NBN CEO says take-up rate better than expected

Company reports adjusted EBITDA loss of $826 million for FY17

Credit: NBN

The take-up so far of National Broadband Network services has so far been better than forecast, NBN has said.

NBN today released its full year results, revealing that as of 30 June more than 5.7 million households and businesses were able to order a service on the new network.

While less than half of those — just under 2.45 million — have an active service, the company is seeing up to 45,000 service activations a week, according to CEO Bill Morrow.

A key part of NBN’s commercial business model is to have a 74 per cent take-up rate by the end of the 18-month period when the National Broadband Network and legacy copper services operate in the same area, the CEO said. There are now more than a million households that are in areas that are past the co-existence period, Morrow said.

“I’m happy to report, not only is the take-up rate higher than expected at 75 per cent but the take-up is happening earlier than what was originally forecasted,” the CEO told a briefing on the company’s results.

Morrow added that there had been no “material difference” in the take-up of services in areas served by fibre to the premises (FTTP) and those served by fibre to the node (FTTN)

As of 30 June, FTTP still represented the most common access technology on the network, with 1.07 million active services, trailed by FTTN with just under 958,000 end users. Hybrid fibre-coaxial served 153,000 end users. NBN’s Sky Muster satellite service had 75,000 users, while fixed wireless had more than 184,000.

Services on the fixed-lined portion of the network were overwhelmingly on the 12 megabits per second and 25Mbps speed tiers. Fifty three per cent of end users opted for 25/5Mbps, while 29 per cent chose 12/1Mbps — a speed tier that Morrow recently told a parliamentary inquiry “was never designed for broadband.”

A position paper released last month by Morrow argued that the retail market for NBN services was a “land-grab environment” where many retailers were pushing low-speed offerings in order to boost their market share.

NBN is “not surprised” by the take-up of 25Mbps and slower plans, Morrow said.

“We do want people to be on faster speeds and we’re trying to think through different constructs with the pricing that might be able to help that,” the CEO said. Morrow added that he believes the popularity of higher speed tiers will climb, driven by the needs of higher-bandwidth applications.

NBN recorded an EBITDA loss of $2.4 billion for the year, compared to a loss of $1.57 billion for FY16. Removing subscriber costs — payments to Optus and Telstra to migrate customers to the new network — shows an EBITDA loss of $826 million, compared to a loss of $990 million for FY16. Revenue grew 138 per cent to $1 billion, while expenses grew 71 per cent to $3.4 billion.

“These losses continue to reduce, with revenue growth exceeding expense growth,” NBN CFO Stephen Rue said, adding that the Q4 adjusted EBITDA loss of $176 million was substantially bleow the Q4 FY16 loss of $283 million.

Read more: 55 technicians out of work after Telstra NBN contractor folds, union says

NBN’s biggest revenue driver continues to be FTTP services. FTTP delivered $369 million in revenue for NBN in its fourth quarter, followed by Connectivity Virtual Circuit (CVC) and Network to Network Interface (NNI) charges ($299 million), and FTTN ($172 million).

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