NBN Co's use of SaaS drives up its IT costs

NBN Co has seen its IT and software costs rise as it consumes more software as a service, but says AI use has not materially impacted its technology budget.

In its results for the 2026 financial year, the company outlined a six percent increase in “other” operating costs, which it said was “mainly related to higher IT and software spend consistent with the adoption of cloud-based services, partly mitigated by cost control measures and lower  discretionary spending.”

Chief financial officer Simon Atkinson largely deflected questions from iTnews about its technology spending and budgets.

While software licencing costs across industry have generally risen over the period, government entities in particular have found themselves exposed to price hikes by individual vendors, such as by Broadcom for its VMware stack.

NBN Co is known to be a VMware user but, as it does not have to report commercial terms in individual contracts, its exposure to price increases there are difficult to quantify.

Atkinson offered little insight into which as-a-service platforms contributed to the increase in costs.

“We don’t comment on our commercial arrangements with regards to our licences,” he said.

“That said, what I can say is we saw something of a timing difference with a lot of tech capex coming forward, but also as we transition to more software-as-a-service as opposed to capitalising licences we’ve seen that increase.”

Asked whether AI use is contributing materially to higher IT and software spend at the company, chief executive Ellie Sweeney responded: “No, it’s not.”

Late last month, NBN Co revealed it is using artificial intelligence to prepare the “first cut” of post-incident reports and to better prepare crews to fix damaged infrastructure, amid a flurry of new use cases.

Sweeney reiterated the growing use of AI inside NBN Co in her commentary for the company’s full-year results.

“AI helps us operate the network more efficiently,” she said.

The company reported FY26 revenue of $5.92 billion, up three percent year-on-year.

This was primarily driven by getting more customers switched over from copper-based services to full fibre, which led to faster and more expensive plans being taken up.

“We are progressively reducing Australia’s reliance on ageing copper infrastructure,” Sweeney said.

Asked if the company would set a deadline for the closure of all copper-based infrastructure, Sweeney said there was “no firm date” yet.

To date, NBN Co has relied on customers themselves to trigger a move off copper-based infrastructure.

However, from 2028, NBN Co will start selecting and shifting customer cohorts across to full fibre as well.

This will improve the customer experience and also assist the company to meet resilience and reliability goals.