Revised NBN plan cuts cost to A$39.3b

Australia’s National Broadband Network (NBN) project will cost slightly less than expected but take three years longer to build, according to a business plan released Monday.
 
The plan reveals the NBN project will cost A$39.5 billion (€29.9 billion), down from the A$43 billion previously expected, and estimates total equity and debt funding of A$40.9 billion.
 
Most of the investment - A$27.5 billion – will be provided by the government in the form of equity, and NBN will borrow A$13.4 billion from financial markets between 2015 and 2021.
 
The plan projects an internal rate of return of 7.04%, assuming 70% take-up of the service by 2025, and its first profit by 2021.
 
However, a decision to adopt recommendations from the Australian Competition and Consumer Commission (ACCC) regarding the number of Points of Interconnect (POIs) will impact on “deployment timing, costs and end-user take-up,” the firm revealed, pushing the completion date from 2018 to 2021.
 
The network will now include at least 120 POIs in a semi-distributed architecture, instead of the 14 POIs in a centralized architecture originally designed.
 
Communications Minister Stephen Conroy said the delay was due to a government promise to connect two million homes scheduled to be built this decade, the Sydney Morning Herald reported.
 
NBN Co expects its network to pass 1.7 million homes by 2013, with 570,000 actually using the service by then.

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