NBN Co now insists $200m not cut from wireless budget

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NBN Co now insists $200m not cut from wireless budget

Reverses its own position.

NBN Co has backtracked on its own claim that it redirected $200 million in capital expenditure from fixed wireless to other parts of the build, now saying the money will still be spent on wireless upgrades.

iTnews reported yesterday that NBN Co outlayed $200 million less than expected on its fixed wireless network in FY19, after the size of the footprint shrunk by 91,380 premises.

An NBN Co spokesperson told iTnews that the lower capital expenditure (capex) was “a result of more accurate modelling of the actual number of premises that need to be made ready to connect in fixed wireless areas.”

The spokesperson went on to say that the money saved by not deploying fixed wireless to non-existent premises would be ploughed into the hybrid fibre coaxial (HFC) and fibre-to-the-curb (FTTC) networks instead, where capex requirements have increased by a combined $700 million over the forward projections.

“In addition to the redirection of the unspent capex previously allocated to fixed wireless, NBN Co will also use contingency that was allowed for in [Corporate Plan 2019] to cover its additional FTTC and HFC costs,” the NBN Co spokesperson said.

But at Senate Estimates late on Tuesday, NBN Co backtracked on that, instead insisting that it would not redirect wireless capex but instead spend it in other years.

“There was no $200m directed away [from fixed wireless],” NBN Co CEO Stephen Rue said.

“We didn’t take $200m out of fixed wireless and decide to spend it somewhere else.”

Rue also contradicted NBN Co’s earlier position that the discovery of 91,380 phantom premises in the fixed wireless rollout had led to the $200 million being freed up.

“It’s not materially related to the dilution piece,” he said.

Rather, Rue said the $200 million resulted from “a combination of timing of build, timing of activations, and timing of capacity upgrades” to the wireless network.

Capacity upgrades refers to the $800 million remediation program announced in August last year.

“We’ve been slightly behind in that program so there’s been a timing of spend between FY19 and FY20 that you’re also seeing in that $200m,” he said.

However, the idea that fixed wireless capex requirements had simply rolled over to next year was not supported by detailed capex figures released to parliament last week.

These show that although NBN Co’s capex requirements for fixed wireless fell by $200 million in FY19, they remain stable at $1 billion between FY20 and FY22. 

In other words, there is no corresponding rise in the requirement for capex on the fixed wireless network in the next three years.

This was noticed by Labor Senator Anne Urquhart, who quizzed Rue on his explanation in the minutes before the hearing wrapped up.

Rue stuck to his line that the $200 million would still be spent on fixed wireless - but said it would now just be reallocated much further into the future.

“Then it would just be a shift into FY23,” he said.

“The $800m that we talked about spending on fixed wireless hasn’t changed. 

“It just will be a timing then outside of the FY22 year that fits into FY23.”

Senator Urquhart then pressed Rue to explain why an NBN Co spokesperson had told iTnews just 24 hours earlier that the capex underspend in FY19 was the result of the reduction in premises in the fixed wireless footprint.

“I’m just repeating what I said earlier, that there is some difference in build timing and some difference in connection timing, but the biggest piece is timing in terms of the capacity program and when that money will be spent over several years,” he said.

“I’m just telling you what it is.”

Update 1.12pm: An NBN Co spokesperson now says the company did "redirect" the wireless capex, but that this did not affect its overall planned fixed wireless spend.

"NBN Co remains committed to the $1.6 billion fixed wireless capex budget outlined in the Corporate Plan 2019-22," a spokesperson said.

"The variance in FY19 capex numbers purely relates to the slower build and activation activity in Fixed Wireless in that financial year and is not related to footprint dilution.  We could have been clearer on this point.
"As a result of the slow activation and build activity in FY19, funds were redirected to other technologies such as FTTC and HFC but it’s important to stress that the overall capex program for fixed wireless remains intact, with the remaining $200 million to be spent in FY23 rather than FY22."

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