In March, the Parliamentary Budget Office reported that the “fair value” (or saleable value) of the National Broadband Network (NBN) was only $8.7 billion – less than one-third the federal government’s equity investment.
This suggested the NBN required a $21 billion write down.
Now, the Morrison Government has put the NBN’s valuation under review, suggesting a write down is pending prior to privatisation:
Consulting firm Ernst & Young has been appointed to examine how the network is valued as the NBN Co enters a new phase of ongoing maintenance and upgrades ahead of an eventual sale…
Telecommunications industry figures and credit ratings agency S&P have said a write-down of the network’s value is inevitable…
Telecommunications consultant Paul Budde said… “The government has so far refused to write down the NBN based on previous valuations so it would love to see higher valuations as that would make it easier for them to offload the NBN. At the moment the future of the NBN is in limbo with no government directions. The valuation will play a key role in changing this situation”…
Under terms agreed by the former Labor Government, Telstra was paid $9 billion in instalments for its fixed line customers to transfer over to the NBN.
These payments were designed, in part, to fix the structural mess created by the Howard Government when it privatised Telstra in the late-1990s. This gave Telstra control of both the wholesale and retail networks, thereby creating a dominant integrated vertical monopoly.
In a tale of ‘back to the future’, the NBN is being readied to be gobbled up by Telstra’s infrastructure arm, thus returning to it control of both wholesale and retail networks:
Communications Minister Paul Fletcher has left the door open for Telstra’s infrastructure arm to acquire the National Broadband Network in future…
His comments will prick the ears of Telstra CEO Andy Penn, who has long harboured plans to try and buy back the wholesale revenues lost to the NBN…
Mr Fletcher has previously downplayed the possibility of Telstra acquiring the NBN, due to legislation forbidding the owner of the wholesale network from also being a retailer…
Mr Fletcher now suggested it could be possible, when asked about InfraCo being spun off by Telstra as a separately listed company…
Thus, after already paying Telstra $9 billion to hand its fixed line network to NBN Co, Telstra now looks set to buy back the NBN’s wholesale network on the cheap.
Telstra is positioned to emerge as the big winner from the NBN debacle. As usual, Australian taxpayers are the losers.
