Aussie Broadband to swap fibre network with VicTrack under 10-year deal

Aussie Broadband to swap fibre network with VicTrack under 10-year deal

Aussie Broadband set to increase its geographic reach in Victoria.

Phil Britt (Aussie Broadband)

Phil Britt (Aussie Broadband)

Credit: Aussie Broadband

Victorian government business enterprise VicTrack is set to swap its fibre network with Aussie Broadband as part of a 10-year deal. 

Under the swap agreement, VicTrack, which owns Victoria’s railway and tram lines, networks and infrastructure, will provide Aussie Broadband access to its fibre network.

Meanwhile, Aussie Broadband in turn will provide VicTrack access to its fibre network. In addition, the telecommunications provider will also construct access to National Broadband Network (NBN) points of interconnect (POI) for VicTrack. 

Aussie Broadband will fund those initial connections at an estimated cost of $1.4 million, which is forecast to be recovered over the initial 10-year period. 

The agreement also has two additional 10-year extensions on offer. 

As a result of the swap, Aussie Broadband will increase the geographic reach of its fibre network, particularly into regional Victoria and will include the rollout of its business fibre services into regional areas such as Traralgon, Morwell, Warragul, Pakenham, Geelong, Ballarat, Bendigo and Warrnambool. 

Additionally, Aussie Broadband’s metro coverage is also expected to expand, with it gaining additional redundancy and protection options without the need to construct more backbone links. 

The capital expenditure that was set aside for Victorian expansion will now be reallocated to network expansion in other states, according to Phillip Britt, managing director of Aussie Broadband. 

“This is a win for Aussie Broadband, a win for VicTrack and most importantly, a win for our customers and their access to high speed, quality internet connections,” he said. 

The lease of Aussie Broadband’s fibre paths to VicTrack will cost it $3.1 million per annum, while the lease of VicTrack’s fibre capacity by Aussie Broadband will have an annual cost of $3.2 million. 

The impact of the lease on after-tax earnings is anticipated to be immaterial, but earnings before interest, tax, depreciation and amortisation (EBITDA) are expected to be improved by the operating lease income. 

Aussie Broadband’s deal with VicTrack comes a week after it announced it had surpassed its 2021 financial year forecast, which saw revenue up 84 per cent year-on-year, to $350 million, and EBITDA up 433 per cent, to $19.1 million for the 12 months ending 30 June. 

These were 3.6 per cent and 55 per cent above its prospectus forecast, respectively. 

Meanwhile, in May, Communications Design & Management (CDM) won a contract to overhaul VicTrack's network to replace its legacy Juniper Networks infrastructure with the vendor’s latest offerings.

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