Telstra rolls out faster NBN speeds to customers

Cumulative EBITDA impact of NBN rollout hits $870 million

Telstra CEO Andrew Penn

Telstra CEO Andrew Penn

Telstra’s CEO, Andrew Penn, says the company is in the process of moving most of its NBN fixed-line customers to the 50/20Mbps speed tier.

The shift to higher speed plans follows a move late last year by NBN to discount the pricing of its 50/20 product as part of efforts by the company to increase the take-up of faster broadband services.

Penn told a half year results briefing that there is “no doubt” that the rollout of the new network has had an impact on customer satisfaction for the telco.

A key issue is the “connection experience” when customers first move to the network. Telstra is seeking to address delays in the activation of NBN services through a modem that has integrated 4G capabilities.

It has also rolled out a new ‘Get Help!’ call centre service that has cut call times for NBN-related complaints by 6 minutes. Telstra is now escalating 60 per cent fewer issues to field technicians, Penn revealed.

The second key issue for end users on the NBN is speeds, the Telstra CEO said. Telstra last year revealed it would offer compensation to some 42,000 customers with fibre to the basement (FTTB) and fibre to the node (FTTB) NBN services because they had paid for unachievable speeds.

In addition to the limitations of copper-based technologies used for large portions of the network, telcos under-purchasing capacity (CVC) has had an impact on end user experience. Penn said today that Telstra recently increased its CVC “to further deliver a market leading 80 per cent minimum NBN speed during peak times” — on average the telco is delivering 85 per cent during peak times.

Penn said that it was “critical” that in the long term NBN wholesale pricing is set at a level that will make broadband services affordable. The discount on 50/20 services by NBN is a step in the right direction, he said.

Telstra now has more than 1.6 million customers on the National Broadband Network, giving it a market share of around 51 per cent (excluding satellite). It added 454,000 new NBN connections during the six months to 31 December.

The company has previously revealed it expects to take a $3 billion per annum hit to EBITDA from the shift to the NBN.

“Fixed EBITDA for the half was down 29 per cent with a $450 million incremental negative impact in the period,” Penn said today.

The CEO attributed $248 million of the drop to higher NBN capacity and access charges, while $200 million was from the loss of fixed voice revenue and wholesale margins.

This was partly offset by $80 million in payments the telco received relating to the migration process.

“Of the approximately $3 billion total impact of the NBN on our EBITDA, we have cumulatively absorbed $870 million to date including the $370 million in the period,” Penn said.

Net profit after tax for the half was $1.7 billion including Telstra’s write-down of Ooyala.

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