NBN Co is currently facing a surge in customer demand for full-fibre upgrades, surpassing its capacity to fulfill orders. During the first half of 2024, the company reported that nearly 200,000 customers had upgraded to fibre-to-the-premises (FTTP), marking a significant increase compared to the previous year.
Despite receiving approximately 7,000 fibre orders weekly, CEO Stephen Rue noted that the connection rate is currently trailing behind this demand. In the latest update, Rue mentioned that about 6,000 premises were connected in the previous week, indicating some improvement in the connection rate.
Various factors, including adverse weather conditions in Queensland following tropical cyclone Kirrily, have contributed to a temporary reduction in the construction rate. However, Rue expressed optimism that enhancements in field processes would accelerate the connection rate.
With over 8.4 million premises now within the fibre footprint and capable of ordering 500Mbps-plus plans, Rue anticipates this number to reach 10 million by the end of 2025. The company’s capital expenditure increased from $1.4 billion to over $1.8 billion in the recent half-year period, with EBITDA rising to nearly $2 billion on increased revenue.
While NBN Co’s post-tax net loss has risen, Moody’s Investors Service views the results slightly above expectations, with a 10 percent growth in EBITDA. Looking ahead, Moody’s anticipates a modest improvement in NBN Co’s credit profile over the next 12 to 18 months, driven by increasing EBITDA and operating cash flow, albeit offset by high levels of capital spending to enhance the network. The company’s available liquidity of $7.3 billion is seen as a credit positive, mitigating refinancing risks associated with outstanding loans.