The wholesaler will invest $3.5 billion in its network as it pursues Fibre-to-the-Node (FTTN), Fibre-to-the-Curb (FTTC) and Hybrid-Fibre-Coaxial (HFC) builds.
The investment is part of a pledge to connect 75% of homes and businesses in the fixed-line footprint by 2023, providing customers with access to peak wholesale speed tiers of “500 Mbps to close to 1 Gbps”.
Premises already connected through FTTN that now require higher wholesale speed tiers will be able to access them through FTTP technology. NBN Co said it will use the existing fibre infrastructure already built to nodes and invest in the continued rollout of fibre “deeper into community areas”.
The announcements were set out in NBN Co’s Corporate Plan 2021.
CEO Stephen Rue said the firm was “investing now and starting work immediately” to meet the growing demand for higher speed broadband services.
“The National Broadband Network is the digital backbone of the nation. Now that we have completed the initial build, we will continue to invest in the nbn to be ready to meet the evolving needs of residential and business customers.”
Rue continued: “Together, the initiatives outlined in this $4.5 billion network investment plan will have a real and positive impact on Australia’s retail and business telecommunications landscape and help lift the digital capability of the nation. With this plan we will support businesses, boost the competitiveness of regional areas, strengthen network performance and further enhance customer experience.”
The improvements will be welcome across Australia, which has notoriously slow internet. However, speaking to the Sydney Morning Herald this week Telstra and TPG have both warned of overbuilding and duplication of infrastructure assets.
A Telstra spokesperson was quoted as saying: “We look forward to seeing more detail, however, it is important this investment doesn't lead to the inefficient duplication or overbuilding of existing infrastructure.”
In detail
Working in partnership with retail internet providers, up to $700 million of NBN Co’s total investment will be channelled into a multi-faceted package of initiatives over the next three years to support business innovation, productivity and growth.
NBN said “the centerpiece” of this package would be the creation of up to 240 nbn Business Fibre Zones across Australia – expected to cover more than 700,000 business premises – including a presence in 85 regional centres. Businesses will have fibre rolled out to their premises free of charge and services to regional businesses will be priced the same as in metro areas.
In a media release outlining the plans, NBN Co said: “This demand has been accelerated by changes in the way people work, study and communicate in response to the global health crisis. It is also clear that economic recovery will in part be driven by digital enablement and innovation.”
In addition to these network investments, NBN Co will invest $1.5 billion to connect more than 300,000 new premises, extend some Covid-19 relief measures into FY21, and invest in IT simplification to reduce cost for NBN Co and internet retailers, and enhance overall customer experience. The company said it will increase its focus on regional areas through targeted investments in fixed wireless and satellite networks, an expansion of fixed-line networks in regional areas, and the deepening of community engagement.
Financing
In May 2020, NBN Co entered into bilateral agreements with a group of leading Australian and international banks providing revolving credit facilities totalling $6.1 billion. The credit facilities each have a five-year term and represent NBN Co’s inaugural long-term borrowing from private debt markets.
To bring forward new network investment of $4.5 billion and invest in additional programs valued at $1.5 billion – while refinancing and repaying the $19.5 billion Commonwealth Government loan – NBN Co is expecting to raise a total of $27.5 billion of private debt by June 2024. This includes the $6.1 billion credit facilities already executed.
In terms of ROI, a report commissioned by NBN Co and AlphaBeta estimates that this package will improve national productivity and has the potential to add more than $6.4 billion to annual GDP from 2024. NBN Co’s ongoing investment program is also forecast to create an additional 25,000 direct, indirect and induced jobs over the next two years.
Rue added: “With residential and business customers, and education and healthcare service providers more reliant on broadband than ever before, we believe the time is right to invest in the network capabilities that Australia will need in the years to come.
“Core to the success of this plan is to ensure that we continue to be customer-led in all we do, focussing on delivering great customer experience in collaboration with our retail partners, and ensuring we address the diverse needs of customers.
“The nbn network is a critical piece of Australia’s infrastructure, playing its part to drive the social and economic benefits that this country needs now, and in the future,” he continued.
