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Pressure builds as NBN rollout slows

The NBN Co’s rollout of Australia’s superfast network has again failed to meet targets as pressure builds on Malcolm Turnbull, the minister for communications, to give contractors and Telco’s more certainty.

Former communications minister Stephen Conroy last week told a conference in Sydney, hosted by the Australian Computer Society, that the NBN targets “were always ambitious” but perhaps “overly ambitious.” Mr Conroy also said it was “undeniable” the company’s 2013 target of passing 1,028 premises per day was not met.

The NBN Co was supposed to be passing up to 3,372 premises per day by June 30, 2014, but that figure now looks to be extremely ambitious, given the company averaged just 1,250 premises per week throughout the 12 months to June 30, 2013. What’s more, that rate appears to be slowing since the election of the Coalition government.

In Tasmania, Leighton Holdings (ASX: LEI) subsidiary Visionstream said asbestos concerns were the reason no new premises were passed by the NBN between August 12, 2013 and October 7, 2013. In the Northern Territory a total of five premises have an active NBN connection. In Western Australia and South Australia, contractors were pulling resources from the rollout because, “the productivity inside NBN Co at the moment is very low,” according to Syntheo, a JV between Service Stream and Lend Lease.

Inside the NBN Co, reviews stemming from the change in government have resulted in a slow output, but Mr Turbull is actively seeking ways to make the company more accountable. Recently he appointed former Telstra (ASX: TLS) boss Ziggy Switkowski to lead the company. According to The Australian Financial Review, Mr Turnbull says, “the revised rollout figures proved the public had been misled by Labor.”

Last week The Age reported that the government’s 60-day review, launched on October 3, was unlikely to result in any significant changes in the NBN rollout until 2014.

Foolish takeaway

Internet service providers such as iiNET (ASX: IIN), M2 Telecommunications (ASX: MTU) and TPG Telecom (ASX: TPM) are eagerly awaiting the rollout of the NBN because it will give them a level playing field against industry giant Telstra. On numerous occasions however, they have been sceptical of the figures and promises of the NBN under the former government and will hope any revision of the Coalitions deal with Telstra will not adversely affect their access to the network.

With its legendary, fully franked 28-cent dividend, Telstra is the darling of Aussie investors. But with its share price skyrocketing over the past year, is Telstra past its prime? Click here for our brand-new report: “Is It Time to Sell Telstra?”

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Motley Fool contributor Owen Raszkiewicz does not have a financial interest in any of the mentioned companies.

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