Get ready for higher NBN prices, Telstra warns

Consumers should prepare to pay higher prices for home broadband, as rising data consumption forces retailers to buy more and more bandwidth from NBN Co, Telstra chief executive Andy Penn has warned.

Speaking after the telco giant’s full year results last week, which included a 40 per cent decline in profit and a warning the business would lose $3.4 billion in ongoing annual earnings as a result of the NBN roll-out, Mr Penn pulled no punches.

“The retail providers are already not making money out of reselling NBN, so all that does is make them lose more money. That’s unsustainable over the longer term, so ultimately that will lead to higher prices for retail customers. It has to,” he said.

By the end of the rollout of the NBN, Telstra will make no money out of its soon-to-be defunct residential fixed line network, meaning the vast bulk of its fixed line earnings must come from NBN resale. But Mr Penn said Telstra is currently making no margin out of reselling NBN, meaning it is on track to earn nothing at all from its residential fixed line operations by 2022.

On the same day Telstra revealed revenue was down 2.3 per cent on the previous period, NBN Co revealed its revenue had risen 43 per cent over the same period. NBN Co had a key success in lifting its all-important average revenue per user (ARPU) up $2 to $46 per month.

Telstra, by contrast, saw ARPUs on its fixed line data and bundle products fall by almost the same amount, from $77.37 to $75.07.

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