NBN Co cracks $1 billion, almost doubles footprint

NBN Co has reported annual revenue of just over $1 billion and almost doubled its footprint for the third consecutive year.

Chief executive Bill Morrow and chief financial officer Steven Rue revealed revenue grew 138 percent to reach $1.01 billion for the year ending 30 June 2017, an increase of $580 million on the same period last year.

The company reported negative EBITDA of $826 million, a 17 percent recovery from last years $990 million EBITDA loss. Capital expenditure reached $5.8 billion, up from $1.1 billion. The largest area of capex growth was in the HFC rollout. Operating expenses grew to $1.8 billion, up from $1.4 billion in FY2016, the figures excluded costs associated with Telstra and Optus charging fees users migrating off their networks, which hit $1.5 billion, up from $582 million last year.

“To almost double the footprint again on the back last year’s efforts is incredible progress and means many more Australians will have access to fast broadband sooner” Morrow said.

“The momentum has seen the team deliver a record 140,000 premises to the footprint in one week, putting us clearly at the centre of our peak construction period.  Our delivery partners and nbn employees have worked tirelessly to reach this incredible pace,” he said.

Breaking down the revenue by technology service, fibre-to-the-premises did the most sales at $369 million, up from $225 million last year, with CVC/NNI services accounting for $299 million. Fibre-to-the-node revenues were $172 million, up from just $10 million in 2016, while HFC saw revenues of $13 million, fixed wireless hit $50 million and satellite connections reaching $19 million, almost doubling from $10 million last year.

Across the fibre technologies, the company reported the speed tier of 25 megabits up and 5 megabits down (25/5) remained the most popular speed tier. In fixed line connections the 25/5 tier rose from 43 percent user uptake to 53 percent, with 25/10 was the least chosen speed, representing just 1 percent of customers. In fixed wireless connections 25/5Mbps was the choice of 78 percent of customers, down from 81 percent last year. Customers using 12/1 speeds on fixed wireless remained flat at 16 percent, while 50/20 connections rose from 3 percent to 6 percent year-on-year. Customers using satellite services opted for 25/5 speeds over 12/1 speeds, at 66 percent and 34 percent respectively.

While positive about the company’s growth and the pace of rollout, NBN chief Morrow touched on NBN Co’s desire to do better by its end customers and improve customer satisfaction, citing a current customer experience metric rating, as surveyed by RSPs, of 7.1 out of 10.

The government has called for a review into NBN customers' experiences in the wake of a war of words between the company and retail service providers.

In early August, Morrow blamed ISPs for promoting a "land grab" mentality to sign up as many customers as possible with no regard for service quality. He added that ISPs were charging customers prices that were lower than they were willing to pay, which drove down speed and services.

“The large number of competitors going after the same customer has driven price to be the key attraction and seldom do you see any clarity around speed options or quality during the peak time of day,” he said.

ISPs hit back, arguing the model was flawed and that the 121 points of interconnect stopped them from being able to guarantee full-control of the end-to-end experience.

In the financial results presentation, Morrow said the complexity of the multiple parties involved in a connection demanded effective communication from he business and RSPs alike.

“While we have seen a higher volume of issues when connecting, they do remain relative to the pace of the build and reach of the network. We continue to improve our processes and integration with those of our delivery partners and retailers for seamless access to retail services on the nbn network,” he said

“The vast majority of people using the nbn network are satisfied and we are certainly listening to those who are not. This past year, industry end-user satisfaction results reinforced the need for simple public information, openness about the network’s capability in comparison to speed packages purchased, and for us all to improve our processes for connections, troubleshooting and complaint escalations.  We listen, we adjust, we learn and improve.”