NBN's half-year results show solid performance but challenges remain

Independent Australia
18 Feb 2025, 11:05 GMT+10

NBN Cohas released itsfinancial and operational resultsfor the first half of FY25, reporting steady revenue growth, ongoing network upgrades and efficiency gains.

The company indicated it remains on track to meet its fiscal targets, but the broader impact of its business model and the accessibility of high-speed broadband remain key concerns.

Financial performance

For the six months ending 31 December 2024, NBN Co reported total revenue of $2.87 billion, a 4% increase from the same period last year. Earnings before interest, taxes, depreciation, and amortisation (EBITDA) rose by 7% to $2.12 billion, reflecting cost control measures that led to a 2% reduction in operating expenses.

Residential average revenue per user (ARPU) increased by $2 to $49, driven by higher demand for faster speed tiers and regulated wholesale price adjustments. Business revenue grew by 5% to $599 million. However, the continued reliance on pricing adjustments raises questions about affordability and accessibility for Australian households.

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Network expansion and upgrades

NBN Co has continued its large-scale fibre upgrade program, with over 600,000 premises opting for Fibre to the Premises (FTTP) under theFibre Connectinitiative. The company aims to enable 3.5 million premises on Fibre to the Node (FTTN) and 1.5 million premises on Fibre to the Curb (FTTC) to upgrade to FTTP by December 2025.

As Ireporteda few weeks ago, a major announcement in January 2025 confirmed a joint investment of $3.8 billion between NBN Co and the Australian Government to extend fibre upgrades to the remaining 622,000 premises currently on FTTN by 2030. This investment, with a significant portion focused on regional areas, aims to improve service quality and reduce reliance on aging copper infrastructure.

Fixed wireless and satellite expansion

The company completed its national fixed wireless upgrade program by the end of 2024, expanding high-speed access to over 800,000 premises. The upgraded network now offers peak wholesale speeds of up to 400 Mbps in select areas. Additionally, NBN Co is evaluating Low Earth Orbit (LEO) satellite solutions as a potential future replacement for its existingSky Musterservice.

The company is focused on securing an efficient and competitively priced wholesale LEO solution while considering both professional and self-install options.

Accelerating speed tiers

In September 2024, NBN Co confirmed that it will introduce new wholesale download speeds of up to 2 Gbps for eligible full-fibre and Hybrid Fibre Coaxial (HFC) connections starting in September 2025. However, while future speed tier adjustments remain a possibility, the company's immediate priority is ensuring a smooth rollout of the planned changes and working closely with retail service providers to enhance customer awareness.

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Operational efficiencies and cost management

NBN Co has emphasised strong cost control, with operational efficiencies leading to reductions in truck rolls and improvements in network performance. Moving more customers to full fibre has contributed to reduced energy emissions and enhanced service reliability. The company is balancing the need for continued investment with maintaining financial sustainability, particularly as fibre upgrades move into lower-density areas.

Capital expenditure for the period was $1.9 billion, up 2% from the previous year, primarily driven by fibre expansion, fixed wireless improvements and new business connections. NBN Co raised $3.9 billion in debt capital during the half-year to support these investments while maintaining financial stability.

The path forward

While NBN Cos latest results show financial stability and continued network expansion, there are critical issues that must be addressed. The company has made progress in upgrading infrastructure, but its business model continues to limit the adoption of higher-speed services due to pricing structures that discourage uptake, something I intend to address next week.

With more than 82% of Australian premises now gigabit-capable and plans to extend that figure beyond 90% by 2025, the challenge remains ensuring that all Australians can access and afford the speeds available. The take-up however stays stuck around 70%. This means the focus must shift from revenue-driven pricing models to delivering an equitable, high-speed broadband network that benefits the nations digital future.

Paul Buddeis an IA columnist and managing director of independent telecommunications research and consultancyPaul Budde Consulting. You can follow Paul@PaulBudde.