What is the fair value of the NBN?
The Department of Communications estimates the value of the NBN based on the depreciated current replacement cost less the present value of leave and superannuation. It should now turn to using net present value of discounted future cash flows; as it does now for Australia Post. In doing that, it should not assume that average revenue per users will rise at the rate needed to recover costs but assume levels that reflect the market (especially competition from wireless broadband). It is likely that the fair value revealed by this DCF estimation will then lead to a write down in equity.