NBN Co’s interim revenue jumps 12pc as Aussies seek faster broadband plans, underlying earnings surges to $1.5bn
Australians are choosing faster broadband plans than ever before, leading to a stellar six months for NBN Co.
Buoyed by bumped demand for data and speeds as a result of the pandemic, NBN Co has posted robust financial results for the six months ending December 31, lifting revenue by 12 per cent year-on-year to $2.5bn as the government-owned group ramps up a multi-billion dollar network upgrade program.
The company on Thursday declared it is on track to achieve full year guidance, reporting revenues for the half greater than that of the 2021 full financial year, with Australian households increasingly opting for higher speed tier broadband plans, and as significant subscriber costs to Telstra and Optus taper off.
It booked interim underlying earnings of $1.5bn, up by $1.1bn, while subscriber costs paid to the telcos were $126m, down 84 per cent from $809m a year earlier. Revenue from business customers increased to $493m, up 24 per cent from $397m a year earlier.
NBN Co’s crucial average revenue per user (ARPU) metric was up marginally to $46 a month, from $45 a year earlier, as Covid-related concessions to retailers eased.
The company is now pursuing its major $4.5bn network investment plan, which aims to make ultra-fast speeds of between 500 Mbps and 1 Gbps accessible to 8 million premises – about 75 per cent of the fixed line network – by the end of 2023.
NBN Co will raise $27.5bn in bank and capital markets debt by June 2024 and as of December 31 had repaid $12.1bn of the $19.5bn Commonwealth loan, chief executive Stephen Rue said. He said the company remains on track to repay the outstanding $7.4bn balance of the loan by June 2024.
About 190,000 premises were added to the NBN network during the six month period, with a total of 8.4 million premises now connected. About 76 per cent of residential and business customers are connected to plans of 50 megabits per second or higher, with 15 per cent on plans offering plans of 100 megabits per second or higher.
The take-up of higher speeds on the network helped increase NBN Co’s revenues, Mr Rue said.
“These are solid financial results. And once again, we have done what we said we would do,” Mr Rue told investors and media on Thursday.
“The strength and predictability of our results combined with the quality of our assets, and our progress and making network investments, is earning the confidence of domestic and international monetary markets.
“We have built a strong, resilient, secure and stable network that has proven its worth, particularly over the last two years, as customers in metropolitan, regional and remote areas of Australia have relied on the network to work and study from home, gain access to vital services such as telehealth appointments, shop, connect with friends and family, and be entertained,” Mr Rue said.
Consultation over NBN pricing reform, conducted by competition regulator ACCC with industry participation, is ongoing. The process has already taken several months and several industry players have described the process as slow, but Mr Rue said he was confident the result would be a balance between maintaining a sustainable business and pricing certainty for retailers.
The executive said that the lingering effects of the pandemic, including urban workers shifting to rural areas, would help drive demand for broadband in the years to come.
“The digitisation of our country, but also the movement of people into regional Australia will show greater and greater demand for broadband services,” he said.
“We have just passed over 10,000 customers on our enterprise ethernet product, and the demand for that shows there is a demand for very high speeds from certain businesses. For example, you may have a real estate agent who’s transferring large volumes of files, or even a funeral director, for example, may have the need to transfer autopsies online. As the economy becomes more and more digitised, there’ll be more and more needs for these types of services.”
Communications Minister Paul Fletcher said the NBN had proven its worth during the ongoing Covid pandemic.
“During the pandemic, when millions of Australians moved overnight to working and studying from home, we really needed good broadband, and the NBN came through with flying colours,” he said.
“More Australians using the NBN is good for the economy, and good for NBN’s bottom line.”
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