NBN and 5G - Threat or Complement
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The document discusses threats and challenges facing NBN Co including an idle network capacity of over 30%, competition from 5G and satellite internet providers, and the need to upgrade FTTN/B connections. It also provides funding details for NBN Co, noting the company has raised $24.9 billion in total debt and will receive around $35.7 billion from Telstra over 30 years for migrating customers off copper networks. Increasing revenue to $54 per customer per month may not be enough to repay costs and make the network attractive to sell.
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NBN and 5G - Threat or Complement
- 1. 1 NBN Co - Threats Idle Network, 5G, Starlink 72.0% 62.4% 28.0% 37.6% FY 24 FY 21 Network Capacity Activated Premises Ready to Connect Premises 19.2% 9.6% 42.5% 23.3% 4.1% 1.4% Technology Penetration of Activated Premises โ FY 21 FTTP FTTC FTTN/B HFC FW Satellite Threats and Challenges โข > 30% idle network (by Feb 2022) โข 5G and IOT o Bypasses need of fibre o IOT forces stickiness o facilitates digital transformation o mobility driven redundancy โข MTM o driven CX for FTTN/B customers โข Higher wholesale pricing โข Non Premise New Entrant - Starlink โข Internet service provided by > 1700 LEO satellites โข Although slower than 5G, the service is faster than other satellite services like NBN Co's Sky Muster, making it particularly attractive to regional communities. โข NSW Police has signed up to their service
- 2. 2 NBN & 5G Open Fibre NBN Technology Mobile (5G) Converge & Grow NBN + 5G Adapt & Grow NBN adds Wholesale Wireless Stagnant Closed Evolution Grow Bypass NBN โข 5G roll out is a threat to NBN Coโs revenue stream as RSPโwill use this to cannibalise their own revenue โข 5G is beyond mobility and is being used for fixed access alternative o wireless as the lead-in technology โ copper, coax, fibre, wireless โข Verizon, AT&T are already there โข Competitive Response: TPG + Vodafone merger is in anticipation of this convergence. Good synergies for targeting Enterprise and Consumer on this convergence โข Grow & Converge option Aligns with one of the likely future options of selling at state level or geography โข NBN Wholesaler of fixed and mobile in urban and country areas Source: IBIS, NBN Co, AFR, Gov.au Technology Threat
- 3. 3 $29.9 Bn = Govt. Funded Equity 51.8% $2.5 Bn = USO (2022) $23.8 Bn = RFR Govt Bonds Debt @3.96% 37.5% $59.9 Billion $7.5 Bn = Private Funded Debt 1.8%- 10.7% $11.3 Bn = Leases Duct, Pits, Exchanges, Migration $13.8 Bn Payments to Telstra NBN Co Funding Key Messages โข Out of the $23.8 Bn (incl $2.4 Bn), only $19.5 Bn is Federal Govt. debt, additional $4.4 Bn is sourced from non govt. sources. โข Labor pledged before the elections in 2022 for $2.4 Bn as debt for 1.5 Mn Premises upgrade โข As of Feb 2022, in all $24.9 Bn (17.5 + 7.4) is raised as total debt, some of the debt is refinanced at a lower rate than 3.96% โข Telstra will get around $35.7 Bn over 30 years including $11.3 Bn for migrating & disconnecting its customers from the copper network $35.7 Bn Over 30 Years โข ARPU has increased to $46. Increasing the ARPU to $54 for Rev generation is not enough for repaying the cost envelope & making it attractive to sell out. โข Spent > $51 Bn for the rollout โข Debt Rating: AA Stable, A1 Stable Source: NBN CO, AFR, Zdnet, iTNews NBN Co Entity - Funding Profile
- 4. 4 Disclaimer: This presentation acknowledges and gives credit to the work of others. Necessary validation have been taken to avoid copyright infringement. Any instances that violate terms can be removed when notified. All discussed thoughts & opinions are my own & not that of my employer or other parties. For further information, please contact: Name: Vishal Address: Melbourne, VIC 3000 Australia Mobile: 0468 675 566 Blog: http://blog.sharmavishal.com/
Editor's Notes
- IOT โ simple data plan EE - ??
- NBN Co is starting to lay the groundwork for a future foray into millimetre - wave 5G, which it revealed as a likely future upgrade path for its fixed wireless network. โข NBN Co has asked the Australian Communications and Media Authority (ACMA) to make 26 GHz spectrum available in all areas where NBN Co currently runs fixed wireless services. โข The ACMA is currently consulting with industry on future uses of several band s including 26 GHz and 28 GHz. โข While NBN Co is keen to have its own millimetre - wave needs catered for, it also wants to make sure any 5G services allowed to operate in these higher bands donโt interfere with the operation of its Sky Muster satellite ser vices. โข In particular, it wants 5G operators to be barred from offering services in the 28 GHz band, which it currently uses for its 10 Sky Muster ground station gateways. โข Source: IT News Here is a sample of what Rod Sims from the ACCC has said recently about 5G and the NBN : This leads us to an interesting competition issue: what does 5G mean for the NBN? The NBN is a monopoly wholesale network so we should strongly welcome it facing competition. We are currently seeing some operators offering consumers hybrid modems with their NBN connection, where data traffic can be directed over the mobile network rather than the NBN. This is just a small step towards operators favouring their ow n mobile networks over the NBN, but will we see it go further? The impetus for this so - called โNBN bypassโ first came about following delays with the NBN build, and consumers not receiving speeds they were sold. Over the last few months, both the ACMA and the ACCC have put some measures in place to try and resolve these problems. However, as many of you are aware, a question remains about the cost of wholesale NBN access services. We have long heard providers complain about low margins on the NBN, which is largely due to the variable costs of provisioning capacity to support high speeds and growing data traffic. So for those RSPs with an alternative mobile or wireless network, it may be more cost effective to offload some fixed NBN data traffic onto their own network (where consumers have a hybrid modem) ENTERPRISE CI - Yammer F ebruary 2019 โ Telstra Enterprise NBN Knowledge Centre - Yammer or seek to supply some services entirely over their own mobile network, completely bypassing the NBN. Of course, a family with three teenagers is highly unlikely to ever switch away from a high - speed fixe d line connection. But there is an opportunity for wireless operators to attract those consumers who donโt necessarily want the high speeds and unlimited data offered by fixed service providers. For consumers at lower price points, with small data needs, a wireless service might suit better than the NBN. We are always happy to see offers in the market match consumer demand and anything that delivers the services that consumers want at the prices they are happy to pay is welcome news to us. But what does th is mean for NBN Co? And what does it mean for the smaller operators who donโt have their own mobile network? These are all complex questions; and we will need to wait and see what happens when 5G becomes widely available and how markets react. What we must never do, however, is seek to restrain others in order to protect the NBN business model. This would be a disaster for consumers. Result Highlights 1H Revenue rose 46% to $1.3bn EBITDA was -$477m, improving 65% v. 1H/18 1H CAPEX spend was $2.9bn, up 2% from 1H/18, which focused primarily on the HFC, FttC & FttN network roll-outs. ARPU rose $1 to $45 ย Ready to Connect premises were 8.1m (up 32%), with active services reaching 4.7m, up 38%, (of which FttC were ~300k).ย As of January, 57% of activations are on 50mbps or higher speed tier plans. Right first time installs were 93% for the Dec qtr., dipping slightly from 94% in the Sept qtr. ย ย Mgt. Briefing Highlights Any 5G threat? โ Stephen Rue (CEO) highlighted the vast majority of data (~97%) is transmitted over fixed networks. He said he sees the trend of growing demand for data continuing on fixed networks as much as in mobile networks.ย ย NBN Write-down? - Stephen Rue responded to questions about a write-down commenting there was no accounting need for a write-down, arguing calls for a write-down were really about a wholesale price reduction. He said the NBN needs a strong business model & cashflows to ensure the future of the network.ย And he used the opportunity to highlight that the conversation needs to move to how the NBN contributes to peopleโs lives in various ways (e.g. improvement in access to data & information, supporting people build businesses & operate from any location, healthcare improvements, education quality benefits etc.). ย New Product launch โ NBN expect to launch the new Wholesale Wireless Product in market by mid-2019, which will have max. download capability of 60mbps, & upload of 20mbps. ย For anyone interested, more results detail can be found by clicking here. ย
- Another 480 million ofr regional connectivity in June 2022 It had $23.8 billion debt at the end of June, according to its annual report, including $10.6 billion in bank and capital markets debt and $13.2 billion in borrowings from the government. The US debt deal comes after NBN Co reported $4.6 billion revenue in the year to June 30 and 8.2 million customers on its network. It lost $3.84 billion in the 2021 financial year and $5.24 billion in FY20. IOT โ simple data plan EE - ?? As at 30 June 2021, the company had raised more than $14.1 billion in private debt, with $8 billion raised during FY21. By 30 June 2021, the Company had