NBN posts bumper loss, but project remains ‘on track’

NBN Co has recorded a deficit of nearly $4bn, as the decade-long infrastructure project nears completion.

NBN Co is now switching the focus of its rollout to “complex premises”.

NBN Co has posted another bumper loss, recording a deficit of $3.78bn, from $3.89bn a year earlier, as the decade-long infrastructure project nears completion.

The government-owned company posted its full year results on Tuesday, lifting revenue by 36 per cent year-on-year to $3.8bn, and active premises to 7.3 million for the year ending June 30, 2020.

The company posted another significant loss however, with $2.4bn in subscriber costs to Telstra and Optus weighing on its numbers.

Its key performance metric, the monthly residential average revenue per user (ARPU), was up just $1 to $45, from $44 in FY19.

In positive news NBN Co said it had surpassed its corporate plan target by more than 230,000 premises, with 11.73 million homes and businesses now ready to connect to the national network.

Its $3.8bn in revenue was also $100m higher than the FY20 forecast in its corporate plan, despite the company giving away more than $80m in capacity to providers, to help them meet demand stemming from COVID-19.

NBN Co posted earnings before interest, tax, depreciation and amortisation (EBITDA), before subscriber costs, of $1.77bn, up 190 per cent year-on-year. Capital expenditure declined from $5.9bn in FY19 to $5.04bn in FY20, which the company said reflected the fact construction work was winding down.

“The most important thing we’ve delivered this year has been 10 years in the making. We completed the initial build of the national broadband network on time so that Australians had access to secure, resilient, high-speed broadband when they needed it most,“ NBN Co CEO Stephen Rue said in a statement.

“When the impact of the COVID-19 crisis became apparent in March, we worked quickly to establish an industry and world-leading response to increased network utilisation, offering pricing relief for up to 40 per cent additional CVC capacity to participating internet retailers at no extra cost.

“Since the introduction of the offer, we have forgone revenue of more than $80 million in CVC capacity charges from participating internet retailers as part of our efforts to help support increased data use during COVID-19.”

NBN Co last month extended its capacity offer to retailers to September 19, and Mr Rue did not say whether it would be extended again.

Communications Minister Paul Fletcher said that NBN Co would now shift its focus to “complex premises”, with 88,000 to be made ready to connect before the end of 2020.

“The government’s investment in this critical infrastructure has proven more important than ever. COVID-19 presents extremely difficult financial and economic challenges for many and access to affordable and reliable broadband through the NBN has been vital,“ he said.

“When COVID-19 struck, nearly 99 per cent of Australian homes and businesses were able to connect to the NBN. When millions of Australians suddenly needed to work or study from home due to COVID-19, the NBN was there for them in their hour of need – but if our Liberal-National government had not completely redesigned the network rollout strategy in 2013 to clean up the chaotic mess we inherited from Labor, the situation in 2020 would have been very different, with around 4.5 million homes in the fixed line footprint still unable to connect to the NBN.

“NBN Co moved quickly and worked with industry to implement a world-leading response to unprecedented network demand by providing up to 40 per cent additional capacity to internet retailers at no extra cost and increased data allowances for Sky Muster satellite customers.”