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The Age / Biz - Money

NBN says six-month rollout delay could postpone $500m in revenue

If all 1.9 million premises still to connect to the NBN's HFC network are delayed by six months, it could result in a $500 million delay in revenue.

If all 1.9 million premises still to connect to the national broadband network on existing pay television or internet cables are pushed back by six months, it could delay $500 million in revenue, NBN Co chief financial officer Stephen Rue said.

In late November, the NBN announced a six to nine-month delay for new customers being added to its hybrid fibre coaxial (HFC) network, starting from December 11.

NBN boss explains HFC rollout delay

Sitting before a parliamentary committee, NBN CEO Bill Morrow admits to the "poor customer experience" of HFC connected NBN users.

Labor's communications spokeswoman Michelle Rowland and finance spokesman Jim Chalmers recently warned the delay could cost from $423 million to $790 million.

"If all were delayed by six months - and I don’t think that’ll be the case - but if all were delayed, you’d be talking about a $500 million delay in revenue," Mr Rue told the Senate Joint Standing Committee on Friday.

"But that is hypothetical – if everything is delayed by six months."

As NBN would continue to build lead-ins and build into new areas while the delay in connecting new customers took place, this figure could be lower.

The specific final figure was "well and truly being worked through", he said, but indicated there would be a $50 million impact on the revenue by June 30.

NBN chief executive Bill Morrow said the company had a $2 billion contingency built into the $49 billion fund for building the NBN - meaning the net effect of the HFC delay on the business was zero.

NBN chief financial officer Stephen Rue said the positive results would help the company tap debt markets in future. Photo: NBN

The contingency fund was created to cover the "unknown" factors of the project.

"That’s why when we do find things, like HFC that we just recently announced, it’s not a problem for the overall budget - we’re just now moving some of the contingency over," he said.

"It does not change the value of the company in terms of the profitability because ... the ongoing revenues will remain and the ongoing profits will remain."

While maintenance issues have always been on NBN's radar, including dealing with holes in the cables of the HFC network, the issues with the network had escalated over time, he said.

"We knew that there would be some level of remediation that was required. We did not anticipate that it would be this much remediation that was necessary, otherwise we would’ve done a far different job before we released it for the customers to connect to," he said.

"We have a plan that outlines how to get to cash-flow positive by only spending $47 billion. But we have uncertainties still that we know we face in front of us and when this plan was written in June of last year, we knew that we would be facing things that we didn’t know."