NBN Co receiving more fibre orders than it can connect

NBN Co is receiving more orders from customers looking to upgrade to full fibre than it can fulfil, with the number of completed upgrades nearing 200,000.

The company reported in its 2024 first-half results that more than 197,000 customers had upgraded to fibre-to-the-premises (FTTP) by the end of the first half of 2024, up more than 107,000 over the first half of 2023.

The company said it’s now receiving 7000 fibre orders each week, but CEO Stephen Rue told iTnews the connection rate is running behind that at the moment.

Based on the 107,000 connections in the period, the average weekly connection rate was around 4100, slipping below a construction peak it achieved in October last year of 5000 premises a week.

But Rue suggested the rate has since improved.

“Last week, we physically connected about 6000 premises,” he said. 

Rue said part of the construction rate reduction was due to adverse weather in Queensland in the wake of tropical cyclone Kirrily, which has required the company to divert field staff to remediation work.

Rue said the connection rate will accelerate with “improvements in our processes in the field”.

Rue told the NBN Co earnings call 8.4 million premises are now in the fibre footprint and able to order 500Mbps-plus plans, and he expects this to reach 10 million premises by the end of 2025.

Capital expenditure rose from $1.4 billion in the first half of 2023 to over $1.8 billion in the most recent half-year period, while NBN Co’s EBITDA rose from $1.8 billion to nearly $2 billion (on revenue up to $2.75 billion from $2.62 billion).

Its post-tax net loss rose to $696 million from $444 million in the first half of 2023.

Moody’s Investors Service vice president Ian Chitterer said in a statement that NBN Co's results "were marginally above our expectations with EBITDA growth of 10 percent."

"We expect a slight improvement in NBN Co’s credit profile over the next 12 to 18 months as increasing EBITDA and operating cash flow are offset by high levels of capital spending to improve the network," Chitterer said.

"NBN Co’s available liquidity of $7.3 billion is [also] a credit positive, as it alleviates refinancing risk related to the $5.5 billion outstanding under its Commonwealth loan maturing on June 30 2024.”