NBN revenue continues to climb, with fibre still key

Revenue for the half year grows 152 per cent compared to H1FY15

NBN’s revenue has continued to soar as the National Broadband Network rollout continues, but despite the pivot to a ‘multi-technology mix’ (MTM) after the 2013 election it has continued to be fibre-to-the-premises (FTTP) connections that contribute the lion’s share.

NBN today unveiled its results for the first half of FY16, revealing a mammoth 152 per cent growth in revenue compared to the first half of FY15. Total revenue hit $164 million for the half ending 31 December 2015.

Broken down by revenue stream, FTTP delivered revenue of $91 million in the half. The second highest component was ‘connectivity’ (charges including the capacity-based Connectivity Virtual Circuit levied on retail service providers), largely driven by FTTP users.

Fixed wireless delivered revenue of $12 million, followed by $5 million from satellite (NBN also reported non-telecommunications-related revenue of $5 million for the half).

Average revenue per user climbed to $43 in the half

Apart from FTTP, the two other key fixed lined components of the MTM network are yet to deliver revenue for NBN. Hybrid fibre-coaxial (HFC) is still in its pilot phase, while fibre-to-the-node (FTTN) only launched commercially in September.

At the end of the half NBN had 6636 end users with active FTTN services, compared to 610,978 FTTP services, 36,003 satellite services (a dip) and 82,435 fixed wireless services (significant growth compared to the 27,792 fixed wireless services at the end of the first half of FY15).

“I can report that FTTN is going well,” NBN CEO Bill Morrow said today during a results presentation.

As part of the FTTN rollout, NBN also includes fibre-to-the-basement (FTTB — used for so-called ‘multi-dwelling units’ such as apartment blocks) and fibre-to-the-distribution-point (FTTdp).

Read more: Telco complaints drop

“Now excluding fibre-to-the-distribution-point we have reach over 120,000 premises ready for service at the end of December last year,” Morrow said.

At the end of December, there were 123,574 premises able to order an FTTN service from an RSP (compared to almost 1.6 million premises able to order an FTTP-based service).

“Our rate of growth [for FTTN] is exceptional, with us currently closing and releasing 8000 [premises] per week, which is nearly the same as fibre to the prem,” Morrow said.

The FTTN ready for service rate should hit 15,000 by the end of February, Morrow said.

“With a bit of experience behind us, we can now see how this technology has minimal civil works, less home owner complaints and a lower cost structure than the alternative approaches,” the NBN CEO said.

“The speed to which we can roll out this technology gives us further confidence in our rollout plan and we in fact are moving full steam ahead.”

Work to connect more than 600,000 premises via FTTN is currently under way, he added, and design work for more than 1.3 million premises is being conducted.

NBN reported a net lost after tax of $1.24 billion for the half, and negative EBITDA of $688 million. Capital expenditure grew to $2.13 billion. Total contributed equity from the federal government grew to $16.39 billion.

NBN last year revealed that the network rollout was likely to cost significantly more than expected.

The company estimates peak funding at between $46 billion to $56 billion, with the company's management aiming for $49 billion. The government has capped its equity contribution at $29.5 billion, forcing NBN to seek an additional source of funding.

NBN expects to hit the equity cap in June 2017. Nothing changed in the half in terms of NBN’s plan to raise debt to fill the gap between the $29.5 billion equity cap and the expected rollout cost, NBN chief financial officer Stephen Rue said.

“We’re had preliminary discussions with various people,” Rue said today.

“We’re very confident that the trajectory of the business, the growth profile, the fact that we have set out targets for the last six quarters and we’ve hit those targets, ingrains a lot of confidence in the fact that we’ll be able to go and borrow that money, with a strong revenue profile coming and strong profitability in the future.”

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