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nbn™ delivers another financial yawn-fest

Solid Q3 with no surprises

There's very little to say about the latest numbers from the company building Australia's National Broadband Network, except to say that at least there's no bad news from the government.

From a financial point of view, nbn™ turned in another boring, solid quarter: revenue at AU$665 million is more than double the $275 million for the same quarter in 2016, ARPU steady at $43, 4.6 million premises ready-for-service and more than 2 million activated.

HFC is starting to generate revenue with $3 million incoming in the quarter (zero last year), and the million active FTTP end users remain the revenue engine-room at $269 million.

The other revenue lines are CVC charges ($199 million), FTTN ($98 million), fixed wireless ($35 million) and satellite ($13 million), with “other” (including services like backhaul for mobile carriers) at $48 million.

Service adoption by speed tier continues to reflect the complex interaction between CVC price, RSP tariff books, and consumer preferences: the fixed network's bottom 12/1 Mbps speed tier fell fell from 33 percent in Q3 2017 to 29 percent now; 25/5 Mbps grew in the same period from 47 percent to 52 percent; and the top 100/10 Mbps drifted from 15 percent to 14 percent.

On the fixed wireless network, there's a small drift away from the middle tier: at 78 percent of users, 25/5 Mbps services lost 5 percent to 12/1 Mbps (up 1 percent to 17 percent), and 50/20 Mbps grew from 1 percent to 5 percent of users.

Here's the worst news for fibre fans: with the FTTP network now standing at nearly 1.5 million ready-for-service, the build is closing in on completion, and capex on that network is falling sharply. In the nine months to 31 March 2016, the company spent $864 million on the remaining fibre rollout; for the same period this year, that was a scant $365 million.

Perhaps the most interesting aspect of the company's results call was discussing where future ARPU growth will come from.

Australians' hunger for downloads is one source, since a retailer's backhaul charges are calculated on a per Mbps, per month basis.

However, that only goes so far: over time, CVC charges have to fall, or they'll crimp both consumers' appetites and retailers' profitability (many critics of the CVC model would argue this is already a problem).

During the call, CEO Bill Morrow and CFO Stephen Rue both mentioned business services as important to future ARPU growth, because they'll command higher charges as symmetrical services.

Since the company's product roadmap doesn't envisage symmetrical services arriving before 2019 (as an enterprise Ethernet offering), there's likely to be another 18 months of flat ARPU.

The Register has asked nbn™ to expand on its expectations for symmetrical services.

Morrow also took the chance, during the call, to clarify an important point about the government's proposed “broadband tax”.

He explained that rather than being levied on all NBN users, it will only apply in geographies where competitors try to “cherry-pick” customers where the NBN is available.

The results announcement is here. ®

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