“The rollout of the NBN network is very much on track”: NBN chief executive Bill Morrow. Government-owned telecommunications company NBN Co now has over one million customers and has doubled its revenue to $421 million for the past financial year.
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However, it also reported a $2.4 billion loss as it spent far more operating its network than it received from customers.

Next year NBN Co expects to report a much bigger loss. It is forecasting revenues of just $900 million as it spreads its network out to 5.4 million households. It is forecasting slow take-up rates of only one million customers to a total of 2.1 million active customers in mid-2017.

It is relying on the government to find additional funding sources beyond 2017, when its initial allowance of $29.5 billion is expected to run out.

NBN Co has enough money to get through the coming financial year, and future funding options include the government raising money and loaning it to NBN Co, according to chief executive Bill Morrow.

“These are issues that the department of finance are considering. [chief financial officer] Stephen [Rue] and I have had numerous meetings with them. They are well on track. We are not pressed for time on this issue. We are not lacking any kind of confidence that they won’t be able to produce whatever the source is that they want to use to fund us,” he said on Tuesday.

The company received $7.1 billion from the federal government during the 2015-16 year, and has spent $20.3 billion since being launched in 2009.

Mr Rue said the company still has access to $9.2 billion of government funding, which is enough to get through the 2016-17 financial year.

“We are currently evaluating long term funding options in order to fund the business through to the time when sufficient cash flows are generated to run the business in a self-sustaining way,” he said on Tuesday.

According to the presentation released on Tuesday, NBN Co’s had a $2.4 billion loss in 2015-16, which was bigger than the $1.7 billion loss the previous year. Detailed financial information will not be available until its annual report is tabled in Parliament later this month.

Employee expenses increased from $404 million to $609 million. Total expenses increased from $1.3 billion to $2 billion, including $582 million paid to Telstra and Optus for customers moving off their phone lines and onto NBN Co’s. These ‘subscriber costs’ will increase as more customers activate their NBN connection.

Communications Minister Mitch Fifield and Finance Minister Mathias Cormann released a joint statement congratulating NBN Co on its ninth consecutive quarter of growth, adding “the Government has instructed NBN to continue rolling out the network as economically as possible.”

“More than one-quarter of Australian homes and businesses can now access an NBN service, and the company is aiming to reach almost half of all households by mid-2017,” they said.

Revenues increased from $164 million to $421 million during the year and are expected to reach $900 million next June. Most of the revenue came from households with fibre-to-the-home connections and internet companies buying enough capacity to service them.

The average revenue per user [ARPU] has increased from $40 per month to $43 per month, according to Mr Rue.

“This growth in ARPU reflects a more than 27 percent increase in data consumption. Retail service providers are dimensioning their networks for additional capacity as demand grows,” he added.

Average monthly downloads were 83 gigabytes [GB] per user in December and had increased to 131 GB by June.

The company continues it’s multi-technology mix, completed a trial of fibre to the node and launched the service in September 2015. It also launched a satellite called Sky Muster and started selling services on it, and has launched a cable product using Telstra’s existing hybrid-fibre coaxial cable network.

It has started testing “fibre to the distribution point”.

“Nearly two thirds of the nation are either in design, in construction, or already able to access the NBN service,” Mr Morrow said.

Of the 1.1 million customers about 822,000 are using the fibre to the premises technology.

The most expensive type of connection was about $4,400 per household for a fibre optic cable installed directly into homes in established suburbs. The next most expensive was fixed wireless, then fibre connections in new housing estates, and the cheapest was fibre to the node, costing about $2,250 per household.

However, NBN Co does not provide cost per premise for satellite connections, which would be about $6,000 per household. The two Sky Muster satellites cost $2.3 billion to construct and launch and will serve a maximum of 410,000 households.

To recoup the high cost, NBN Co will look at selling spare satellite capacity commercially.

“Spare capacity is a term to be careful with. It might be spare now, but will change in the future,” Mr Morrow warned.

NBN Co currently has about 40,000 people using an interim satellite service and has just started moving customers onto Sky Muster. Both satellites will have more than enough capacity to service a few hundred thousand households.

Chief customer officer John Simon said the satellites will have ‘idle’ capacity, not ‘spare’.

“Our broadband service tends to work for the homes at peak busy hour, which we know is the evening. But during the day there are many beams… that are not being used. So what we are looking to do is to make sure we get the most effective use of that satellite by creating opportunities for commercial organisations to be able to use that service to generate a better return,” he said on Tuesday.

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