NBN slows rollout
Telstra assesses fallout from broadband giant’s delay
TELSTRA is assessing how much of the $ 2.5 billion it was tipped to receive from the NBN this year will be delayed, after the trouble- plagued broadband provider halted parts of the rollout using the telco’s pay television cables.
NBN wants to connect about three million Australian houses to its national network using the cables Telstra uses for Foxtel and broadband. But this was halted yesterday after an increasing number of customer complaints of dropouts and quality problems after switching to the NBN.
Telstra yesterday said it had been told by NBN that it would cease sales on the cables – known as High Frequency Coaxial cables – for six to nine months from December 11, as it tries to identify and solve the problems.
NBN said the delay would be in effect until “incremental field work” was undertaken to “raise the quality of service for end users”.
Shares in Australia’s biggest telecommunications group dipped yesterday as it flagged the delay, closing down 0.6 per cent at $ 3.46.
“Telstra’s FY18 guidance to the market included an assumption that the NBN rollout would be broadly in accordance with the NBN corporate plan 2017,” Telstra told the sharemarket.
“Telstra will assess the effect of today’s announcement in conjunction with the NBN Co Corporate Plan 2018 on its outlook for FY18 and advise the market once that assessment is complete.
“The delay in the NBN rollout will delay a proportion of the payments to Telstra from NBN into future periods.”
The NBN compensates Telstra in return for access to the cables and other technologies – such as copper cables previously used for landlines. But those HFC payments will be deferred as the migration is halted.
Last year Telstra received about $ 1.25 billion from the NBN for payments disconnecting customers from both copper and HFC.
At its full- year results in August it projected it would receive between $ 2 billion and $ 2.5 billion from copper and HFC transfer of customers, plus associated asset transfer payments.
It is another headache for the telco giant after chief Andy Penn this year revealed the completion of the NBN would effectively put a $ 3 billion hole in earnings annually, as Telstra loses its wholesale monopoly.
To cope with such changes the telco earlier this year slashed its dividend, revealing that from this finan- cial year it will pay out 70 per cent to 90 per cent of underlying earnings – a tally that excludes one- off items – ending its historical practice of paying out almost all net profit.
Telstra expects the total dividend payout this financial year to be about 22c a share, fully franked.
Shares in Telstra have fallen almost 30 per cent in the past year, and on October 5 closed at their lowest level in more than five years – $ 3.38.
Using the HFC cables was a part of the Turnbull Government’s “multi technology” strategy of using things such as fibre to the node, satellite and HFC.
This was an alternative to the previous Rudd- Gillard model of building fibre to the home, which was expected to cost more.
The NBN yesterday said it remained confident of hitting the goal of completing the build and connecting eight million Australian premises by 2020.
“There are so many elements of this industry transformation that we cannot directly control, but we are serious about improving that which we can,” NBN chief Bill Morrow said.
“So we can provide a better experience to our customers and their end users, NBN Co will immediately implement new initiatives designed to improve the quality of service for end users on our HFC network.
“The HFC access technology is used around the world to deliver reliable high speed broadband services. This technology is an important part of NBN Co’s technology mix.”