HFC shutdown, fixed wireless puts NBN rollout costs up $2 billion

NBN Co has increased the budget of its national network build by $2 billion as a result of the temporary shut down of its troubled HFC rollout late last year and increased investments in its fixed wireless network.

The company announced its new corporate plan today and reported expected peak funding requirements had reached $51 billion, which includes a $1 billion contingency to “accommodate for any risks in the complex final stages of the build”.

“The increase from the estimated $49 billion base case is the result of the HFC pause and deferred revenues, the introduction of wholesale pricing bundle discounts and additional investment in the fixed wireless network,” NBN Co reported.

NBN Co paused all orders over its hybrid fibre coaxial network in November 2017 following quality of service issues. HFC services and rollout relaunched in April this year and will soon return to full velocity.

The new corporate plan said NBN Co would source the additional $2 billion from private sector debt at the completion of the build.

The plan, spanning 2019 to 2022 forecasts revenue $3.9 billion in revenue for the 2020 financial year, and $5 billion from 2021 onwards.

The company said the forecasts put the expected internal rate of return at 3.2 percent.

The network builder and operator reported $1.98 billion in revenue for the 12 months to 30 June 2018, up 98 percent from $1.01 billion in 2017. It also beat its own estimate of $1.9 billion as laid out in its 2018-2021 corporate plan.

The company maintained that it was on track to complete the rollout by 2020, with 11.7 million premises ready to connect and 8.1 million homes and businesses with an active NBN service.

Recently appointed chief executive Stephen Rue said NBN was conducting a significant period of its build.

“We know the network is already having a significant impact on the lives of Australians and the economy, helping to drive the growth of new businesses, industry productivity, jobs, educational opportunities and access to healthcare options,” he said.

“There will inevitably be challenges in the remainder of the build – some known, some new. But our ability to deploy the network at speed and scale is evident, and we’re well-positioned to continue enhancing customer experience and delivering access to the benefits of high-speed broadband to all Australians.”