Australia's National Broadband Network (NBN) company has revealed that it is expecting a base case funding of AU$51 billion following decisions made last financial year to "consciously prioritise customer experience" including the cease-sale on hybrid fibre-coaxial (HFC).
After last year estimating peak funding in the range of AU$47 billion to AU$51 billion with a base case of AU$49 billion, the NBN Corporate Plan 2019-22, unveiled on Friday morning, is now forecasting that it will hit AU$42.9 billion in peak funding by the end of FY2019, AU$48.7 billion by FY20, and AU$50.9 billion by FY21 and FY22.
"The decision to pause HFC orders and optimise the network is expected to impact revenue over the life of the build by AU$0.7 billion, and incur additional optimisation capex spend of AU$0.2 billion," NBN's Corporate Plan says.
"The wholesale pricing change, while successful in helping shift end users to higher-speed plans and helping reduce congestion, is forecast to result in a AU$0.7 billion deferral in revenue in the plan.
"The fixed-wireless capacity upgrade program is designed to help address congestion in order to improve end-user experience, and is expected to result in additional capex of AU$0.8 billion."
New NBN CEO Stephen Rue said the rise in funding would be funded through short-term private debt.
According to the Corporate Plan, NBN expects to generate AU$2.6 billion in revenue and negative AU$1.7 billion in earnings before interest, tax, depreciation, and amortisation (EBITDA) in FY19; AU$3.9 billion of revenue and minus AU$1.4 billion of EBITDA in FY20; AU$5.2 billion in revenue and AU$1.3 billion of EBITDA in FY21; and AU$5.6 billion in revenue and AU$2.5 billion of EBITDA in FY22.
NBN said it should be cash flow positive as of FY22, predicting AU$100 million by then.
The build is still set to be complete by June 2020, NBN said.
The company plans to have 9.9 million premises ready for service (RFS), 9.7 million ready to connect (RTC), and 5.5 million activated by FY19; 11.6 million RFS and RTC and 7.5 million activated by FY20; 11.7 million RFS and RTC and 8.4 million activated by FY21; and 11.9 million RFS and RTC and 8.7 million activated by FY22.
"The top priority for the fixed-wireless program this year is to focus on capacity upgrades, spectrum optimisation, and technology evolution investments," NBN said in its Corporate Plan.
"A capacity management program is adding more capacity at the wholesale level to existing sites, with a focus on supporting RSPs to help deliver a consistent customer experience during the busy hour. NBN Co plans to evolve, over FY19, its design criteria with the aim of targeting a minimum average download wholesale speed across all active users on a cell of 6Mbps during the busy hour."
More than 300,100 cells have had capacity upgrades on the fixed-wireless network, chief customer office Brad Whitcomb said on Friday.
The average revenue per user (ARPU) shift by AU$1 is expected to impact FY22 cashflow by AU$100 million; the 1 percentage point permanent change to penetration rate is expected to impact FY22 cashflow by AU$80 million; the 10 percent change in opex is expected to impact FY22 cashflow by AU$170 million; and the 10 percent change to ongoing capex is expected to impact FY22 cashflow by AU$120 million.
NBN's Corporate Plan lists as risks the rollout of new technologies; customer and end-user experience; operating model transformation, or the "transition" of the company's workforce from working to deliver a network rollout to a network operating company; and market disruption, such as the threat of 5G.
"The timing of the deployment of the HFC and FttC network technologies contains risk due to internal and industry scaling challenges," the plan explains.
"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, and ARPU."
Communications Minister Mitch Fifield, who retained the portfolio following last week's political instability, used the plan unveiling to thank outgoing CEO Bill Morrow and congratulate incoming CEO Rue.
"Stephen takes over at what is a pivotal point in the lifecycle of the NBN, with the rollout completion in view, and the challenge ahead to transition the business into a self-sustaining operating model," Fifield said.
"Stephen is the right person to take the NBN forward, and over the past four years, he has brought financial rigour to the company and transformed its procurement and supply processes."
Rue told ZDNet that he is now looking to replace his previous role as CFO, but would not be drawn on whether the appointment will also be made internally.
"That is something that I'm currently considering -- what we do regarding my replacement," Rue told ZDNet.
"We will have some commentary to make on that in due course, but I'm pleased with the team I've built but obviously we'll need to consider an appropriate replacement."
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