Sunday, 17 October 2021
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S&P analysis raises prospect of NBN write-down

An analysis of Australia’s NBN rollout released by S&P Global Ratings has raised the prospect of a potential write-down of the value of the new network.

The S&P analysis states that an NBN-developed forecast of a 73 to 75 per cent take-up rate will be “hard to achieve without a step-change to its wholesale pricing model”.

“Any shortfall in NBN Co.’s revenue target raises the prospect of a writedown and additional government funding to support the company, potentially in the form of debt relief or direct subsidies,” the article states.

“Even if a recalibration of NBN Co.’s wholesale pricing model were to occur, it’s uncertain whether retail service providers (RSPs) will realize an enduring benefit. Prevailing incentive structures are likely to continue to push MNOs [mobile network operators] to invest heavily in their own mobile network infrastructure.”

If the government wrote off a portion of the cost of the NBN rollout, it would reduce the financial pressure on NBN. Because the government treats the network as an investment, it is kept off budget — but, over the long-term, it must offer a return on investment for the government.

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