In February 2023 NBN Co released its first half-yearly result to December 2022. I will be looking behind the self-congratulations that took place. However, for the statistics, it has reported total revenue of $2.6 billion — a 4% increase on H1 FY22.
None of that is unexpected; as the roll-out keeps going, new premises are added and thus more people are connected and as a result, more revenue. It closed the half-year with more than 8.5 million premises connected to the network. The mix of retail subscriptions shows 77% of customers connected to plans offering download speeds of 50 Mbps. Another 21% of customers were connected to plans of 100 Mbps and above, the remainder is on lower speeds.
The company raised a further $2.6 billion from bank facilities and debt capital markets and repaid $875 million of the Commonwealth loan, reducing the outstanding balance to $5.5 billion.
The company is still struggling to increase its average revenue per user (ARPU). According to projections from five years ago, that should now have been more around $52-$54 but instead, it has increased by 1% to $47. This clearly confirms my long-standing position that uptake of the NBN and its higher speeds have more to do with affordability than with technology.
The company also announced more details about its plan to overbuild the Fibre-to-the-Node (FttN) network with a proper fibre network. However, the details remain scarce and confusing.
The initial backflip from the Coalition Government took place in 2020, announcing the start of overbuilding parts of the FttN network with fibre. Subsequent election promises in 2022 and 2023 had broad bipartisan support. According to the latest data, it looks like the company aims to have 796,000 services upgraded by the end of 2026. It made a start last year and connected 3,000 premises, and it hopes that by the end of this year, this will have reached 121,000 activations.
I am not quite sure how this data fits in with the government announcement to invest $2.4 billion to enable an additional 1.5 million homes and businesses currently served by FttN to upgrade to Fibre-to-the-Premise (FttP). This is on top of the company’s original program to enable full fibre upgrades to an initial 2 million premises served by FttN. Also happening are upgrades from the HFC network. As mentioned, the situation remains somewhat confusing.
Whatever the technology, the company plans to enable up to 10 million premises or around 90% of premises on the fixed line network to access the “NBN Home Ultrafast” wholesale speed tier, which is capable of achieving peak wholesale download speeds of 500 Mbps to close to 1 Gbps, by the end of 2025.
Upgrades of the fixed wireless network are also progressing. This is based on the $750 million commitment to upgrade this network using 4G technology and software enhancements as well as the latest 5G mmWave technology. This will allow existing fixed wireless users to achieve faster and more consistent speeds with less congestion. This network should achieve typical wholesale busy period download speeds of at least 50 Mbps.
The enhancements are being delivered across more than 2,300 fixed wireless infrastructure sites and will also enable approximately 120,000 former satellite-only eligible premises to access fixed wireless services by the end of 2024.
In an interview with Grahame Lynch, NBN Co CEO Stephen Rue suggested the telco’s FttP infrastructure lead-in costs were around $1,500 and the cost of passing the premises was “slightly less than that”. This is higher than figures given to Grahame’s publication, Communications Day, by the Coalition Government in late 2020, which modelled a $1,350 cost per premises passed and a $750 lead-in cost, numbers which Communications Day has reported subsequently without contradiction from NBN Co. But now Rue said this lead-in estimate was not accurate. Of course, this has nothing to do with politics.
All in all, NBN Co is moving along and is making progress which is a good thing. The situation is as it is. No use crying over spilt milk — we now have to make the best of it and certainly, this is what the company is doing.
But as a result of the political interference from the Coalition Government over nearly a decade, this means delays and sometimes stumbling and muddling on along the way.