EBITDA flat at $346m but NPAT flipped to a $5m loss as borrowings hit $2.9bn

What changed

Revenue for HY25 was $500m, up approximately 4% on the restated HY24 comparable of $481m, though the company's own disclosure frames it as "down 1%" against HY24's $503m — a gap that reflects the unit mismatch in the extracted data and should be read against the release-stated figure of $503m for HY24. EBITDA of $346m was essentially flat against HY24's $347m, indicating cost growth absorbed the modest revenue lift.

The more significant movement was below the EBITDA line. NPAT swung from a $26m profit in HY24 to a $5m loss in HY25, a deterioration of roughly $31m. PBT was not disclosed for HY25, but HY24 PBT was $37m — the full compression of that margin into a net loss signals a meaningful step-up in depreciation, amortisation, interest, or a combination of all three, consistent with a sustained high-capex infrastructure build.

Gross borrowings rose to $2.9b from $2.2b in the prior period, lifting estimated net debt to approximately $2.8b. Against the annualised EBITDA run-rate, that implies leverage of around 8.1x, up from roughly 6.6x in HY24. Cash on hand increased to $83m. Capital expenditure of $199m was lower than HY24's $246m, though it still represents about 40% of revenue.

The interim dividend was declared at 23 cents per share, up 70% on HY24's 13.5 cents — a notable increase declared against a period in which the company reported a net loss.

What matters

• Leverage trajectory is the central concern. Net debt rising by roughly $660m in one half-year, with leverage crossing 8x EBITDA on a regulated infrastructure asset base, is the dominant balance-sheet story. Chorus operates under a price-regulated framework where EBITDA is largely predictable, but at these multiples any slippage in EBITDA or further capex overrun compresses the already-thin headroom between operating cash flow and debt service.

• The NPAT loss and the enlarged dividend create a visible tension. The 23 cps interim dividend is being paid while the business reports a net loss. For a regulated utility, dividends are conventionally benchmarked to free cash flow or EBITDA rather than NPAT, and the company's unimputed status suggests its tax-loss position is being utilised — but operating cash flow for HY25 was not disclosed, so the cash coverage of the dividend cannot be verified from this release. The FY24 full-year dividend total (interim 13.5 cps plus final 28.5 cps = 42 cps) compares to the HY25 interim alone of 23 cps, implying a materially higher full-year payout trajectory if the final is similarly sized.

• Capex stepping down is structurally important. At $199m in HY25 versus $246m in HY24, the capex decline is the first concrete signal that the fibre build may be approaching a peak-spend inflection. If this trend continues into H2 and beyond, the free cash flow profile should improve, which is the primary mechanism through which leverage would stabilise.

Expectations

No formal earnings guidance or stated targets were disclosed in this release. The second-half shape from FY24 implies HY24 was the lighter half — FY24 revenue was $1b with HY24 contributing roughly 48%, suggesting H2 has historically been marginally stronger. On that basis, an annualised run-rate of approximately $1b from HY25 is broadly in line with FY24's $1b, indicating flat revenue progression rather than growth.

The EBITDA annualised run-rate of ~$692m sits slightly below FY24's $700m, consistent with the flat-to-marginally-softer top-line and copper connection revenue continuing to decline as the copper network is retired. No forward work pipeline or medium-term EBITDA guidance was provided, so the release offers limited forward visibility beyond confirming the near-term revenue base is holding.

The decline in capex relative to HY24 is directionally positive for free cash flow in the second half, but without operating cash flow disclosure for HY25, it is not possible to assess whether working capital or other cash items are offsetting the capex relief.

Quality of result

The EBITDA result is structurally sound in the sense that Chorus's revenues are substantially regulated or quasi-regulated, making the $346m a reasonably durable figure. The flat comparison to HY24 reflects the offsetting dynamic of fibre connection revenue growing while copper-based revenues decline — a mix shift that is secular rather than cyclical.

The NPAT loss, however, reflects the reality that heavy depreciation on a $6bn asset base and rising interest costs on $2.9bn of gross borrowings are consuming the entire operating surplus. This is not a timing or working-capital-driven outcome; it is a structural consequence of the capital intensity of the fibre network rollout being financed predominantly with debt. The dividend, in this context, is effectively being funded from a combination of operating cash flow and balance sheet capacity rather than from reported earnings — a position that is sustainable only if leverage stabilises and free cash flow improves as capex moderates.

Total equity has fallen to $662m from $1.4b in the prior period, reflecting accumulated losses and distributions outpacing retained earnings. This further concentrates risk in the debt capital structure.

Unresolved

• Operating cash flow for HY25 was not disclosed, making it impossible to calculate free cash flow, cash conversion, or cash coverage of the dividend from this release alone.
• The full reconciliation of the borrowings increase from $2.2b to $2.9b — whether driven by new debt issuances, refinancings, or the recognition of new lease liabilities — is not available in the extracted data.
• The trajectory of copper disconnections and their revenue impact on H2 and FY26 is not quantified; the rate at which that headwind accelerates will determine whether flat revenue holds or begins to slip.
• No disclosure was made on interest rate hedging, debt maturity profile, or covenant headroom, which are material at 8x leverage.

This briefing cannot assess whether Chorus's regulated asset base valuation, price reset schedule, or any forthcoming Commerce Commission determination would alter the forward EBITDA or leverage trajectory.

Key metrics

Analytical metrics

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This analysis was generated using Annolyse, an AI-powered tool that analyses NZX company announcements. The analysis is based on available company filings and standard Annolyse calculations. This is general information only and does not constitute financial advice. The analysis may contain errors. Always read the original company filings and consult a licensed financial adviser before making investment decisions.