nbn is a disaster, page-85

Yeldub,
The economics of utilities such as power distribution companies and Telsra is regulated by the authorities including the ACCC and the ESC who regulate monopolies. They set the modelling rules.

They set the allowable deductions, return on capital which is allowed and depreciation. There is a lot of science in it.

The Amorisation is usually 20 years even on poles and wires because after that time major upgrades are needed. It matches depreciation. It represents the reinvestment which must be continually made or allowed for if the asset is going to have an ongoing life.

Once the $43b is invested that is not the end of capital reinvestment. Fibre will have to be replaced, terminal boxes upgraded, etc.

I agree that the business will have a 'Terminal Value'in an NPV calculation but that is related to its profit margin as a business. Not the cashflow required to pay banks, equity and ongoing capital upgrades.

If it just covers costs from what it charges the punters the business won't be worth much.

As to the number of connections. My back of the envelope allowed for 10m. Thats about one for every two adults in the country. It ignores the very old, prisons, hospitals etc. I think it is generous.

I agree there are many more mobile devices but these are better served wirelessly than with extension cords.

I wish we had the data to have an informed debate. It is ridiculous to start spending $43b without a plan.

bacci