NBN Co losses climb as rollout steps up

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NBN Co losses climb as rollout steps up

Broadly on track to meet fiscal year targets.

NBN Co's financial losses are climbing as the network builder ramps up the speed at which it connects premises to the national broadband network.

At its first-half fiscal 2015 results briefing today, NBN Co reported a loss before interest, taxation, depreciation and amortisation of $497 million for the six months to December 2014.

Capital expenditure grew to $1.43 billion during the six months, attributed to $797 million in costs associated with constructing the FTTx access networks, cabling activity for multi-dwelling units, and the acquistion of Telstra lead-ins.

NBN Co expects to release a fibre-to-the-basement product for multi-dwelling units "imminently", and is targeting 2000 premises ready for services this quarter.

NBN Co chief financial officer Stephen Rue said the rise in costs had resulted from growth in the number of customers moving off Telstra's copper network and onto the NBN, and said costs would continue to rise as the rollout progressed.

The company reported a 35 percent increase in serviceable premises for the period to 748,000, up from 552,618 at June 2014.

Activated premises - homes and businesses that have actively taken up a service on the NBN - grew from 210,628 at the end of the previous full fiscal year to 322,391.

The company has also decreased the percentage of service class zero premises (those unable to order services) to 17 percent from 31 percent a year ago.

"Within the fixed line footprint, concerted efforts by the company to improve the rollout process mean that, for the first time in the project’s history, more than half of all premises nominally passed by fibre can now order a national broadband network service," the company stated in its results presentation.

NBN Co has a current weekly run rate of 10,200, which, if it remains stable would see the company just miss out on reaching its target of 1 million premises serviceable by the end of its fiscal year in June.

However, the increase in activated premises combined with a $3 increase in ARPU (average revenue per use) to $39 resulted in a 191 percent boost to telecommunications revenue on the previous corresponding period, reaching $64 million.

NBN Co attributed the ARPU growth to higher revenues from greater demand from RSPs for capacity, as well as the speed mix of fibre end users.

Its most popular offerings were the 25/5 Mbps1 and 12/1 Mbps1 wholesale services, both counting 38 percent of users. The 100/40 Mbps1 followed behind with 19 percent of users.

Cost per premise

Following an internal review of how the company calculates the average cost per premise of construction, the company recently updated its methodology to include a more "comprehensive" view of costs.

Costs around design, internal labor, net present value of leases and delivery partner activity are now included in the estimate, NBN Co said.

At the end of December, the cost per premise for fibre-to-the-premise brownfield connections came in the highest at $4316, greenfields FTTP connections dropped from $3104 in June to $2780, and fixed wireless sat fairly steady at $3637.

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