NBN Co won't reveal individual profit and loss for wireless, satellite

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NBN Co won't reveal individual profit and loss for wireless, satellite

Could undermine the case for a broadband tax.

NBN Co has backed away from revealing just how much its fixed wireless and satellite networks lose each year, information that could bolster - or undermine - the case for the broadband tax.

Chief development officer for regional and remote, Gavin Williams, told a senate committee last month that NBN Co did make an effort internally to break out the performance of fixed wireless and satellite separately.

“We seek to understand, as you'd expect, what the economics, what the P&L, looks like for fixed wireless and satellite separately,” Williams said.

“We do that on the basis of prudent product management for those services.”

Having confirmed they existed, Labor Senator Anne Urquhart asked if NBN Co would “have any concerns about tabling financial accounting statements for its fixed wireless and satellite networks.”

Williams said immediately that they may contain “some commercially sensitive items” which precluded their release.

Now, NBN Co says the informal nature of the reporting means a release isn't possible.

“Fixed wireless and satellite have not been established as separate statutory entities for NBN Co, and therefore we are currently not in a position to prepare or table separate financial statements for these networks in accordance with Australian Accounting Standards,” NBN Co said this week.

Further, NBN Co appeared to backtrack on its ability - or at least appetite - to apportion costs and revenue on an access technology by access technology basis.

“For the purpose of statutory financial statements, NBN Co has determined that assets (including fixed wireless and satellite) that form the NBN access network work together to achieve the delivery of products and services in order to generate cash inflows,” it said.

“As a result, NBN Co has determined that the ubiquitous broadband network is a single cash generating unit, and as a result there is no statutory requirement for disaggregated segment reporting.”

Senator Urquhart also elicited an admission from NBN Co that it was "requested" following the 2014 Vertigan review to "implement accounting separation for [its] regional networks" - which would have made their financial status much clearer.

However, based on NBN Co's reasoning - that the network is too integrated to formally break out costs for individual access technologies - this clearly did not progress.

Why costs matter

The current and ongoing costs associated with the fixed wireless and satellite networks were a hot topic in the lone public hearing conducted by the senate committee examining the latest form of the regional broadband scheme (RBS), colloquially known as the ‘broadband tax’.

The committee set the RBS up to pass into law, waving it through despite longstanding concerns over how much impact it will actually have.

The committee heard evidence that future costs for fixed wireless and satellite are uncertain, and that administration processes for the money collected under the RBS are still yet to be determined.

Internal P&Ls for fixed wireless and satellite, combined with capital expenditure projections in the company’s corporate plan, could indicate just how much of a dent the tax will have offsetting future costs.

If the tax has only a negligible impact, and does not prevent future calls on the budget, for example, it could undermine the case for the tax to be passed.

The RBS legislation needs to pass the senate to become law. It could be in place as early as July this year.

It would mean users of NBN-like fixed-line services - including businesses - pay a levy of $7.10 a month, which goes towards the future costs and upkeep of the fixed wireless and satellite networks.

The $7.10 is also paid by users of NBN Co fixed line services, but is already considered to be embedded in existing prices, and therefore will not be an additional cost.

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