NBN on target for 1 million premises passed

The company formerly known as NBN Co has said it is on target for AU$150 million in telco revenues and premises serviceable passing 1 million at the end of this financial year.
Written by Josh Taylor, Contributor

NBN CEO Bill Morrow has said the company is on target for passing 1 million premises serviceable, and achieving revenues of AU$150 million by the end of this financial year.

In the company's third-quarter results released on Wednesday, NBN reported a total loss of AU$1.38 billion for the nine months ending March 31, 2015. This is up from AU$1.145 billion for the previous year.

Telecommunications revenue was up to AU$106 million for the nine months, the strongest for NBN to date. NBN CFO Stephen Rue attributed the rise to "an increase in active premises and pleasingly an increase in average revenue per user [ARPU]."

ARPU went up from AU$37 to AU$40 for the quarter with AU$29 the average connection fee, and AU$11 the average capacity charge.

Morrow said NBN was on target to hit AU$150 million in telecommunications revenue this financial year, and reach 1 million premises serviceable by the end of the financial year. As of May 14, NBN had passed 979,967 premises across fibre, fixed wireless, and satellite.

Around 12,330 premises were being made serviceable every week, NBN Co said.

The company also defended its track record for wait times for being connected to the NBN. Morrow said that wait times had over halved from the time of order with the retail service provider to the time to connect.

"Our average right now is at 15.7 days. That's a marked improvement. That comes from improvements within the company, improvements with service delivery partners," he said.

Morrow attributed the improvement to the company ensuring lead-ins were installed at the time of the construction of the network, but said more could be done to ensure more customers get connected quicker, and with fewer appointments.

Seven out of ten customers get connected at the time of the first appointment with NBN Co, according to Morrow.

"We don't want to give out false impressions that we accept it the way it is. We have quite an obsession within the company talking about the service quality we're giving to the end user and the RSPs," Morrow said.

The company is also on target for 200,000 fibre-to-the-node premises being passed by the network, and will double that to 400,000. This will see the company utilising Telstra's copper lines in new areas including in the Northern Territory, South Australia, Western Australia, and existing areas in New South Wales, Queensland, and Victoria.

Morrow said the company will be able to ramp up the fibre to the node network, which could cover up to 39 percent of Australian premises, when the Australian Competition and Consumer Commission (ACCC) accepts the revised deal for access to Telstra's copper and HFC assets over the next few weeks.

Morrow said the ACCC's draft decision on NBN Co taking over Optus' HFC network was expected in June.

Year-to-date earnings before interest, tax, depreciation, and amortisation were a loss of AU$785 million.

As of the end of March, NBN Co has received AU$11.8 billion in funding from the Australian government out of the total funding commitment of AU$29.5 billion.

Capital expenditure for the nine months was AU$2.235 billion, up from AU$1.742 billion.

Fibre counted for 81 percent of total premises activated, and capital expenditure was highest for the fixed network, at AU$700 million for brownfields, AU$90 million for greenfields, and AU$196 million for fibre to the node.

Operating expenses were AU$893 million, up from AU$748 million. Rue said this was due to the increased costs with disconnecting and migrating customers onto the NBN. This cost was expected to increase as the rollout ramps up.

"We're now in a solid position to move from a linear growth to an exponential one," Morrow said.

NBN is close to announcing its construction contracts for the fibre-to-the-node build, but would not say whether Telstra would be the winner.

"What our intent here is we want the highest success fact. We need to keep costs as low as possible. We don't care who it is," Morrow said.

Morrow indicated that NBN would also look to buy existing assets, such as iiNet's Adelaide HFC network, but said it needed to be valued at a price that would be less than the cost for the company to roll out its own network.

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