Telstra will lose $700 million in revenue from NBN's HFC delay

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Telstra will lose $700 million in revenue from NBN's HFC delay

Telstra has advised that NBN Co’s decision to halt hybrid fibre coaxial (HFC) orders will wipe $700 million off the telco's revenue.

The company revised its financial year 2018 guidance to take into account NBN Co’s decision this week to stop talking orders for HFC connections until at least June 2018 as the network builder works to improve the quality of services.

Telstra previously anticipated total income of between $28.3 billion to $30.2 billion next year, and this has now been reduced by $700 million. 

The HFC delay will take a significant bite out of Telstra's profits, with guidance on earnings before interest, taxes, depreciation and amortisation reduced by $600 million to between $10.1 billion and $10.6 billion.

NBN Co had already revised down the number of brownfields 'ready for service' premises in its August 2017 corporate plan, which meant a reduction of 200,000 brownfield activations.

That alone did not push Telstra's financial outlook outside of its expected range, but the telco told the sharemarket today that NBN Co's decision to delay the HFC rollout meant it was forced to update its guidance.

However, it is not all bad news over the longer term, Telstra said in a report released to the ASX.

“While the NBN rollout delay impacts Telstra’s outlook for FY18, it is anticipated the delay will be modestly financially positive to Telstra over the full rollout due to the effects of a natural hedge. It is noted that NBN Co remains committed to completing the rollout by 2020,” Telstra told shareholders.

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