NBN Co beats revenue target

NBN Co’s chief is confident more than half the country will be ready to connect to the network in the next year.

Rolling out the NBN in Alice Springs.

NBN Co chief executive Bill Morrow is confident that more than half of the country will be ready to connect to the National Broadband Network (NBN) in the next 12 months, and that advances in wireless technology pose very little risk to the company’s business model.

Mr Morrow said while fixed wireless services are becoming more robust, when it comes to meeting customer demands, the technology isn’t quite ready to dismantle NBN Co’s economics.

“Fixed wireless does have very strong customer satisfaction rates but we have accounted for a degree of infrastructure competition in our model,” Mr Morrow told the media at NBN Co’s full year 2016 results presentation.

“We are keeping a close eye on wireless and 5G because we might use it ourselves and we don’t see any major risks.”

Mr Morrow added that NBN Co is on track to have 5.4 million premises ready for service within the next 12 months with more than 2.3 million active services, as the company looks to build on its positive momentum.

NBN Co has easily exceeded its rollout and revenue targets for full year 2016, with the company’s revenue jumping from $164 million to $421 million in the 12 months ended June 30 2016.

The number of premises able to order a NBN service more than doubled during the period from 1.2 million to 2.9 million. Meanwhile, the number of premises with an active NBN service has also pushed up significantly during the period from 486,000 to 1.1 million.

Mr Morrow said the NBN Co is on track to post revenue of $900m in fiscal 2017 as all the components of the multi-technology network – Fibre-to-the-Node (FTTN) and Hybrid Fibre Coaxial (HFC) – start making a more meaningful contribution to the overall rollout.

Mr Morrow said the FTTN build, which relies on copper for last mile connectivity, has so far delivered on its promise.

“The FTTN has delivered exactly as what we expected and has helped speed up the rollout,” Mr Morrow said.

“The condition of the copper has also come in as we expected,” he added.

The original Fibre-to-the-Premises (FTTP) technology still accounts for the bulk of active NBN conditions but there are signs of life on the FTTN and fixed wireless front. NBN Co currently has over 119,000 active FTTN connections and over 117,000 premises connected to the fixed wireless footprint.

HFC is expected to be next big growth driver for NBN Co and Mr Morrow said preparations were under way to make the transition to the DOCSIS 3.1 standard – capable of delivering symmetrical broadband speeds of 10Gbps to retail service providers - by the end of next year.

NBN Co’s average revenue per user (ARPU) for the period came in at $43, compared to $40 last year, with the company highlighting the continued increase in data appetite among users.

“The average monthly download is consistently higher than the national average of 83 gigabytes (GB) per user,” Mr Morrow said.

“This growth in ARPU reflects a more than 27 per cent increase in data consumption,”

According to NBN Co, the trend is only going to accelerate and both it and the RSPs will have to work together to meet the burgeoning demand.

With the federal government pouring $29.5 billion in equity into NBN Co, company chief financial officer Stephen Rue said there was money than enough money on the table for NBN Co to meet its upcoming targets.

According to Mr Rue, NBN Co still has access to $9.2bn of government funding and is working closely with the federal government on evaluating long term funding options until the business is able to sustain itself.

Mr Morrow reiterated that the final call on future funding options rested with the Department of Finance.

“This is a question for the government and they certainly have a number of options in hand and we are in talks with them.”