NBN Co defends $5b cost hike for AU NBN

Staff writer
13 Aug 2012
Daily News

Australia's NBN Co, the company building and operating the National Broadband Network, has released an updated plan for the country's largest national infrastructure project through 2015.

The company said it expects to achieve an annual Internal Rate of Return (IRR) of 7.1%, a marginal increase on its original projection released 20 months ago before the full-scale rollout of the National Broadband Network had commenced.

NBN Co CEO Mike Quigley gave assurances that the IRR is essentially unchanged from its original projections and the company remains committed to the objective of connecting all Australians to high-speed broadband over the remaining nine years of the 10-year project.

However, the total forecast capital expenditure to the end of the construction period in fiscal year 2012 has increased by $1.4 billion (3.9%), while operating expenditure has risen by $3.2 billion.

NBN Co said the changes in costs have been more than offset by forecast increases in revenues that are projected beyond the fibre construction period, leading to a marginal increase in the project's IRR from 7% to 7.1%.

"We continue to build the NBN as cost effectively as possible,” said NBN Co Chief Financial Officer Robin Payne.

The updated corporate plan, however, assures that the fibre network rollout remains on course to reach peak scale run rate during 2015.

NBN Co said as of June 30 this year, construction had already commenced or was complete for approximately 305,000 premises across Australia. By the end of this year, the number is forecast to rise to approximately 758,000 premises, in line with the 12-month rollout announcement in February.

By mid-2015, construction will have commenced or be completed for approximately 3.5 million premises, in line with the 3-year rollout plan announced in March.

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