Thursday, 09 February 2017 12:19

Losses blow out to $1.83 billion on NBN rollout Featured

By Peter Dinham and Stan Beer

NBN Co has reported a massive loss blowout of $1.83 billion for the first half of 2016, a whopping increase of 47% over the corresponding half of the previous year.

The loss was recorded against still relatively paltry revenues of $403 million, which are substantially up on the previous half, but still a long way short of the $5 billion revenue target that NBN Co has set as its target in the next three years.

Of particular concern is the lack of growth in the average revenue per user, (ARPU) which remains stuck on a relatively low figure of $43, prompting critics to argue that this is short of what NBN Co should be achieving at this stage of the project.

But despite the losses, NBN Co maintains it is on track to reach the “half-way complete” milestone of the rollout.

NBN Co chief Bill Morrow says already increased productivity is enabling NBN Co’s retailers to market more services in more areas.

“On schedule, on budget, and approaching half way point” touts the NBN Co with the release of its financial results.

According to Morrow the company achieved incremental growth and increasing productivity gains over the six months.

“It has been another impressive result for the NBN team and our partners as we step closer to completing the build and connecting eight million homes by 2020. This result gives further confidence in NBN Co’s ability to deliver, and we remain on track to achieve our full-year 2017 targets.”

NBNCo has set a target of eight million premises to be connected to the NBN by 2020, with annual revenues of more than $5 billion.

“Our increased productivity is enabling our retailers to market more services in more areas,” Morrow said.

“Take-up of services over the NBN network is growing, as is average data use per home, meaning that each week thousands more Australians are seeing the benefits of fast broadband via the NBN network.

“Growing penetration is driving encouraging revenue growth. In the past six months, NBN recorded revenue close to the total achieved in the entire fiscal 2016 year. This strong growth is demonstrating the long-term sustainability of the company.

“With a robust balance sheet clearly being built, NBN Co is on track to invest in future upgrade paths as demand requires.”

NBN Co lists key highlights for the six months to the end of December 2016 as:

  • The number of premises able to order an NBN service rose to 3.8 million, an increase of 129% versus the six months ended 31 December 2015 (H1 FY2016);
  • The number of homes and businesses with an active service over the NBN network increased to 1.6 million, a 125%  increase in comparison to H1 FY2016;
  • Revenue earned in the half-year was $403 million (146% increase in comparison to H1 FY2016); and
  • ARPU remains constant at $43 in comparison to H1 FY2016.

It also counts the successful launch of the second Sky Muster satellite into orbit and a greater focus on the “world-leading” FttDP technology in its network mix as key highlights of the six months.

On productivity increases, NBN Co says the December weekly run rate of new premises made ready for service grew to approximately 48,000 on a 12-week rolling average, “which is considerable compared to the December 2015 figure of 21,000”.

“In terms of connections, the December 2016 weekly run rate was approximately 20,000, a doubling of output in comparison to the same time a year ago. Last week, the weekly run rate for new connections had already increased to 28,000.”

“The rollout continues to accelerate; our weekly growth, particularly over the calendar year, shows the shift in scale,” Morrow said.

“Now, 80% of the country is either in design, in construction or already able to order a service. This shows the vast reach of NBN network into a majority of communities across the country.

“The company is on track to reach the half-way point of the rollout this year, and we are confident in our progress towards Australia being the first fully-connected continent.”

NBN Co says as the network and user base grows,  it is working closely with retailers to drive an “enhanced experience”.

And, the company says it has commenced a broader education on NBN wholesale speed tiers, aiming to ensure a more “informed conversation between end users and retailers about the full potential of the NBN service in their area”.

“We are refining processes with our retailers to ensure ordering and installing a service over the NBN network can be completed more efficiently, and that the service itself delivers to expectations,” Morrow said.

“Already we are seeing more end users purchasing plans from retailers, based on the 100Mbps wholesale speed tier. NBBN experienced the greatest incremental growth in this speed tier in the December quarter.

“With the NBN network, there is greater choice than ever before.  We encourage everyone to ask their retailer about what is available, as NBN provides a range of wholesale speed choices to retailers.”

To access the NBN half-year results click here.


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