NBN estimates now cut to $15bn by Telstra

Recent estimates for the federal Governments National Broadband Network to be built by Telstra have on occasion risen as high as $25 billion, but now a pre-financial-crisis figure of around $15 billion is the current consensus from the industry.
In the last year the estimates from Telstra to build to network have fluctuated drastically. Costing of as much as $25billion was talked about by Donald McGauchie, the Telstra chairman in June, however, this price was reduced to $15billion last week by Sol Trujillo, the Telstra chief executive.

Trujillo Said “We’re talking about a build that’s probably going to exceed $10 billion and could be as high as $15 billion in total, if all objectives were to be met.”

The Terria consortium, Telstra’s bidding rival are offering to build the network for $15billion too
Even though a price of $15billion has been reached it still remains relatively unknown as to what this will actually be spent on to build a network that will at some point provide 98 percent of the Australian population with high-speed broadband access.

For the building of a network that will provide the network tender’s agreed 98 percent coverage, the $15 billion estimate that first Terria and then Telstra have reported is what most industry sources have agreed it should cost.

The gag order place on the bidding process by Stephen Conroy, the federal Communications Minister has limited any conversations with regards to the layout of the new network even though the final price has now been fixed.

Michael Simmons the Terria bid manager said “We can’t talk about anything to do with our bid, but a couple of months ago Sol came out and said the capital expenditure for the network would be around $30 billion. Now we’re back at the $15 billion mark. We’re pleased to see there is finally some sanity and reality coming into Telstra’s views on the cost of the network.”

David Quilty, the Telstra communications chief said little about details of the $billion costs.

He said “The figure is a general estimate of what it would cost to build a network of the type being sought by the Government. The figure is a general estimate of what it would cost to build a network of the type being sought by the Government,”

Although refused to make any changes to the new price tag from his boss, Mr Quilty did warn that unless the falling value of the Australian dollar was improve the $15 billion costing would probably balloon.

He said “With the devaluation of the Australian dollar, the cost of building the network has now increased. We’re looking at a30 per cent devaluation over the past month and the reality is that the vast majority of the materials and equipment will be sourced overseas and paid for in US dollars.”

November 26th is the date that has been set for bids on the rights to build the network.