency, and reliability. But too often, we're seeing examples of customers who have been given the impression that fixed wireless is just as good as fibre. We've included some customer examples from online forums on the slide, and we're seeing increasingly more of these. We're concerned that headline comparisons are being made between fibre and fixed wireless on the basis of average download speed performance. Such comparisons, though, can be very misleading when fixed wireless performance can vary significantly due to a wide range of factors, such as how far a customer is located from a cell tower, other obstructions like trees or house construction materials, and the number of customers using the cell tower at any one point in time.
In contrast, a fibre network means you can expect to receive the marketed speed at any time of the day. That's why we've launched a new campaign in market to help customers better understand the difference, referencing the mobile network operators' own terms and conditions that talk to the variability in network experience. We believe transparency and product disclosure to consumers of broadband technologies is essential. We were pleased last week to see the Commerce Commission had proposed improved broadband marketing guidelines. These now include consumers having the right to exit fixed wireless services if real-world broadband performance is consistently less than 70% of average reported speeds. The Commerce Commission's reporting shows 5G fixed wireless performance has varied significantly in the last two quarters, possibly as more customers use the network.
The chart shows the very wide range of speeds that about half the monitored customers were receiving below the reported average speed, and 17% of customers were getting less than 50 Mb, which is more comparable to a 4G service and below our own entry-level fibre plan. Compare that to fibre, which sees very, very little variability from stated plan speeds. Finally, as we look ahead to 2030, while New Zealand may be facing macro market challenges, the investment we've already made in fibre means we are well-placed for the future. We have picked the technology that is in high demand and can cater for the expected ongoing growth in data. That growth doesn't require the development of fantastic new applications on virtual reality headsets, although they will likely also come.
We can see it right in front of us today, and with simple steps such as the switch from terrestrial to internet broadcast TV and more 4K content at mass market level as it becomes the default standard for video content. Now, that's before we see the ongoing evolution of AI adoption and cloud-based applications. This financial year marks the step change in what has been a very successful story to Chorus, for Chorus to date. But now is the transition time to a more simplified future state with one superior technology, and that is fibre. On that note, I'll pass back to Mark. Thank you.
This year, we've decided to invite the chairs of our Audit and Risk Management Committee, Kate Jorgensen, and the People, Performance and Culture Committee, Sue Bailey, to address the meeting to give shareholders some more context around what their respective committees do and the areas they're focused on. To ensure sound and picture quality, Kate and Sue's speeches have been pre-recorded, and we'll play Kate's pre-recorded address now.
[Foreign language] . Good morning, everyone. Kate Jorgensen, [Foreign language] . I am the Chair of the Audit and Risk Management Committee. The primary function of the Audit and Risk Management Committee is to assist the board in overseeing Chorus's financial and non-financial risks, financial management, accounting, financial reporting, internal and external audit, and compliance. As part of this responsibility, the ARMC also oversees Chorus' sustainability and climate-related progress and reporting. This year saw Chorus' first mandatory climate disclosures prepared under Aotearoa's climate-related reporting regime. Aotearoa has been world-leading in this space, which means the business and the committee has been hard at work ensuring that Chorus, with its low-emission fibres technology, is looking to the future and how we can help Aotearoa benefit from the fibre network we now operate.
As part of the climate journey, we joined with the New Zealand Telecommunications Forum to build an industry-wide set of climate scenarios and reviewed and reported our own climate risks and opportunities against those scenarios. The climate change area is one that is continually developing, both in Aotearoa and internationally, and the committee will keep a close eye on this area. Over the year, the committee also played a crucial role in partnering with the executive to identify and manage or capitalize on strategic risks that may affect Chorus, including discussing emerging risks, given the evolving domestic and international operating landscape. Our internal audit team carried out audits, including cybersecurity, contract management, and procurement processes, as well as providing a broad refresh of the legal and regulatory compliance program. Cybersecurity continues to be an area of focus for us.
We utilized several methods during FY 2024 to test and assure our cyber resilience strategies. These included, but were not limited to, cyber exercises with the executive and board, an external maturity audit, and strengthening our network protection. Cyber maturity, operational performance, and progress are reported to the board at least every quarter. We also reviewed our business continuity management and crisis management frameworks. Looking forward to financial year 2025, we remain focused on supporting Chorus as we transition from network builder to operator and enter our second regulatory period. Internal audit will focus on our financial, operational, and commercial fundamentals. We are seeking to streamline the regulatory reporting process with the Commerce Commission and continue to develop our sustainability and business continuity management processes to build our business maturity.
As you can see, it's been another busy year for the committee, and we remain focused in the year ahead on ensuring the business has the right building blocks, frameworks, and resources as we transition to an all-fibre future. [Foreign language] . Thank you very much.
Thank you, Kate. We'll now move to Sue Bailey on the People Committee.
[Foreign language] . I'm Sue Bailey, and I'm pleased to take on the role of the Chair of People, Performance and Culture Committee from Murray Jordan after his recent retirement from the board. I've been a member of the committee since twenty nineteen and consider it an essential part of aligning employee performance and development with strong business performance and shareholder interests. Employee engagement has always been strong at Chorus, with scores of 8.5, 8.7, and 8.6 out of 10 over the last three years. This puts Chorus in the top 10% of the IT company benchmarks we measure ourselves against.
Our latest engagement result is testament to the resilience of the organization, especially when you consider that substantial changes were made to the operating model in February, and this involved realigning the business around new value streams and changing about a hundred and thirty roles, so these changes were an opportunity to promote some high-potential staff into executive roles, and we also took the opportunity to employ people from outside of Chorus, where we believe different perspectives can help underpin Chorus' new focus on being a great network operator. Mark Aue's appointment as CEO, and more recently, Drew Davies as Chief Operating Officer, is part of that thinking. Chorus remains committed to talent and succession planning at all levels as we continue to build a diverse and inclusive environment, and one where our people are engaged, appropriately rewarded, and have the tools to reach their potential.
The board sets measurable objectives each year to promote diversity and inclusion, and considers that overall, we continue to make good progress towards achieving our DE&I objectives. These include meeting our gender ratio target of 40, 40, 20 at board and executive level, and continuing to focus on reducing our gender pay gap. Our commitment to diversity, equity, and inclusion has been recognized with a number of external wins, including our Head of Diversity, Equity, and Inclusion, Sarah Archer, being personally recognized for her leadership in the DE&I field with a win at the New Zealand Leadership Awards. In FY 2025, we continue our focus on gender equity, as the committee has recently approved the first stage of our gender equity plan.
From a remuneration point of view, we will also continue to refine our performance and reward framework to ensure that they remain market-aligned and fit for purpose, so that Chorus continues to attract, retain, and develop the talent and capability we need to be successful. Chorus has a large contractor workforce, and we expect our suppliers to share our commitment to treating all people fairly. We have an ongoing worker welfare program and audit regime to monitor that. We take any complaint seriously, and in partnership with our service companies, we ensure action is taken where it's needed. Finally, a big thank you to Murray Jordan for his mahi, knowledge, and guidance as Chair of the People, Performance, and Culture Committee for the last five years. Big shoes to step into.
I'd also like to thank the People and Culture team and the executive who have led the change across Chorus in the last year, and of course, I want to recognize the people of Chorus for their hard work, patience, and ongoing contribution to the long-term success of your company. [Foreign language] . Thank you very much.
Thank you, Sue. As you've heard, there's a lot of work being done, both at board and committee level across the business, to ensure Chorus is performing well for you, our shareholders, and for our people as we look to the future. We now come to the resolutions outlined in the notice of meeting. We have Miriam Dean retiring by rotation under the NZX listing rules and standing for re-election. The board unanimously supports her re-election. We also have Neal Barclay standing for election following his appointment by the board at the end of August. A brief biography for each director standing for re-election and election was included in the notice of meeting. The third resolution relates to the proposed increase to the director fee pool. The fourth resolution relates to the fixing of the fees and expenses of our auditors, KPMG.
Voting today will be conducted by way of a poll on all items of business. As a reminder, for those of you online and eligible to vote, you can cast your vote by clicking on the Vote tab and selecting your voting directions. Your vote is cast when the tick appears. There is no need to hit a Submit or Enter button, as the vote is automatically recorded. You do, however, have the ability to change your vote up until the time I declare voting closed. I'll give you a warning before I move to close voting. If you wish to ask a question, please press on the Q&A icon. This will open a new screen. At the bottom of that screen, there is a section for you to type your question. Once you've finished typing, please hit the Send button.
You can also ask general questions that will be addressed at the end of the meeting. We now move to Resolution 1: Miriam Dean's re-election as a Director. She retires under rotation under the listing rules and offers herself for re-election. It's my pleasure to propose Resolution 1, the resolution to re-elect Miriam as a director of the company. I now invite Miriam to address the meeting.
Thank you, Mark. [Foreign language] . Good morning, shareholders. Apologies in advance, I have a very croaky voice. I put it down to a lot of talking in Wellington yesterday, so I do hope it will last the distance. I seek re-election today, having first been elected in two thousand and twenty-one. It's been a real privilege to be part of the Chorus board, and I'm pleased to have the opportunity to seek your support for re-election as an independent director. First, why do I want to continue to be a member of the Chorus board? As a former director of Crown Fibre Holdings, the government stakeholder in the public-private partnership that built the country's awesome fibre network, I spent nearly a decade involved in almost every aspect of its successful rollout around the motu.
So for me, the opportunity to continue the journey as a Chorus director and help guide the business as we become a simpler all-fibre infrastructure company is one I relish. I am a strong believer, too, that Chorus plays an essential role providing New Zealand homes and businesses with fast and reliable broadband connectivity that has economic, social, and cultural benefits for us all. The shift to remote working and consumer demand for high capacity and low latency connections has clearly cemented fixed broadband's place as an essential utility. To me, it's as important to New Zealanders as electricity or water. Fixed broadband is the superior technology, and it's inherently a low-emissions one.
I'm a very strong believer, too, in digital inclusion, and this year I was really proud we supported various programs to bridge the digital divide, helping more people across Aotearoa, regardless of their ethnicity, gender, age, or location, to access and benefit from the digital world. We must continue those efforts. So, our social license requires it. Secondly, what do I bring to the Chorus board? It's always hard to talk about oneself, but I do have extensive legal, governance, and commercial experience, including working within our telecommunications, infrastructure, and regulatory sectors. I believe my specialty in competition, consumer, and regulatory law continues to add strategic value to Chorus as we move into our second regulatory period. Our regulatory environment is complex, and it's a challenging one. We are heavily regulated as if we were a monopoly, yet we are not. We compete head-on with fixed wireless.
So it's important, in my view, that our regulatory environment is fit for purpose and can respond to changing market dynamics. It's also important we help educate consumers on the benefits of fibre, as our Chief Executive has already noted in his address, so that our residential and business customers alike can easily choose fibre at a time when some retailers steer them to their fixed wireless products. In my view, we must make sure customers have informed choices, and hence our new advertising campaign. After all, the customer should be at the heart of everything we do. As King's Counsel, I've acted for many corporates. I understand your commercial drivers. I understand the importance of a clear and compelling strategy, which we now have as we move from a build to an operating phase, and I well understand the need for shareholder value.
In my other roles as a governor and reviewer, I've gained insights into key areas for any board, including workplace culture, health and safety, risk management, and so on, all essential for Chorus as it adapts to its new business model. With your support, I look forward to continuing to work with my fellow directors and Chorus's strong management team to deliver value to consumers and shareholders alike, and to see Chorus grow over time. But that, of course, requires your support. [Foreign language] . Thank you.
Thank you, Miriam. Kristel, have we received any questions for Miriam or about Resolution 1?
No questions for Miriam or for Resolution 1. Thanks, Mark.
Okay. Thank you. I now move as an ordinary resolution that Ms. Miriam Dean be re-elected as a Chorus Director. If you've not already done so, I ask that shareholders vote on Resolution 1. We now move to Resolution 2, the election of Neal Barclay as a Director. I invite Neal to address the meeting.
[Foreign language] , and good morning, shareholders. [Foreign language] . It has been a privilege to be invited by the directors to join the Chorus board, and I'm pleased today to have the opportunity to now seek your support for my election as an independent director. I believe a person's motivation for any job is fundamentally important, and so for me, the attraction of Chorus was twofold. Firstly, I'm a proud New Zealander. I want to work with businesses that make a real difference to our economy and our society here in Aotearoa. The importance to New Zealand of the infrastructure that Chorus builds and maintains can't be overstated. We now live in a world where flexible working, video conferencing, streaming, and online computer gaming are a normal way of life. Connectivity is key, and this company provides the connectivity to New Zealand through a world-class broadband service.
Secondly, I had the fortune to work for Telecom New Zealand between 1995 and 2008 in various finance leadership roles, and one of the last projects I was involved in at Telecom was the redesign of the business operating model, including the establishment and separation of Chorus as an entity. Now, while Chorus has undoubtedly changed a lot since the initial inception that I was involved in, for me, this does represent an element of unfinished business, and so I'm very much looking forward to supporting the board and management to continue what has developed into a remarkably successful and important business for our country. I believe my experience will add strategic value to Chorus. I have a finance background and extensive executive leadership experience in regulated core infrastructure businesses, and I have a track record of applying strong capital discipline to those businesses.
I'm currently the Chief Executive of Meridian Energy. I joined the company in 2008 , and I became Chief Executive in 2018 . Meridian is the largest electricity generator retailer in New Zealand, and the company's market cap of more than $ 15 billion puts it in the top two companies listed on the NZX. In my time as CEO, Meridian has delivered total shareholder returns that have outperformed the electricity sector in Australasia and the NZX 50, but not outperformed Chorus, as it turns out. My experience as CEO provides me with relevant insight and understanding of how a board can most effectively set the direction and govern a company while providing constructive challenge and support for management.
I think my career journey has also afforded me the opportunity to learn and to lead an organization to be an exemplar of ESG business practices and to lead in climate action. I believe strongly that doing things sustainably in the broadest sense is an absolute non-negotiable for future business success. I'm confident I can complement the board's existing capabilities, and with your support, I look forward to bringing my diverse skills and experience and a fresh perspective to the next stage of the Chorus journey, and that's focused on operating and maintaining its world-class fibre network. Ultimately, it's our job as directors to create better outcomes for New Zealanders and to continue to earn the support of our shareholders. [Foreign language] . Thank you very much.
Thank you, Neal. Kristel, have we received any questions for Neal or about Resolution 2?
No questions for Neal or about Resolution 2.
Okay. Thank you. I now move as an ordinary resolution that Mr. Neal Barclay be elected as a Chorus Director. If you've not already done so, I ask that shareholders vote on Resolution 2. We now move to Resolution 3, Director Remuneration. As outlined in the notice of meeting, we're proposing to increase the director fee pool from the current $ 1.169 million to $ 1.365 million per annum. This is the first year we've sought to increase the fee pool since 2019. The proposed increase will bring the fee pool up to the median of Chorus's peer comparator group. As noted, we're not proposing an increase in individual director fees in the current year. Kristel, have we received any questions about Resolution 3?
No questions in relation to Resolution 3.
Thank you. I now move as an ordinary resolution that the maximum aggregate remuneration able to be paid to all directors in their capacity as directors be increased by $ 195,958, 17%, from $ 1.169 million to $ 1.365 million per annum. If you've not already done so, I ask that shareholders vote on Resolution 3. We now move to the final resolution, Resolution 4, the auditors' fees and expenses. In accordance with the Companies Act, Chorus's current auditors, KPMG, have been automatically reappointed as Chorus's Auditor. Under that act, auditor fees and expenses must be fixed in the manner determined at the annual meeting. Kristel, have we received any questions about Resolution 4?
No questions on Resolution 4.
Thank you. So I now move as an ordinary resolution that the board be authorized to fix the fees and expenses of KPMG as auditor. If you've not already done so, I ask that shareholders vote on Resolution 4. I now invite shareholders to raise any other questions, comments, or discussion, whether related to any of the presentations, the financial statements, or the management of Chorus. While we're waiting for people to raise any items of general business, an email address for your feedback is here on the screen. We welcome your feedback at any stage. Kristel, have we received any general questions?
We do have some general questions, Mark. Our first question from Stephen Mayne: The ASX is currently in the midst of an unprecedented deluge of takeovers that has contributed to listed entities falling by 170, or 7.4%, to 124 since June 2022, including 20 straight months of decline. There have already been 27 major takeovers above 200 million completed so far this calendar year. There is a clear mispricing between public markets and private markets. Why are public markets not valuing ASX and NZX-listed companies like ours more highly, and what special protections do we have to avoid being taken over?
Mm.
If Telstra bid for Chorus, what regulatory or legislative approvals would be required? Does the chair agree this thinning out of the ASX and NZX is a problem for both nations, particularly with so few new floats replenishing the ASX ranks? Why is it happening?
Thank you, Stephen. Actually, an incredibly topical and interesting question, which I can't answer in general terms in the time we have today. I'll express a few views, but I'll also talk specifically about Chorus, which I'll probably do first. So Chorus, as you're probably aware, actually has a couple of things that would need to be dealt with before anyone could take over the company. Firstly, and probably most importantly, is a 10% shareholding cap, which is a legacy of the original separation of Telecom and Chorus back in 2011. So, without any approval, that cap exists, so no one could buy more than 10%. As it happens, individuals or companies can apply to exceed the cap, and I think that's happened.
Our two largest shareholders have applied for and received that approval and sit above 10%, and I think in the past there've been one or two others that don't no longer sit above 10%. So there's that first key hurdle for anyone interested in Chorus. And then secondly, we're also subject, like all other New Zealand companies, to the overseas investment approval process, and that would also apply in the case of Chorus. So in a way, talking about the takeover of Chorus is somewhat hypothetical because those two things would need to be gone through. I think on the general point, it's a major issue for exchanges all around the world, not just New Zealand and Australia.
The advent of and the massive growth in private capital has driven the desire to invest in companies, either private or to look on the exchanges for companies that are sort of vulnerable to takeover by virtue of value. One might think that that arbitrage will disappear over time as the markets even up, but I think at least from a Chorus's perspective, our focus, at least as a board, is to deliver to shareholder value such that there would be no arbitrage between the public and private ownership of Chorus. Albeit, that there are certain things that private owners may be able to do or a cost of capital that they may have that would differ from us as a public company. So as I say, our focus is really on delivering shareholder value, irrespective of ownership.
Thank you, Mark. We've got a second question from Stephen: Could the chair please comment on whether he would support putting the remuneration report up for a non-binding vote at next year's ASM, as is required by law in Australia?
Mm.
What harm is done from asking your shareholders what they think about our remuneration policies? Not doing this makes New Zealand look like a governance backwater.
As you're aware, we are a dual-listed company, so we're subject to both NZX and ASX regulations. As you note that as a New Zealand company, we're not obliged to submit to the remuneration voting process. I think our focus has always been on being absolutely transparent about our remuneration, so not just what our executives get paid, but how they're measured and how they've performed against those measures. Every year we take feedback from shareholders on how we can improve our reporting, and particularly the transparency of it. We're also very open to feedback from all shareholders and proxy advisors, and we do that. I would say our mind's not closed to putting it up for an advisory vote, but as I say, at this stage, we haven't had the driving feedback to need that.
I think as a result of the dual listing and the NZX, ASX, I wouldn't describe New Zealand as a governance backwater as such. I think the level of disclosure, certainly we have as Chorus, is up there with any ASX, purely ASX-listed company.
Thank you, Mark. We've got a further question from Stephen for Mark Aue: It must feel quite strange having a former public company CEO suddenly become prime minister of the country. How important is support from the Luxon government when it comes to our ongoing success? And what is the CEO's view so far in terms of government policy decisions that are helping our company or the overall business sector?
Yeah, thanks, Stephen. Well, look, I think the first thing I'd recognize is actually the Ultra-Fast Broadband rollout had largely bipartisan support. So I think the recognition of fibre and the economic and productivity gains it's and benefits it's brought to the country are well understood. That said, for the new National Government, I'd recognize we're very encouraged by the open conversations that we've been able to have, both in terms of fibre expansion, the potential for that, and equally about how we may manage the challenges on exiting legacy technology such as copper. Equally would recognize the approach around the national infrastructure and infrastructure priorities plans of the government, and kudos to them.
I think, there's a challenge there on runway, and being able to execute in the short term. However, again, that vision is there for the longer term, and I would recognize for Chorus, there's an opportunity to leverage what we see as one of the most successful examples of public and private partnership, with the UFB rollout, and to look at further expansion, of fibre and take fibre to more New Zealanders. You know, at 87% of the population today, we would certainly see a use case up to 95%. New Zealand's topography and population dispersity probably makes that uneconomic beyond 95%.
However, we certainly see a use case there, and we've had, again, what I'd say is open conversations with the government about what the conditions might be for that to happen.
... Thanks, Mark. Yeah, I'd certainly agree that we are actively working with government to shed any constraints that we have on maximizing the potential of Chorus. Do we have any other questions, Kristel?
We do. We have a question from Simon Ritchie. It's about your managed exit from copper: Some of us in rural New Zealand are unlikely to ever receive the benefits of optical fibre. In addition, some of us have no cellular coverage or other wireless services. Can we be assured that we will continue to have connectivity via your copper lines, or will Chorus just disconnect us as part of your managed exit?
Thanks, Simon. I'll pass that on to Mark.
Yeah, Simon, I think, again, on the openness of conversations with government, there's a recognition of aging technologies and legacy copper networks, and, you know, at the moment, actually, if you reference one of the Commerce Commission's recent reports around service availability, they would recognize 97% of premises outside of fibre regions today can access an alternative wireless or mobile provider. Beyond that, obviously, the advent of low Earth orbit satellites take that largely to 100%, and it's clear that there are alternatives available. I think from our perspective, we would see certainly copper technology as a legacy one that is not fit for purpose in the future.
That said, we continue to work with the government on how we may exit from copper, where arbitrary decisions aren't actually made. We need to ensure that connectivity solutions are available for New Zealand.
Thanks, Mark. Any other questions, Kristel?
No further questions, Mark.
Okay. Thank you. So, ladies and gentlemen, that concludes our discussion on the items of business. I'll close the voting system shortly. Please ensure that you've cast your vote on all resolutions. I'll now pause briefly to allow you time to finalize those votes. Voting is now closed. The results of these votes will be released to the stock exchange after this meeting. There being no other matter of business, I thank you for connecting with us today. I now declare the meeting closed. Thank you.