Australia's National Broadband Network (NBN) company has announced its results for the first nine months of the 2015-16 financial year, reporting a total comprehensive loss of AU$1.954 billion to March 31, 2016.
The company revealed earnings before interest, tax, depreciation, and amortisation (EBITDA) of negative AU$1.071 billion for the nine months -- a rise of 36 percent from last year's negative AU$785 million.
NBN's revenue also increased, jumping by 155 percent year on year from the AU$108 million announced in the first nine months of FY15 up to AU$275 million this year. It now has total assets of AU$16.77 billion, up 26 percent from last year's AU$13.259 billion.
Breaking its revenue down by technology, NBN made AU$151 million from fibre to the premises (FttP); AU$3 million from fibre to the node (FttN); AU$19 million from fixed-wireless; AU$8 million from satellite; and AU$9 million on "other".
It also made AU$85 million in revenue from its connectivity virtual circuit (CVC) and NNI charges.
NBN's active end users as of the end of March stand at 34,869 on satellite, down 0.07 percent due to customers being taken off the old satellite service; 99,455 on fixed-wireless, up 187.2 percent year on year; 43,553 on FttN, which launched during the nine months; and 725,071 on FttP, up 130.6 percent. NBN now has a total of 902,948 active end users, which was a rise of 132.2 percent, and an average revenue per user (ARPU) of AU$43.
The speed tiers being chosen by customers on fixed-line NBN technologies involve 33 percent on 12Mbps download and 1Mbps upload; 47 percent on 25/5Mbps; 1 percent on 25/10Mbps; 4 percent on 50/20Mbps; and 15 percent on 100/40Mbps. By comparison, 16 percent of those on fixed-wireless services are on speeds of 12/1Mbps; 83 percent are on 25/5Mbps; and just 1 percent are on 50/20Mbps.
Capital expenditure in the nine-month period saw AU$1.141 billion spent on the design and construction of the FttN network; AU$864 million on FttP; AU$175 million on transit; AU$126 million on satellite, mainly due to the launch of Sky Muster and the testing and launching of services over this new satellite; AU$262 million on fixed-wireless; and AU$515 million in common capex, which NBN CFO Stephen Rue said was primarily spent on IT for developing the FttN and HFC network platforms to support the launch of commercial services, as well as on business support systems, datacentres, and the national test facility.
NBN also spent AU$277 million on readying its HFC network, with the spend "primarily related to upgrading DOCSIS technology, as well as design and construction activities prior to the launch of the HFC network planned for later in this fiscal year," Rue explained.
Life-to-date capex spend has seen AU$12.3 billion spent on the NBN.
The operating expenditure for the nine-month period included AU$434 million on employee expenses, AU$625 million on telecom and network expenses -- mainly from the cost of disconnecting and migrating customers over to the NBN -- and AU$287 million on "other" expenses.
Cost per premises (CPP) in NBN's life to date is AU$4,403 for FttP brownfields; AU$2,713 for FttP greenfields; AU$2,275 for FttN; and AU$3,479 for fixed-wireless.
In regards to equity funding for the NBN, Rue said that during the nine months to March 2016, NBN received AU$4.9 billion from the federal government, taking total equity funding to date to AU$18.1 billion. He acknowledged that there is a disparity between government funding and the total cost of the project, saying that NBN is "confident" in raising this.
"The arrangements we have with the government is the government equity is capped to AU$29.5 billion. If you look at last year's corporate plan, it indicates that we will utilise that equity by around about June next year, which means that on a AU$49 billion funding or total peak cash that we need, we'll need to borrow around about AU$19.5 billion," Rue said.
"So obviously, that's work that we'll be conducting in the next 12 months. We're confident we can borrow that money. Our model really is that over time, our capital expenditure reduces, the payments to Telstra and Optus reduce, and obviously our revenue significantly grows, and because of that, we have a very positive cash flow for the future.
"So we're confident that we can borrow that money, that's work that we'll be conducting in the next 12 months."
Under the 2016 Budget announced on Tuesday night, the federal government said that if NBN fails to raise enough debt to complete its rollout, it will step in.
"In the event that NBN is initially unable to raise the necessary debt on acceptable terms, interim funding support may be required," the government said.
"Were it required, additional government financial support for NBN would have implications for the fiscal position, for example by increasing assets and liabilities on the balance sheet and, depending on the nature of support, could have positive or negative impacts on the underlying cash balance."
During the financial results call, NBN CEO Bill Morrow also announced that NBN has signed deals to ensure its FttN nodes are powered across the country.
"We are pleased to confirm that we have finalised agreements with power utilities in all states for the access to infrastructure and the supply of power for nodes," Morrow said.
He added that skinny fibre will be implemented into the company's network design to speed up the delivery of services.
"The use of skinny fibre will help lower the cost and accelerate the deployment of fibre, and can be used for new developments, FttP brownfields, and FttDP applications," Morrow said.
In regards to the fibre-to-the-distribution-point (FttDP) network, however, Morrow conceded on Thursday night that even if FttDP were able to be deployed now, NBN would hold back on making the product available due to additional work needed on its IT system to integrate FttDP.
NBN is currently trialling FttDP across the nation as a solution for premises in more remote areas, with lead-ins of between 50 metres and 300 metres, where it is too expensive to roll out either FttN or FttP.
While the opposition Labor party has used Australia's falling position in the Akamai's worldwide ranking of countries on broadband speeds as proof that the Coalition's NBN model is "second rate", Morrow argued that Akamai's figures are largely derived from the ADSL connections still prevalent in much of Australia.
"Some have claimed the technology behind the NBN is why the country has moved down the ladder, but this couldn't be further from the truth," the chief executive said.
"Akamai uses data ... to gather observed speeds across all of the fixed-line broadband services in Australia. Now, this base is across nearly 7 million premises with a large majority using existing ADSL technology. Less than 10 percent of the entire sample is thought to be NBN services, and we must also remember that 80 percent of NBN services are chosen retail speeds far less than what the network is capable of.
"If the network is built according to our current plan, nearly half the nation will be connected with technology that can reach gigabit-per-second speeds, and the majority of the other half can reach 50Mbps or better. Very few countries will be able to beat this when we get this build done."
In Senate Estimates on Thursday evening, Rue said the company remains confident that it will continue hitting all of its targets.
"The results show real progress, real momentum, we are going to hit our year-end numbers and exceed our year-end numbers. Each quarter we continue to do that which we are very, very proud of," Rue said.
"There's less than nine weeks to go before the end of the year, and we're very optimistic, barring any unforeseen circumstances that we will hit every target that we have been given," Morrow added.