NBN halves EBITDA loss in FY20 as revenue grows by a third

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The company responsible for deploying the National Broadband Network (NBN) is closing in on positive earnings before interest, tax, depreciation, and amortisation (EBITDA), as NBN posted an EBITDA loss of AU$648 million for the year to the end of June.

Revenue was up by 36% to AU$3.8 billion while operating expenses were down 7% to AU$2.07 billion. With the NBN hitting the end of its main rollout, capital expenditure decreased from almost AU$6 billion last year to AU$5 billion.

Payments to Telstra and Optus — which NBN has previously complained about as wiping out its otherwise positive EBITDA — increased by 27% to AU$2.4 billion for the full year.

Once depreciation and amortisation are taken into account, the company finished with slightly improved EBIT loss of AU$3.78 billion for fiscal year 2020, compared to AU$3.89 billion a year prior.

Over the year, NBN increased revenue from business connections by 40% to record AU$666 million, while residential revenue increased from AU$2.17 billion to AU$2.98 billion. Monthly residential average revenue per user increased by AU$1 to AU$45 over the period.

With the company leaving more difficult to connect premises until the end of its rollout, cost per premises has ticked upward for all technologies beside fibre to the premises.

A fibre-to-the-node (FttN) connection now averages AU$2,330, an increase of AU$62 compared to last year; fibre to the curb (FttC) is up AU$214 to AU$3,343; HFC is now AU$2,752 compared to AU$2,590 for last year; and fixed wireless shot up by AU$477 to AU$4,315 where around 90,000 premises were removed from its estimates of the number of premises within the footprint of that technology.

For fibre to the premises (FttP), brownfields connections dropped AU$3 to AU$4,395 and new greenfields connections dropped AU$48 to AU$2,130.

The 11.7 million premises that were ready to connect as of the end of June consisted of 1.97 million FttP connections, 4.76 million connections with FttN, FttC accounted for 1.46 million premises, the fixed wireless estimate now sits at 610,000, and satellite is estimated to be 432,000 premises.

NBN CEO Stephen Rue praised the result, saying the company was able to complete its volume build two months earlier than planned and connected an extra 230,000 premises by year end.

“From a standing start, it took more than five years to connect our one millionth customer in 2016, but from that moment on we have flown,” he said.

“Over the last four years, we have connected another six million premises to the network, and today’s total activated services stands at more than 7.4 million premises.”

Rue added that in a year’s time, NBN expects to have 8 million premises connected to its network. The company had 7.27 million premises on its network as of June 30.

During the coronavirus pandemic, NBN has been offering a 40% CVC boost to retailers, and despite multiple extensions, the company has said the discount will end on September 19.

“While it has been critical to support the industry through these waves of heightened data demand, the additional CVC capacity we put in place was only ever intended as a short-term measure,” Rue said on Tuesday.

Rue added that a “seismic shift” had taken place in Australia, with the pandemic accelerating the pace of digital change.

“COVID has induced changes over the last 6 months that would otherwise have taken years to play out. It’s changed not just where we work, but how we work: how we collaborate; how we innovate, and who we work with,” he said.

“The information superhighways made possible by NBN have never been more critical to our way of life.

“The distributed workforces of the future have arrived.”

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