NBN half-year revenue jumps to AU$1.3b as CEO confident of positive cash flow by FY22

9.5 million premises are now ready for service, while NBN announced revenue of AU$1.3 billion and negative EBITDA of AU$477 million for the first half of FY19.

The National Broadband Network (NBN) company is ramping up business, reporting a 46 percent year-on-year rise in revenue to AU$1.3 billion for the first half of FY19.

NBN also announced a 65 percent improvement in earnings before interest, tax, depreciation, and amortisation (EBITDA), up from the negative AU$1.4 billion reported this time last year to negative AU$477 million.

Almost 4.7 million premises were active as of December 31, while around 8.1 million are ready to connect and 9.5 million are ready for service, with average revenue per user (ARPU) growing by AU$1 to AU$45 per month.

Active premises reached 2.5 million on its fibre-to-the-node (FttN) network; 1.3 million on fibre to the premises (FttP); 512,000 on hybrid fibre-coaxial (HFC); 264,500 on fixed-wireless; 94,000 on satellite; and 76,000 on fibre to the curb (FttC) as of December 31.

Speaking to ZDNet during the financial results call, CEO Stephen Rue said the company and its retailers are always thinking about how to ensure everyone has access to the network, following calls from the Australian Communications Consumer Action Network (ACCAN) last week for lower pricing for low-income households that cannot afford the NBN.

"Something that our teams are thinking about ... [is] how do we ensure that we increase our penetration on NBN, how to we ensure that we have products where low-income households may seek access to NBN, and how do we ensure that we work through the product development forum with our retailers to ensure that we access all of the marketplace," Rue said.

"I have no particular comments to make on the actual construct that was put forward [by ACCAN], but I certainly think that this is one of many things that NBN and the retailers will continue to talk about in coming months and years."

Rue also repeated comments that calls for a write down of the NBN are really just calls for lower pricing, arguing that NBN needs to be cash-flow positive in order to continue making technological improvements to its network and ensure it continues providing social benefits.

"I'm satisfied that both the replacement costs of our assets and the future economic value of the company is such that we are satisfied with the accounting ... it is really important that NBN has a very strong business model; it's important that NBN has cash flows to enable us to continue to invest in the network, to continue to meet consumer demands, to continue to adjust as technology requirements adjust," Rue said.

"There's no doubt that the primary purpose of NBN was to create economic and social benefits to all Australians, and that's what the conversation needs to move to.

"How can NBN as an organisation contribute enormously to people's lives? Contribute to the economy? Contribute to regional Australia? Contribute to the way that kids can get educated? To improvements in our healthcare services? To ensure that entrepreneurs can stay in Australia, that people can build their small businesses? To ensure that women are able to become more involved in the economy, that women are able to set up businesses and be successful? That's what NBN is about, and for that we need strong cash flows."

Providing assurances that NBN remains on track to become cash-flow positive in FY22, Rue added that one way in which NBN is looking to improve speeds and capacity is via 5G on its fixed-wireless network.

"We continue to look at ways in which we can improve our fixed-wireless network, the way that we can continue to bring technological advancements on our fixed-wireless network," he said.

"Part of that is looking at the benefits of 5G, the spectral efficiencies it provides, and the opportunities for us again to provide better services to regional and rural Australians, and that's something we have a CTO department for, to look at these things, they look at advanced technology, and they can continue to pursue opportunities and look at how we can bring better benefits going forward."

NBN made the most revenue during the six-month period from FttN, almost doubling from AU$222 million last year to AU$414 million this year; AU$395 million from connectivity virtual circuit/network-network interface (CVC/NNI), up from AU$279 million; AU$246 million from FttP, up from AU$216 million; AU$79 million from HFC, up from AU$50 million; AU$44 million from fixed-wireless, up from AU$33 million; and AU$22 million from satellite, up from AU$13 million.

Its FttC network is now also bringing in revenue, making AU$8 million during the six months to December 31.

Across the fixed-line networks, 49 percent of users are now on the 50/20Mbps speed tier; 25 percent are on 12/1Mbs; 17 percent are on 25/5Mbps; and 9 percent are on 100/40bps. On fixed-wireless, 50 percent are on 50/20Mbps, 34 percent on 25/5Mbos, and 16 percent on 12/1Mbps.

The majority of satellite customers -- 69 percent -- sit on the 25/5Mbps speed tier, while the rest are on 12/1Mbps.

As a result, 56 percent of all NBN customers are now on speeds of at least 50/20Mbps.

In the first six months of FY19, NBN spent almost AU$3 billion on capital expenditure: AU$836 million on HFC; AU$674 million on FttC; AU$564 million on FttN; AU$279 million on common capex; AU$204 million on fixed-wireless; AU$193 million on FttP; AU$115 million on its transit network; and AU$43 million on satellite.

Cost per premises (CPP) is now AU$4,403 for FttP brownfields, AU$3,800 for fixed-wireless, AU$3,058 for FttC; AU$2,466 for HFC; AU$2,259 for FttN; and AU$2,209 for FttP greenfields.

NBN was lauded for its "sold performance across all metrics" in a joint statement by Communications Minister Mitch Fifield and Finance Minister Mathias Cormann on Monday morning.

"The company [is] powering ahead to connect all Australians to fast broadband by 2020," Fifield and Cormann said.

"With thousands signing up to the NBN every day, the extensive work over the past year to improve consumer experience on the network has delivered real benefits for consumers. Nearly three-quarters of all Australian homes and businesses can now access an NBN service."

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