NBN first quarter revenue tops AU$1 billion

Following the peak of its subscriber payments to Telstra, the national broadband wholesaler recorded positive earnings of over AU$100 million.

The company responsible for the National Broadband Network (NBN) handed down its 2021 first quarter results on Monday morning, posting revenue of AU$1.07 billion and earnings before interest, tax, depreciation, and amortisation (EBITDA) of AU$102 million.

This represents an increase on last year's first quarter revenue of 22% and an almost half billion dollar turnaround from the AU$435 million EBITDA Q1 2020 loss.

Across the three months to September 30, NBN connected 84,000 new premises to take its total connection number to 11.82 million. The company said it spent AU$772 million in capital expenditure during the quarter.

NBN pointed to the drop in subscriber payments to Telstra and Optus for its EBITDA boost.

"In FY20, NBN Co paid approximately AU$2.4 billion in subscriber costs to Telstra and Optus, the highest annual level of such payments," the company said. "These costs will significantly reduce from FY21 with payments totalling approximately AU$1.5 billion due over FY21-24, until such payments cease."

NBN CEO Stephen Rue said revenue was tracking ahead of its forecasts.

"Customer demand for higher speed broadband services remained strong in the first quarter and by 30 September 2020, more than 70% of residential and business customers were connected to plans based on NBN wholesale download speed tiers of 50 Mbps and above," he said.

During the quarter, NBN announced it would begin an on-demand upgrade program for fibre-to-the-node (FttN) connections. Under the program, NBN is expecting around 200,000 premises to shift from FttN to fibre to the premises, which is initiated whenever an order is placed for a service that the copper lines are not capable of. The first orders are expected to occur in the second half of 2021.

Speaking to the joint parliamentary committee examining the NBN business case last week, Rue said the upgrade to a full fibre connection was cheaper than other technologies such as fibre to the curb (FttC).

The basis for the calculation was FttC requiring a distribution point unit (DPU) that is capable of serving four homes, and having that cost distributed amongst those connected to it. But if one home was all that connected, it does not remain cheaper.

"When we when we look at a on-demand model, fibre to the premise is more cost-effective because you simply don't know if your neighbours are also going to sign up," Rue said.

"If you're upgrading ... one individual home, fibre to the premise will then be cheaper, but obviously if you then end up doing three, it's more expensive."

Rue added that across the FttC footprint, most distribution points, on average, service approximately 3.1 premises.

Chief operations officer Kathrine Dyer added it was often the case that when placing a DPU into a pit, the pit also needed remediation.

Last month, NBN said it was beefing up the number of hybrid fibre-coaxial (HFC) lines capable of getting speeds over 500Mbps, with 25% able to get over the threshold by the end of November.

"The company expects that by June 2021 over two-thirds of premises in the HFC network footprint will be able to order NBN ultrafast broadband, and it forecasts that by the end of 2021 nearly the entire HFC network footprint should be able to order NBN ultrafast broadband," it said

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