Tuesday, 11 August 2020 09:01

NBN Co's annual losses fall by half to $648m as rollout officially ends Featured

NBN Co's annual losses fall by half to $648m as rollout officially ends Image by Gerd Altmann from Pixabay

The annual losses incurred by NBN Co, the company rolling out Australia's national broadband network, have been halved in 2019-20 year-on-year, according to the company's results which were announced on Tuesday.

Losses came in at $648 million for the financial year, compared to $1.3 billion for the 2018-19 financial year.

The company said the forecast growth in its customer base and revenues, combined with lower subscriber payments to Telstra and Optus in the future, would help to support its forecast to become cash-flow positive in 2022-23.

The NBN Co was unable to lower the cost of installation per premise, apart from very marginally in the case of installation at FttP brownfields and greenfields premises. In the case of the former, the cost fell from $4398 in 2018-19 to $4395 in 2019-20, while in the case of the latter, the change was from $2178 (2018-19) to $2130 (2019-20).

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But in the case of all other technologies, the installation cost per premises went up. In the case of FttN, it rose from $2268 to $2330, FttC costs went up from $3129 to $3343, HFC rose from $2590 to $2752 while fixed wireless showed the biggest increase, from $3838 to $4315.

In a footnote, the NBN Co said "Fixed wireless cost per premises includes the impact of a reduction of approximately 90,000 premises in the estimated number of premises within areas serviced by fixed wireless. This premises dilution has been applied following a full analysis of available premises data for these areas."

NBN Co said by the end of the 2020-21 financial year a total of 8.2 million premises in Australia would be ready to connect. At the end of the 2019-20 financial year, the official end of the rollout, 11.7 million premises were ready to be hooked up.

Of the total, 431,680 premises were connected by satellite, 610,415 through fixed wireless 2,500,281 through HFC, 1,462,451 by FttC, 4,758,706 through FttN and 1,970,043 through FttP.

The NBN Co said its average revenue per user had risen by a dollar to $45 in 2019-20, compared to the previous financial year. The company has said in the past that it has to hit ARPU of $52 in order to break even.

cost per premise

Summarising its performance in 2019-20, the company said it had:

  • exceeded its corporate plan 2020-23 and FY20 build targets to close FY20 with 11.73 million premises ready to connect and 7.3 million premises connected to the network;
  • led the industry response to COVID-19, offering pricing relief for up to 40% additional CVC capacity to retail service providers at no extra cost;
  • Increased Sky Muster data allocation and Sky Muster Plus enhancements and offer of up to $150 million in financial relief for residential and business customers;
  • earned total revenue of $3.8 billion, up 36% on FY19 EBITDA, before subscriber costs, of $1.77 billion, up 190% on FY19;
  • achieved monthly ARPU of $45, up from $44 in FY19; and
  • achieved business revenue of $666 million, up from $475 million in FY19.

Of the NBN Co's 2019-20 performance, chief executive Stephen Rue said: "As a company, we surpassed our activation forecasts by more than 250,000 premises and exceeded our premises ready-to-connect forecast by more than 230,000 at 30 June. We are proud of this achievement because it underscores the vital role nbn is playing to support and grow Australia’s digital economy and demonstrates that we are delivering on our purpose, which is to lift the digital capability of Australia.

“We exceeded our total revenue, build and activation forecasts. Residential ARPU grew and we significantly outperformed our forecasts for EBITDA and statutory EBITDA before subscriber costs.

“We have also achieved significant improvements in customer experience and overall satisfaction, and this will continue to be a major focus area for our company in the future. Year on year, right first time installations rose to 93% in FY20, meeting agreed installation times remained steady at 96% of cases and average network congestion fell to approximately 7 minutes per week in June.

“Following the completion of the initial network build, we are focused on our future as a customer-led service delivery organisation as we work to unlock and enable the economic and social benefits that fast broadband can deliver.

"This will require us to sharpen our efforts in areas such as customer experience and innovation, as well as continuing to simplify our relationship with internet providers so we can provide a more seamless experience to customers.

“We enter FY21 in a strong financial position and with good momentum in both the residential and business markets. We look forward to presenting our future strategy and outlook at the release of our corporate plan 2021-24 later this year.”

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Sam Varghese

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Sam Varghese has been writing for iTWire since 2006, a year after the site came into existence. For nearly a decade thereafter, he wrote mostly about free and open source software, based on his own use of this genre of software. Since May 2016, he has been writing across many areas of technology. He has been a journalist for nearly 40 years in India (Indian Express and Deccan Herald), the UAE (Khaleej Times) and Australia (Daily Commercial News (now defunct) and The Age). His personal blog is titled Irregular Expression.

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