The chair of Australia’s National Broadband Network (NBN) has attempted to hose down calls for a write-down of the network, telling Senate Estimates on Tuesday night that write-downs are not within the purview of management or government, and are driven by accounting rules.
“The ability to properly value this asset is probably not going to be available to us until the 2020s,” Switkowski said. “Yes, I can rule out a write-down — this is my personal view.
“I think considerations and evaluations of NBN will await the business moving into a normal conventional mode, which will happen when we finish the building in 2020, we complete the conversion of all households and businesses in 2021, we turn cashflow positive, we look forward, and then whoever is going to make a judgment will make it then.”
Referring to the inevitable privatisation of the NBN, which was baked into the plan from its unveiling in 2009, Switkowski said he thinks selling off the network would occur later than expected.
“I do think that the discussion should await the completion of network build, and if I were asked … I think it will happen later rather than earlier,” he said.
The NBN chair said he has yet to have any discussions on selling off the network.
With the June creation of InfraCo by Telstra, which is widely seen as a vehicle for taking on NBN’s assets in the future, Switkowski once again said it is too early to look into this.
“[It is] one of the scenarios that could play out, it will have to overcome many regulatory and competition hurdles,” he said.
Telstra CEO Andy Penn said in June that the new organisation would allow for “optionality” for a demerger or entry of a strategic investor for post-NBN deployment.
“The business will comprise Telstra’s high-quality fixed network infrastructure assets, including datacentres, domestic fibre, international subsea cables, exchanges, poles, ducts, and pipes. It will provide access to these assets to Telstra through commercial arrangements to drive efficiency and transparency,” Penn said. “It will comprise Telstra’s commercial activities and existing Telstra wholesale business. It will also continue to provide services to NBN Co.”
Last week, Penn had called for a AU$20 chop to the wholesale pricing charged by NBN to retailers.
Penn said Australians are paying some of the highest prices in the world for broadband, and that the price is likely to continue increasing unless wholesale charges are addressed.
“The current arrangements are unsustainable, and ultimately this can only lead to poorer service and higher prices for broadband for all Australians,” he said.
“[The wholesale price] has to come down, and not by AU$2, but by more than AU$20.”
Speaking on Tuesday night, NBN CEO Stephen Rue ruled out such a move and said Penn is looking to lower costs.
“It’s not something that we have contemplated,” Rue said.
Speaking to ZDNet earlier this year, now-Prime Minister Scott Morrison also said the government is still not looking to write down the NBN, and that a report from the Australian Competition and Consumer Commission (ACCC) “addressed that issue fairly plainly”.
“We said at the time that that was not a view that we had held as necessary. It’s not our advice, and it’s still no longer the issue, and we continue to maintain I think a very sound commercial footing for the NBN and the assumptions it’s based on,” Morrison told ZDNet in April.
“And of course it has to pass muster on those issues when it comes to identifying and defining the nature of the debt and other finance that’s going into the project, so I mean these aren’t arbitrary decisions that are made, they are subjected to standards on the accounts, and they’re meeting those standards and we expect they will continue to.”
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