Strength in numbers: NBN Co’s FY19 financial results

Our Chief Financial Officer Philip Knox shares the results of FY2019.

Fiscal 2019 was the busiest ever year of network construction for NBN Co and its employees, as the Company deployed access technologies at scale, rolled through some of the nation’s busiest metropolitan centres, and continued to hit our construction and financial targets.

We closed the year with another period of strong financial and operational performance as the company exceeded its core targets for activations, revenue and premises ready to connect.

During the year, 1.5 million new homes and businesses signed up to services over the nbn™ broadband access network, taking the total number of activated premises to more than 5.5 million, an increase of 37 per cent on the prior year.

This strong growth in activations continued to boost the company’s revenue base, which increased by 43 per cent on the prior year to $2.83 billion.

Revenue growth was underpinned by a significant jump in blended Average Revenue Per User (ARPU), which increased to $46 a month, compared to $44 just twelve months ago. There were three main drivers of that ARPU increase in FY19: customer migration to higher speed plans, increased data consumption, and strong growth in our business segment.

These revenue gains mean that before subscriber costs, NBN Co’s earnings before interest, tax, depreciation and amortisation (EBITDA) came in at $608 million compared to a loss of $103 million dollars in the prior year.  

This is a significant achievement and milestone for NBN Co and reflects the maturity of our operations as we continue to focus on growing a sustainable business. It also gives us confidence that we have the right mix of retail and business products to lift ARPU in coming years as we close in on creating a cash flow positive business with the means to reinvest into our network and customer experience.

The rollout continues

Importantly, our rollout continues to expand at pace. In FY19, we added close to three million homes and businesses to the nbn™ footprint, taking the total of premises ready to connect at the end of the financial year to 9.95 million.

This has placed us in a very strong position to complete the build, on time and on budget, by the end of June 2020*.

FY19 was also a significant year for two other important reasons: the launch of our scaled deployment of Fibre-to-the-Curb (FTTC) technology and our focus on the wholesale telecommunications business market.

In FY19, our rollout of FTTC picked up some serious pace as we increased the number of ready to connect premises by more than 580,000. We have also increased the number of activated premises on this technology from 4000 at the end of FY18 to almost 230,000 at the close of FY19.

Business momentum

Our participation in the business market also gained momentum in FY19 with business revenue up 54 per cent on the prior year to $388 million as the launch of new wholesale products for government and enterprise customers, and broadband bundles for small and medium sized businesses, were well-received in the market.

We continue to hold great confidence for our business segment going forward and believe it will greatly benefit competition and broadband access for thousands of businesses across the country.  

Research conducted by economics firm AlphaBeta (commissioned by nbn) showed that the nbn™ access network is already helping create new businesses and supporting much needed flexibility for workers. According to that research, by 2021, there could be up to 80,000 additional new businesses created as a result of the nbn™ access network, and up to 47,000 additional people using our network to work from home.

It’s statistics like these that show just how important the nbn™ access network will be to the future economic and social prosperity of the country, and why we are placing such a heavy focus on this part of the business.

Towards completion

Today’s results confirm the strength of the company and our strategy. We know we have lots to do before the end of FY20 as we continue our efforts to connect more Australians to the benefits of fast broadband.

But we remain confident that we can meet these challenges and – in partnership with the telecommunications industry and our delivery partners – complete the major construction phase of the rollout, get more Australians connected and improve customer service.

*This represents the connection of standard installation premises only. Network construction will continue beyond 2020 in relation to new residential and business developments and complex installations, which includes properties that are difficult to access, culturally significant areas and heritage sites.