Telstra expects FY18 revenue hit from NBN’s HFC hiccups, rollout delays

Telco releases revised guidance after HFC activations paused

Telstra expects to take a $700 million hit in FY18 from NBN’s decision to put the activation of new hybrid fibre-coaxial (HFC) services on hold.

NBN earlier this week revealed it would cease selling HFC services until it had sorted out performance issues with the technology.

Telstra today released revised guidance for FY18, with the company saying it was now expecting total income in the range of $27.6 billion to $29.5 billion, down from previous guidance $28.3 billion to $30.2 billion — a reduction of $700 million.

Telstra said it expected EBITDA of $10.1 billion to $10.6 billion for FY18, down $600 million.

Telstra said that the biggest impact would be from the payments it receives when customers disconnect from the copper network (PSAA) and from NBN access to a range of the telco’s infrastructure (ISA).

(NBN earlier this year vetoed a plan of Telstra’s to monetise a portion of its ISA receipts.)

Telstra said its revised guidance was not just necessary because of NBN’s HFC decision. NBN’s updated corporate plan, released in August, revealed that the company had pushed the expected ready for service date of 200,000 premises back by a year because they were now planned to be connected with fibre to the curb (FTTC) instead of HFC or fibre to the node (FTTN).

“While this change impacted Telstra’s financials, the impact did not result in Telstra’s outlook falling outside of its guidance range,” Telstra said today.

“However, with the addition of the delays from the nbn cease sale of HFC announced earlier this week, Telstra’s outlook is now outside of the guidance range and has been updated accordingly.”

Telstra said its original FY18 guidance had “included an assumption that the nbn rollout would be broadly in accordance with the nbn Corporate Plan 2017”.

Telstra said although rollout delays had affected its FY18 outlook “it is anticipated the delay will be modestly financially positive to Telstra over the full rollout due to the effects of a natural hedge”.

“It is noted that nbn co remains committed to completing the rollout by 2020,” the telco said.

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