How NBN Could be Profitable in FY25

How NBN Could be Profitable in FY25.

Background:

• Losses are booked for the last 6 years and are anticipated to continue until FY24. 
• Depreciation and Amortisation are a drag on the NPAT and will continue in the $2.9-2.5 Bn range. 
• WACC will be around >=2.97% 
• Revenue increase (less idle network) is assumed to be 4-5% YoY. 
• Cost is anticipated to increase by 5-6% in FY23 and FY24. 

How the Govt and NBN can make it profitable:

• Increase the wholesale price via SAU
• Reducing the serviceability of debt (this is now executed, where serviceability has been reduced from $1.47 Bn to $0.37 Bn per year)
• migrating <= 50 Mbps tiered users (78%) to >=100 Mbps high-speed internet,
• by applying these levers, it can book a profit (NPAT) in FY25, even with a 25% idle network. 

My previous post on why the government is worried about NBN after FY23 H1 results can be read here