NBN Co ahead of revenue targets despite $2.1b loss
NBN Co chief executive Stephen Rue said the government wholesale broadband provider’s financial projections remain on track despite it posting a $2 billion half-year loss and scrapping controversial plans to sign up business customers directly.
Telstra, Optus and Vocus all publicly expressed anger about NBNs plans to sign up business customers directly, forcing the network to abandon the plans two weeks ago.
Mr Rue said the decision wouldn’t hurt the NBNs long term finances.
“We are pleased with the fact we are ahead of our connection budget and as a result our revenue is tracking slightly ahead and we are also pleased our operating costs remain in line,” Mr Rue said.
Mr Rue did not directly respond to questions about legal threats made by telecommunications providers prior to the tweak to its enterprise business model, but said the concession and its decision to stop rolling its own fibre into commercial buildings was the combination of multiple factors.
“Quite frankly when you have many of our retail partners telling us that they had concerns it got to a stage when we made a decision that we would do two things – that we would step back from doing direct contracts for fibre upgrades and secondly that we would issue consultation papers for the industry to formally seek their feedback on how we can work best together,” he said.
The deadline to complete the NBN rollout across Australia is fast approaching.
“It’s certainly fair to say that many retailers made private comments but also public commentary around the fact they felt that NBN needed to slightly adjust what it was doing.”
Telcos were upset the NBN was in contravention of its legal requirement to be a wholesaler by seeking to sign up business customers directly. The backflip was welcomed by the industry with Telstra describing it as a “good result”, and Optus and Vocus also applauding the move.
NBN Co boosted revenue by 39 per cent in the six months to December to $1.81 billion, with earnings (before interest, tax, depreciation and amortisation) excluding subscriber payments at $775 million.
The company posted an EBIT loss of $2.14 billion for the half-year due to increasing subscriber costs, which are a combination of payments to Telstra for disconnection of services and to Optus for migration of subscribers to the network. For the half-year the subscriber costs were $1.43 billion.
The monthly average revenue per user for the government owned corporation increased by $2 to $45 for the half year.
NBN Co’s results came amid discussions between NBN Co and major state government departments about how it will fund upgrades.
Mr Rue said the organisation was always in discussions local and state governments, arguing that by 2022 – when the business plans to break even – he could use cash flows to upgrade the network.
“If we are going to help the health and education and regional authorities and indeed help to stimulate small business growth in regional Australia, it’s important we engage with local government and with state government,” Mr Rue said. “So that is what those discussions have been and ensuring that we are aware of any plans the state governments have and to the extent we can work in partnership with them to ensure we do.”
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