A Review Has Found The NBN Will Struggle To Make A Good Return On Its Investment Capital

Communications Minister Malcolm Turnbull (Photo: Getty/Stefan Postles)

Australia’s huge national broadband infrastructure project will struggle to make a decent return on its investment capital, a review has found.

The review, reported by The Australian, has found that up to $38 billion in spending commitments were locked in under the previous government, and must be met — regardless of whether the Coalition used Labor’s original fibre to premise plan, or its alternative, which relies on “nodes” and existing wiring to homes.

While the NBN is expected to rake in $18 billion in revenue over the 10-year review period, there will be $7.9 billion in corporate overheads, $17 billion in operating expenses for payments to Telstra, and $12.8 billion in higher capital expenditure to meet coverage and service commitments made under Labor.

The Australian says NBN Co pays Telstra up to $1300 for each of its household and business accounts that connect to the NBN.

“Combined, these three areas amount to $34bn-$38bn of spending commitments between 2011 and 2021 locked in under Labor’s watch … The overwhelming ­majority of these obligations must be met in full if the NBN is to be completed. This is true regardless of choices about network design or technology,” the review’s report says.

“All face the same $34bn-$38bn baseline of financial commitments if the NBN’s fixed, wireless and satellite networks are rolled out.

“These expenses are so vast that they make (it) immensely challenging for NBN Co to earn commercially adequate returns on its invested capital.”

This puts the Government in a difficult position, after it promised — while in opposition — that it could build the project faster, and cheaper than Labor. While it stressed it hadn’t seen the NBN Co accounts, it claimed it could complete the project for $20.4 billion in capital expenditure and would require funding of $29.5 billion

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