iiNet 'pessimistic' about faster NBN rollout

iiNet has hinged much of its growth strategy on the rollout of the National Broadband Network, but CEO David Buckingham is pessimistic that the government will deliver on its promises of a faster rollout.

Despite the National Broadband Network (NBN) being behind 80 percent of the company's customer growth in the first half of 2014, iiNet CEO David Buckingham is pessimistic that Australian Communications Minister Malcolm Turnbull's promise of a faster rollout can be delivered.

In the first half of this financial year, four out of every five customers signing up for an iiNet broadband service were doing so on a National Broadband Network connection. The company now has 60,000 customers connected on the NBN, and 975,000 customers in total.

The company's growth strategy has specifically been aligned with the NBN, because it allows the company to reach into markets and offer products at a price that it hasn't been able to historically.

When iiNet announced its results on Thursday, it told investors that the NBN could potentially provide accelerated growth for iiNet if the company meets its rollout plan of expanding to 2.5 million premises across fibre, fibre-to-the-node, fibre-to-the-basement, and hybrid fibre-coaxial (HFC) technologies by June 2016.

However, Buckingham told journalists that he is not optimistic about the company meeting that target.

"I look forward to them delivering it. I hope they can. I'm pessimistic. We are seeing a slight increase, but we're right at the cusp with NBN between the planning phase and actual operational delivery," he said.

"The rubber has got to hit the road. These guys have got to step up."

The vast majority of the 20,000 NBN customers added in the half were on the iiNet brand, Buckingham said, and average revenue per user was higher than ADSL fixed customers, at around AU$65 to date.

70 percent of customers are opting for plans faster than the basic 12Mbps download service, but Buckingham said that NBN Co's connectivity virtual circuit (CVC) capacity charge still needs to be fixed.

"NBN Co is trying to do something about it ... but they're nowhere near enough for what the rest of the market costs us. And we've got to live with that," he said.

NBN Co announced in June last year that it would cut the AU$20 per 1Mbps per month charge by 12.5 percent to AU$17.50.