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What went wrong: Why government needs to write tens of billions off the NBN

The NBN has been riddled with drama and it’s unlikely Australian taxpayers will ever see the full value of the NBN when it’s sold.

The important piece of infrastructure has been incredibly costly, and it’s not because the revised rollout of the NBN is expected to cost close to $50 billion.

It’s because it’s worth a whole lot less.

Ross Greenwood says government need to “bite the bullet” and price the NBN at its real value in order to be able to sell it.

S&P Global Ratings Telco Analyst Graeme Ferguson tells Ross Australian taxpayers are “unlikely to see 100 cents on the dollar” when the infrastructure is finally sold.

“The more it costs to roll out and the cost of the changing strategy mid-rollout… it’s the end users who are expected to pay.”

Mr Ferguson says in order for the NBN to be valuable, it needs to generate a positive economic return. Otherwise, a write-down of the NBN is inevitable.

“It needs to be able to hike up its wholesale price to retailers.

“But their margins are pretty close to zero, so they’ll need to pass that onto end users.

“They need to be able to sell that value proposition to about three-quarters of Australia households and all the while they need to be able to do so while forcing and fending off the threat from mobile substitutions.

“The mobile network operators, Telstra, Optus, Vodafone and now TPG are throwing billions of dollars at cherry-picking NBN Co’s most profitable market.”

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