Federal Budget missed opportunity to tackle NBN black hole according to MNF Group

Current NBN model threatens to reduce competition, squeezing out mid-tier telco companies

MNF Group, Australia’s largest provider of hosted voice and data communications services, has expressed its disappointment that the Federal Government did not take the opportunity to write off part of the NBN network build cost in Tuesday’s Federal Budget, noting that inaction by the Turnbull Government on this front threatens the feasibility of the NBN business model.

The NBN wholesale pricing model business case is currently usage-based and relies on reaching an unrealistic target of 80% of all Australian households having an active NBN service by 2020 to generate sufficient revenue to repay the investment of building the network.  Shortfalls in activation numbers and resulting revenue will need to be recouped via an increase in retail prices making it unattractive for providers to sell or for consumers to buy.

“The NBN business case is under serious threat. Failure for the scheme to reach a critical mass of activations could ultimately affect the viability of the whole telco industry and leave consumers worse off,” MNF Group CEO and co-founder Rene Sugo says.

“In order to reach its targets, NBN has to be the ‘number one choice’ for data services for consumers and be available at a viable price point for service providers of all sizes to resell.  As it stands, this is not going to be realistic,” he warns.

“A fair model would allow middle players to step up and effectively compete in the market, driving NBN uptake and balancing out the challenge of the NBN bypass services. Australia needs a healthy, competitive telecommunications industry for this ambitious NBN build to succeed,” Sugo concluded.

About MNF Group

MNF Group Limited, (ASX: MNF) is an integrated telecommunications software and network provider, specialising in IP voice communications. MNF Group was founded in 2004 and listed on the ASX in 2006, it has 66.9 million shares on issue and has operated profitably since 2009 paying dividends to its shareholders every six months since September 2010.

The Group operates a global IP voice network carrying over 6 billion voice minutes per annum, with Points of Presence (POPs) in Los Angeles, New York, Hong Kong, Singapore, London, Frankfurt, Sydney and Auckland. Domestically, the Group operates the largest, fully interconnected IP Voice network in Australia.

MNF Group has a reputation for quality, value and innovation, being the recipient of numerous awards including the Forbes Asia’s 200 Best Under a Billion (2014 & 2015), Deloitte Technology Fast 50 (2008, 2009, 2010, 2012, 2013, 2014) and CeBIT Outstanding Project Award (2013). MNF Group companies includes retail brands MyNetFone, Connexus, CallStream, PennyTel and The Buzz; and wholesale brands TNZI, Symbio Networks and iBoss.

For further information about MNF Group Limited please visit: http://mnfgroup.limited/