NBN budget revised up again to $51 billion as higher costs and slower revenue bite

The peak budget for the completion of the National Broadband Network has been increased to $51 billion after the higher costs of the rollout and deferred revenue.

Key points:

NBN budget revised up to $51b, 75pc higher than than the 2016 pre-election coalition commitment
The additional $2b will be sourced from private markets, not government funding
Calls for write-down of NBN value rejected
An additional $2 billion will be sourced from private investment markets to make up the shortfall, increasing the NBN’s budget from the previous $49 billion.

The original $29 billion in funding was topped up by a special $19.5 billion loan from the Federal Government in 2017, which Finance Minister Mathias Cormann said was negotiated on commercial terms.

Newly appointed NBN Co chief executive Stephen Rue said the additional $2 billion, which includes $1 billion for contingencies, was yet to be sourced and “would not be needed for several years”.

Mr Rue said NBN Co did not ask the Federal Government for another top-up loan and that the company needed to stand on its own feet without more Government financial assistance.

In its latest corporate plan released today, NBN Co predicted 80 per cent of Australian homes and businesses would be connected to high-speed broadband by the end of the 2019 financial year.

The rollout is scheduled to have 11.7 million premises as “ready to connect” and 8.1 million homes with an active NBN connection.

The $1 billion contingency is for risks set aside in what NBN Co calls the “final complex stages of the build”.

Unusual to tap private funding

Mr Rue denies the revised peak budget of $51 billion is a blowout and said it is in the range of $47 billion to $51 billion in last year’s corporate plan.

He said it is unusual for a government-funded agency to tap private markets for additional funding and confirmed he had not sought the $2 billion from the Federal Government.

“As an operator, you’d expect us to be in a position to go to the market on our two feet and get those $2 billion and I’m very confident we’ll do so,” Mr Rue told The World Today.

Mr Rue also rejected speculation that the NBN will ultimately need a taxpayer-funded bailout or write-down given the additional costs.

“The NBN has a very strong business model and as a result of that I’m very confident in the investment that has been made in this business,” Mr Rue said.

Mr Rue dismissed suggestions from ratings agency S&P Global that the onset of a lightning fast 5G network would supersede the capacity of the NBN.

From: http://www.abc.net.au/news/2018-08-31/nbn-cost-revised-up-to-51-billion-dollars/10187108

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