Long term readers of this blog will know that I’m not in to making predictions. ‘Preparation not prediction’ is the mantra. But I’m not going out on a limb with this one. BrisConnect is going bust.
The Brisbane toll road is open to traffic and (surprise, surprise) the number of cars using it is well short of expectations. Average traffic for August was 81,469 per day, versus prospectus forecasts of 190,000 a day. Here’s the forecast:
And here’s what happened in August:
That’s a problem in itself. But it’s a significantly understated one. At the moment, the road is free.
Yep. At the moment, it doesn’t cost anything to use it, and traffic is still less than half of what was forecast. When they start charging tolls, traffic will drop by 30-50%, and BrisConnect will be left with 60,000 cars a day at the absolute best. It could be as few as 45,000.
Under the best case scenario it will be generating $220k of revenue per day, or about $80m of revenue per year.
Before we even concern ourselves with operating costs (prospectus forecast $64m per annum), Brisconnect’s revenue is less than a third of its $270m annual interest bill.
Play with the assumptions all you want, BrisConnect will be joining its brother RiverCity in the well-populated toll road graveyard.
Functional cookies Always active
The technical storage or access is strictly necessary for the legitimate purpose of enabling the use of a specific service explicitly requested by the subscriber or user, or for the sole purpose of carrying out the transmission of a communication over an electronic communications network.
The technical storage or access is necessary for the legitimate purpose of storing preferences that are not requested by the subscriber or user.
The technical storage or access that is used exclusively for statistical purposes.The technical storage or access that is used exclusively for anonymous statistical purposes. Without a subpoena, voluntary compliance on the part of your Internet Service Provider, or additional records from a third party, information stored or retrieved for this purpose alone cannot usually be used to identify you.
The technical storage or access is required to create user profiles to send advertising, or to track the user on a website or across several websites for similar marketing purposes.