Australian NBN Co clarifies costs and govt contribution

NBN Co CEO gives details of funding at Aust Computer Society event

NBN Co chief executive Mike Quigley is becoming clearer on the costs involved in the rollout of the National Broadband Network (NBN), confirming A$27 billion as a “precise” peak government injection equity figure. However, the former Alcatel-Lucent chief operations officer told Computerworld Australia that NBN Co’s business case was yet to be finalised or delivered to Government. Quigley’s new stance, revealed at a recent Australian Computer Society event, comes just a week after he told an Australian Information Industry Association (AIIA) lunch that government equity would be “south of $30 billion”. “Our business case requires equity funding by the Government of around $27 billion,” Quigley told the ACS. “This is not the total capital costs, as we expect to raise debt, without Government guarantees, of at least $10 billion.” Quigley said that, in addition to government equity and debt funding, internal revenue generation from active parts of the network would also play a part. However, given the NBN Co is currently leasing access to its wholesale fibre network at reduced rates, it remains unknown whether its internal revenue is enough to pay back equity, leaving the total cost of the NBN rollout closer to $37 billion than the $43 billion initially proposed. Quigley wouldn’t reveal how much less the rollout would cost if its $9 billion deal with Telstra is finalised next year, but said it would be “quite a deal to the overall business case”. The $27 billion peak government injection figure is just a billion more than stipulated in the NBN Implementation Study, authored by consultants at KPMG and McKinsey & Company, and released in May. The study found the Government would reach its peak equity injection by 2015, with expectations that NBN Co would be able to repay as much as $20 billion of the injection by 2024. Though Quigley appears more comfortable with the new equity injection figure, he told media that the business case was not completely finished, and that it would only be delivered to Government once NBN Co has the opportunity to integrate the Government’s finalised response of the implementation study into the case. “We never finish the business case,” he said. “Our business case is constantly updated as we get more information, we just keep tuning it and honing it. As you would expect, if the Telstra deal is consummated, that makes quite a deal to the overall business case.” Australian Communications minister Stephen Conroy told a Senate estimates hearing earlier this year that the business case would remain commercial in confidence, and would not be released to the public.

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Tags nbn coacsMike Quigley

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