Chorus has reported a rise in its fibre regulated asset base to NZD 6 billion for 2025, alongside a significant NZD 101 million under-earn on its maximum allowable revenue, resulting in a NZD 76.3 million wash-up balance to be carried into the next regulatory period.
- Fibre regulated asset base grows to NZD 6.0 billion
- Core RAB increases by NZD 221 million to NZD 5.1 billion
- Financial Loss Asset reduced to NZD 862 million
- NZD 101 million revenue under-earn for 2025
- NZD 76.3 million wash-up balance carried forward to PQP3
Regulated Asset Base Expansion Reflects Ongoing Fibre Investment
Chorus Limited's fibre network continues to expand, with its regulated asset base (RAB) reaching approximately NZD 6.0 billion by the end of 2025, up from NZD 5.9 billion the previous year. The core RAB segment saw a NZD 221 million increase to NZD 5.1 billion, driven by NZD 343 million in commissioned assets, partially offset by depreciation and asset allocator adjustments.
Meanwhile, the Financial Loss Asset (FLA) was trimmed by NZD 130 million to NZD 862 million, reflecting ongoing regulatory accounting treatments. The company’s asset revaluations also increased due to higher inflation rates, with a 3.11% uplift in 2025 compared to 2.22% in 2024.
Revenue Underperformance Creates Regulatory Wash-Up
Despite steady asset growth, Chorus under-earned its maximum allowable revenue (MAR) by NZD 101 million in 2025. The MAR for the year was NZD 963.9 million, while actual revenue received was NZD 863.2 million. This shortfall, combined with other adjustments such as updated cost allocators, pass-through cost variances, and CPI recalculations, culminated in a NZD 76.3 million wash-up balance.
This wash-up amount will be carried forward into the upcoming PQP3 regulatory period, preserving net present value neutrality through post-tax weighted average cost of capital (WACC) adjustments. Notably, no individual capital expenditure proposals were submitted in 2025, simplifying the wash-up calculation.
Operating and Capital Expenditure Trends
Operating expenditure remained relatively stable, with total opex for the second half of 2025 at NZD 94 million, slightly down from the first half. Network maintenance and operations costs showed minor fluctuations, while corporate and technology expenses saw modest increases reflecting ongoing support and development activities.
Capital expenditure (capex) was focused on network extension and sustainment, with NZD 129 million spent in H2 2025, down from NZD 178 million in H1. The reduction largely reflects timing differences in network augmentation and site sustain activities. Chorus continues to invest heavily in augmenting its fibre network, with a strategic emphasis on sustaining and enhancing network resilience.
EBITDA Growth and Revenue Segmentation
Chorus’ EBITDA from regulated Price-Quality Fibre Fixed Line Access Services (PQ FFLAS) showed steady growth, reaching NZD 331 million in H2 2025, up from NZD 266 million in H1 2023. This improvement reflects the company’s ability to manage operating costs effectively despite revenue underperformance.
Conversely, EBITDA from non-PQ FFLAS activities declined to NZD 29 million in H2 2025, down from NZD 64 million in H1 2023, indicating a contraction in other revenue streams. Capital contributions remained a minor but consistent component of overall revenue.
Regulatory Review and Forward-Looking Considerations
All reported figures and regulatory calculations are subject to review by the Commerce Commission, which may influence final outcomes for Chorus. The company’s under-earn on MAR and the resulting wash-up balance highlight the ongoing challenges in aligning revenue with regulatory allowances amid evolving cost and inflation dynamics.
Looking ahead, the wash-up balance carried into PQP3 will be a key factor for investors and stakeholders to monitor, alongside Chorus’ capital expenditure plans and operational efficiency as it navigates the next regulatory cycle.
Bottom Line?
Chorus’ fibre network investment continues apace, but revenue shortfalls and regulatory wash-ups underscore the delicate balance between growth and earnings under the current framework.
Questions in the middle?
- How will the Commerce Commission’s review impact Chorus’ reported RAB and wash-up balance?
- What factors contributed most to the NZD 101 million revenue under-earn in 2025?
- Will Chorus’ capital expenditure strategy adjust to address ongoing revenue pressures in PQP3?