TLS chart, page-446

Extract BUS AUST today:
A major writedown of the National Broadband Network would deliver a much needed boost to Telstra’s margins as the incumbent telco overhauls its business, according to JPMorgan. JPMorgan analyst Eric Pan told clients yesterday the NBN needed to be written down by at least $20 billion to make the wholesale costs low enough for telcos to offer customers cheaper high-speed internet. 

With Telstra’s basic NBN plan priced at $69 a month and unlimited plans starting at $89 a month, Mr Pan said a $20 discount could translate to a 20 to 30 per cent improvement in the telco’s gross margin: “While we expect some of the savings to be passed along to consumers mostly as a result of competition, we do expect NBN resellers like Telstra to benefit somewhat from the reduction in wholesale costs.” 

The comments further reinforced calls made by Telstra boss Andrew Penn that NBN Co needed to cut its wholesale prices by $20, an implied 44 per cent discount on the current wholesale average revenue per consumer (ARPU) for the cheapest NBN package of $45......’
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