Government claims NBN will pay itself off

By Brett Winterford on May 6, 2010 2:32 PM
Filed under Communications

NBN Implementation Study calls network a government "investment".

The Federal Government has claimed that its $26 billion investment in the $43 billion National Broadband Network will yield a profit of 6 to 7 percent.

The figures were released today in the NBN Implementation Study, written by McKinsey-KPMG after a $25 million commission from the Government.

The study said that - assuming no deal is struck with Telstra - NBN Co could nonetheless be earnings positive within six years.

NBN Implementation Study in brief:
- Report says that based on half of Australians adopting NBN-supplied services, no deal with Telstra and privatisation within seven years, the Government could make a 6 to 7 percent return on the NBN.
- Report recommends NBN Co become the sole provider of fibre to Greenfield housing estates, taking the direct fibre to the home component of the NBN from 90 percent to 93 percent.
- The study estimates entry-level wholesale prices for 20 mbps fibre access at $25-30 per month, $30-35 with voice and $50 per month at high speed.

Speaking at the launch of the implementation study, Finance Minister Lindsay Tanner told the press today that the report "confirms clearly that the proposal is entirely financially viable" within the $43 billion plan first announced.

Minister Tanner said the Government's $26 billion contribution to the NBN "is an investment, not a grant" because "it will be earning a return."

The NBN Implementation Study assumed that half of Australia's population would take up NBN-supplied services "at prices comparable to today at faster speeds."

Prime Minister Kevin Rudd told a separate news conference that the report "confirms that the company will be profitable, so that Government investment peaks at $26 billion by the end of year 7, and taxpayers will be paid back with a modest return by year 15."

NBN Co CEO Mike Quigley released a statement saying that "it is pleasing to see that the Implementation Study has confirmed NBN Co's conclusion that this project is financially viable."

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