NBN Co expects to be cash-flow positive a year later than previously forecast

NBN Co revamps financial forecasts, build to continue past FY20

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NBN Co now expects it won’t be cash-flow positive until FY23, a year later than projections released last year by the company.

The company expects to be cash-flow negative to the tune of $200 million in FY22; previously it projected positive cash flow of $100 million. It is forecasting cash flow of $700 million in FY23.

The company today also confirmed it will need to continue hooking up premises to the National Broadband Network beyond the official build completion date of 30 June 2020.

NBN Co said it was “on schedule and on budget to complete construction” but confirmed that it expected construction to continue to connect newly built homes and around 100,000 premises classed as “complex connections”

“Next year we will complete the build as we add another 1.5 million homes and businesses to the ready to connect footprint,” CEO Stephen Rue said today. “And while we are signposting this as the completion date, naturally construction activities will continue into the future as new homes and houses are added to the nation’s stock.

“Our construction delivery plan includes a very small number of premises that require bespoke solutions and we’ll be taking a considered approach to complete these. These are connections that depend on factors outside of NBN’s controls, such as restricted properties, properties under development, heritage sites, or culturally significant areas.”

The complex connections represent less than “1 per cent of premises” in Australia and NBN Co will “endeavour to deliver them as soon as practicable,” the CEO said

The company downgraded its activation target for FY20 by 500,000 premises, which it said was a result of certain areas being connected later in the year than previously forecast.

An updated corporate plan released today reveals that NBN Co has again shifted its financial forecasts, with earnings expected to be below previous projections for FY20.

The company now says it expects revenue of $3.7 billion in FY20, down from $3.9 billion in the previous edition of the plan. In the 2018 edition of the document, revenue for FY20 was expected to be $4.9 billion.

Discounting the payments to Optus and Telstra to migrate their customers from legacy copper services to the new network, EBITDA in FY20 is expected to be $800 million. Previously the company expected $1.3 billion. However, the company revealed that its EBITDA after subscriber payments is expected to be the same: A loss of $1.4 billion in FY20.

FY22 revenue is expected to be the same are previously forecast at $5.9 billion.

The company has also increased its capex projections. Previously it expected capex of $3.6 billion in FY20 and $1.5 billion in FY21; those figures have increased to $4.3 billion and $1.7 billion, respectively.

Rue said the figure represented the cost of connecting new developments, upgrading the capacity of its hybrid fibre-coaxial (FHC) and fixed wireless infrastructure, hooking up businesses and ongoing investment in NBN Co’s IT systems, as well as the cost of refreshing assets.

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