Government to loan NBN money to complete rollout

Loan to be made on commercial terms, government says

The government will loan NBN the money it needs to complete the National Broadband Network rollout, finance minister Senator Mathias Cormann and communications minister Mitch Fifield have announced.

Before the 2013 election the Coalition said its NBN plan would cost $29.5 billion, and the government has capped its equity contribution to NBN at that amount. That money is expected to be exhausted in the current financial year, with NBN forced to raise debt to complete the rollout.

After the Coalition won the 2013 election, a strategic review commissioned by the new government estimated that shifting to a ‘multi-technology model’ (MTM) for the NBN rollout would cost up to $41 billion. NBN later revealed a revised estimate of $46 to $56 billion, with the company's management aiming for $49 billion.

In an updated corporate plan released this year, NBN said that although it still expects peak funding for the rollout to be $49 billion, it had narrowed the worst case scenario to $54 billion.

A team at the Department of Finance has been examining funding options for the NBN.

The government said today it would loan the money to NBN on commercial terms.

“NBN's 2017 Corporate Plan assumes it will source private debt funding for the remaining $19.5 billion needed to complete the rollout,” the statement from the two ministers said.

“To help ensure that NBN can fully focus on the remaining rollout as it significantly ramps up, the government has decided to provide the remaining funding required to complete that rollout through a government loan to NBN Co Ltd on commercial terms.

“In anticipation of a future privatisation of NBN as provided for in the NBN Companies Act 2011, it is expected that this loan will be re-financed by NBN on external markets in 2020-21.”

“NBN has recently obtained strong indicative credit ratings from credit agencies, which shows that NBN’s business case is strong,” the statement said.

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