NBN is the government’s $60 billion investment that will never be sold

The Albanese government’s big announcement about not privatising the NBN feels like it was answering a question no one was asking.

There is no roar from the large super funds egging the government on to liberate the national broadband network because of its great earnings or its commercial value.

Why Anthony Albanese chose to elevate the NBN sale to an “issue” is a little difficult to fathom. Credit: Alex Ellinghausen

And when was the last time dinner party conversation was hijacked by discussions on whether or when the NBN would be privatised?

But the community would be enormously interested if their broadband price was more manageable during a cost-of-living crisis.

The government’s message on Wednesday was that retaining ownership of the NBN would enable it to keep wholesale prices – which it charges to retail telco operators – more affordable.

The Coalition, which the government claimed was itching to sell the NBN, was noticeably quiet.

The community would be enormously interested if their broadband price was more manageable during a cost-of-living crisis.

Realistically, the government would crystallise a loss in the tens of billions of dollars if the NBN were sold – and that assumes someone would want to buy it.

Calculating its potential sale price appears more like an exercise in “pin the tail on the donkey”.

Assuming that the usual company valuation metrics are applied (based on earnings before interest, tax and depreciation), the business could be worth $30 billion or a bit more.

Communications Minister Michelle Rowland quotes its worth at $20 billion, saying that is the view of her department, but revealed no basis for this.

Withdrawn from the market – the NBN will stay government owned.Credit: Fairfax Media

But if either is compared against the $60 billion-plus that has been invested in its building, it’s an incredibly poor outcome for any government.

Why Albanese chose to elevate the NBN sale to an “issue” is a little difficult to fathom.

It is arguably unsaleable for an attractive price, so putting it on the market is something of a moot point.

Sure, some mega super funds or private equity groups typically love these monopoly cash-flow-generating assets.

But the regulatory uncertainty that has beset the NBN would make it a riskier asset to buy, according to telco expert Ian Martin, from New Street Research, who says the regulatory model that sets its pricing framework has been unreliable in the past.

In the 2024 financial year, it lost $1.1 billion, a 5 per cent deterioration on the previous year’s loss after paying $700 million more in capital expenditure. Its interest payments also increased on its $27 billion debt pile.

The larger problem in Albanese’s plan to retain this nationally important piece of infrastructure in perpetuity is how it will be treated in the future on the government’s books.

Until now, the NBN’s costs do not count against the budget deficit because it is meant to provide an eventual net profit to taxpayers, making it an investment rather than an expense.

The problem with the NBN being kept in government hands is that the model used to determine capital expenditure is a “budget” model rather than the longer-term “return on invested capital” model that is being used by retail telcos such as Telstra and Optus.

Communications Minister Michelle Rowland quotes the NBN’s worth at $20 billion.Credit: The Sydney Morning Herald

The commercial model understands and anticipates the amount of spending needed for the big seismic moves such as AI, where data use increases at breakneck speeds. More data cable closer to the customer and more fibre will be in demand, meaning the NBN network will need to step up.

It is already clear that Telstra is investing billions of dollars in future-proofing its network to deal with increased demand from big IT customers such as Microsoft on the back of AI.

The initial response from retail telcos is that retaining the NBN under government ownership brings some certainty. Needless to say, they argue that the NBN’s wholesale charges remain too high.

I’m not sure that will change.

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