NBN Needs Extra $2 Billion To Complete Rollout

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Earlier today NBN Co Released its Corporate Plan 2019-2022, which revealed that the overall cost of the NBN is expected to rise to $51 billion. That is an increase of $2 billion that the company is blaming on the 2017 HFC pause and deferred revenues, as well as the introduction of wholesale pricing bundle discounts and increased investment in its fixed wireless network.

The extra $2 billion will be sought from the private sector after the Australian government loaned it $19.5 billion to finish the rollout when it was in trouble back in 2016.

This additional financing will need to be first approved by government shareholders.

The HFC issues that started in November last year impacted NBN Co by roughy $900 million, $200 million of which was additional investment for network optimisation. The

Despite concerns over revenue raising, the ability to finish the project and the ability to pay back the debt, NBN Co is forecasting $3.9 billon in revenue for the 2020 financial year, with an increase to $5 billion from 2021. It also expects to see an internal rate of return of 3.2 per cent.

NBN Co CEO Stephen Rue is spinning this news in a positive light.

"NBN Co is undergoing a significant period as we work to complete the build, improve customer experience and position our business for the future. The Corporate Plan 2019-22 is our blueprint for how we will navigate the complexity and deliver on our goals to provide affordable access to all Australians by 2020.

"We know the network is already having a significant impact on the lives of Australians and the economy, helping to drive the growth of new businesses, industry productivity, jobs, educational opportunities and access to healthcare options.

"There will inevitably be challenges in the remainder of the build – some known, some new. But our ability to deploy the network at speed and scale is evident, and we’re well-positioned to continue enhancing customer experience and delivering access to the benefits of high-speed broadband to all Australians."

Because the NBN has taken so long to rollout, emerging technology such as 5G as well as lack of confidence from consumers have become issues.

"Customer experience for end user and trust in NBN Co may be impacted as the result of industry-wide services, regardless of whether NBN Co is directly responsible. These flow-on impacts present risks to the value of NBN Co’s brand, take-up rate and ARPU."

As someone who was supposed to get NBN last year and has a huge hole outside doing nothing other than potentially collecting water, the legitimacy of these fears is anecdotally legitimate.

NBN Co has its work cut out for them when it comes to earning back to trust of the Australian people, which could potentially impact the ability of the company to successfully secure the extra $2 billion in private equity.

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