NBN Co pulled in AU$2M in 2011-2012

NBN Co pulled in AU$2M in 2011-2012

Summary: In the last financial year, NBN Co pulled in AU$2 million in revenue.

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NBN Co has reported revenues of AU$2 million for the first year of commercial operations for the 13,536 premises connected to the National Broadband Network (NBN), ending June 30, 2012.

NBN Co began charging for services across its fibre, satellite and fixed-wireless technologies in October last year, and since then, the company has raked in AU$2 million in operational revenue, according to its annual report (PDF), released on Friday.

The company generated an operating loss of AU$520 million, with AU$220 million in employee-related expenses, AU$136 million in IT and telecommunications costs, and AU$89 million for legal and technical advice.

As of June 30, 2012, NBN Co has 1,674 workers, having added 906 since June 2011. The NBN Co board received a total of AU$9.15 million in salaries and bonuses in the last financial year, with CEO Mike Quigley receiving AU$1.9 million base salary.

The total bonuses paid out to NBN Co executives — which is awarded based on targets for a variety of factors, such as the number of premises passed and activated — was AU$642,132. Quigley opted to give up his bonus for the year.

Since the release of the report, there are now 24,000 active services on the NBN. A total of 569,000 premises have been passed, with 32,295 of these passed by the fibre roll-out.

As the government prepares to release the Mid-Year Economic Fiscal Outlook (MYEFO), which is tipped to make a number of cuts in order to ensure that the budget is back in surplus by 2013, Opposition Leader Tony Abbott said yesterday that he would "pause" the NBN to bring the budget back into surplus.

"If we can pause unnecessary white elephants, such as the National Broadband Network, I am confident that we can make the saving that will be needed to give the forgotten families of Australia the cost of living relief they deserve," he said.

In January, Parliamentary Library Economic Analyst Brian Dalzel said that the government treating the funding for the NBN as "off-budget", so not adding to the debt, is in line with international accounting standards. The government is expected to make a return on the NBN, so it is treated as an asset, rather than an expense.

"Money transferred to NBN Co cannot be classified as an expense under currently accepted accounting standards. It is accounted for as a financial asset on the balance sheet (an 'investment in other public sector entities'), as opposed to an expense item on the operating statement. An eventual gain or loss on the government's equity investment in NBN Co is accounted for in the operating statement as an expense, but this does not affect the fiscal balance measure."

The Coalition has argued, however, that the interest on the government's funding of the NBN through debt is on budget, and has estimated that it could amount to as much as AU$10 billion through the life of the project.

Topics: NBN, Government, Government AU

About

Armed with a degree in Computer Science and a Masters in Journalism, Josh keeps a close eye on the telecommunications industry, the National Broadband Network, and all the goings on in government IT.

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Talkback

17 comments
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  • Silly Silly Tony.

    Ahhh Mr Abbott. Your party has no understanding of economics. You cant pause something that already has the raised CAPEX to do its job. The money for the project doesnt come directly out of the budget and doesnt feature as an expenditure due to internationally accredited accounting standards.

    What you claim to understand Tony - is nothing.
    Master_T[RG]
    • The haven't raised all capital for capex or opex (expected to max at $44b)

      The money is raised as required (ie ramps up).

      The AUD2 million in NBNCo revenue (formed 9/4/2009) was just enough to cover the CEO's salary. 100 time more revenue any they'll cover their wages bill. What risks?;-)
      Richard Flude
      • What exactly is your point?

        That start-ups don't make as much money in the early years? Surely that should be obvious?
        Tinman_au
        • "Surely that should be obvious?"

          You'd think so but richard is a CIO.
          Hubert Cumberdale
        • 3rd year of operations, technologies developed by others

          Rollout well behind forecast.

          Seems expensive to me but I guess they have to roll out all that fibre; well if it wasn't contracted out to others;-)

          $500k paid out in redundancies last year.

          Cost/revenue breakeven expected in 2021, after that they'll start to pay it all back;-)

          I've never seen a startup like it.
          Richard Flude
      • Fair point

        Look, at least Mike gave up his bonus right? ;) No way I would have done that if I was only earning $1.9m per year.

        Look,

        I stand by that fact that the NBN HAS to get built because a large (majority) proportion of the population NEEDS it and I really do believe FttP is the ONLY way Australia can stay competitive in a lot of industries on a global scale. Truly. I think some nay-sayers simply have no idea how badly communications infrastructure has lapsed since Telstra was privatized.

        However,

        I will concede with Richard and admit that some of the operational costs of constructing the NBN most definitely is looking far above what is required for normal operations. I don't believe there's a tight enough reign on the operational budget.

        In summary - it MUST get built in my opinion, but I'm I'm starting to get more and more dissatisfied with how the money is getting spent.
        Ramrunner-5dd3e
  • Typical

    Typical weasel words from Abbott. Sounds like their whole party is in disarray on the NBN issue too. But I'm not surprised. This is a group of clowns that honestly believes FttN and it's dismally slow speeds is what should be rolled out despite it being a colossal waste of time and money. They cant wait to screw over Australians just to satisfy their bloated political egos.
    Hubert Cumberdale
  • For NBN "deniers"

    "After 3½ years, the NBN Co had signed 6400 households to its network, a rate of five households a day, even though the company has one employee for every 15 customers."
    Paul Sheenan writing for Fairfax (I know biased)
    http://www.smh.com.au/opinion/politics/rich-vitriol-shrouds-budget-extravagance-20121021-27z9t.html

    What could go wrong?
    Richard Flude
    • Umm

      3.5 years ago was when the NBN was first announced!!!!!

      So... did you expect them to sign 'households' up the very next day, week, month?

      You won't allow them time to set up an organisation (NBNCo) to oversee the project?

      To attract able personnel for NBNCo?

      To analyse and pen a Corporate plan/direction?

      To negotiate and sign contracts with contractors?

      To negotiate a deal with the incumbent for use of pits and ducts, to reduce duplication, quicken the roll-out/reduce disruption to the public and to give NBNCo a clearer indication of costs?

      To negotiate deals with the incumbent and #2 Telco, to migrate customers to fast track revenue?

      To clear competitive hurdles with the ACCC?

      And then the trial periods/sites (shh let's not mention them).

      Etc, etc...

      Of course according to the nay sayers, even though we don't need the NBN/it's a white elephant, it should have begun sooner *sigh*. But could you imagine their uproar if by cutting trial periods and rolling out sooner, things went amiss on a large scale instead of on small trial scale...OMG

      Gotta love their each way bet FUD - NBNCo is damned if they do/don't...

      Seriously what makes people so negative that they must incessantly stretch the truth (blatantly lie) about such things?

      Oh that's right $$$$ and political bigotry... of course.
      RS-ef540
  • Err

    Refer to Tinman_au's comment above?

    NBN hatred should not make one totally devoid of all related common sense, but alas!
    RS-ef540
    • Err

      refer ramrunners comment above.

      Devoid of common sense isnt defined as someone that disagrees with you. Some of us are finding the amount of money spent is well excess of the value created.
      Richard Flude
      • Correct (a first)

        What makes one devoid of common sense, due to irrational NBN hatred is... not accepting that start-up companies/builds (especially one which is a 10 year build) will not be making big bucks immediately.

        Do start-up's make big bucks straight away Richard?

        If not... that mindset in relation to the NBN alone, IS devoid of common sense, isn't it?

        Yes I like Ramrunners comments, particularly this one here...

        http://www.zdnet.com/nbn-cancellation-liability-rises-to-au2-3-billion-7000005733/
        RS-ef540
  • it is a lot of political hot air however,

    most posts on these sites who comment against the NBN are not anti broadband. Bonus payments on a start up company that has not delivered on its own projections is a poor show. The CEO should have knocked back all bonus payments ,not just his own to send a stronger message to his team that more is expected.
    Blank Look
    • "more is expected"

      Indeed. Rolling out more fibre to more homes is to be expected. It is the future after all. Yet you freely admit you are "against the NBN", a project that is actually achieving exactly that regardless of the delays. How very odd. Perhaps you are complaining because you believe such a FttH roll-out should have started much sooner. If so I am inclined to agree.
      Hubert Cumberdale
    • Apparently...

      The old adage of paying peanuts and getting monkeys only applies to professionals "outside" of the NBN :/
      RS-ef540
    • The bonuses could well be earned

      While NBNCo missed it's original projections (thanks to Telstra dragging out it's negotiations over 18 months, rather than the 12 the NBN allowed for), they are actually moving a little ahead of where the updated projections would put them.

      Given that, why shouldn't they be awarded bonuses they have earned?
      Tinman_au
  • perhaps however,

    the CEO did not take his bonus. Bonus payments are normally taken from profit. At the very least those invloved in the Telstra negotiations should forego any bonus, although, point 2 still applies.
    Blank Look