Aussie Broadband's FY23 Results

 Aussie Broadband's  (ABB) FY23 Results and Why it's Emerging as an Acquisition Target

  • NBN
    • Consumer
    • 2019, 100K customers, unprofitable. 
    • 2023, 700K customers, NPAT of $37Mn.
    • 65% of Revenue from the consumer segment.
    • 12% of NBN customers are on >  $100/month plan and 40% of Aussie customers are in this segment. Aussie acquires more than half of all new high value subscribers to the NBN.
    • Business & Govt
    • Business segment grew by 8% to $90Mn Rev. EE is adding to margin growth
    • >800 new deals – SMB is driving it 
    • Both segments utilise wholly owned fibre and an internally built cloud platform to generate 50% GM against residential GM of 30%. As those segments grow, profits will disproportionately rise.
  • Smallest telco to build its own fibre backhaul.
  • Built in house software to manage data loads, billing and other core functions.
  • Wholesale
    • business offers white labelled telco services to 3rd parties like Origin, was its fastest growing segment and a genuine surprise. Revenue rose 60% to over $100Mn and maintained 30% GM. Management expects margins to rise as more partners use the service.
  •  Cloud
  • With 2 new data centres added to the business, growing fibre and a bespoke cloud platform, there is little doubt that Aussie aims to build a capability to sell cloud services to enterprise and government. 
  • This is ambitious and chances are this will fail. Globally Telcos have struggled with Cloud as HPS’s and Tier 2 Cloud players are far ahead in the game.

Acquisition Target
  • ABB is to become a billion-dollar business in the next 2 years. 
  • Healthy balance sheet.
  • Currently, the EV is $0.946 Bn and with good growth potential for Rev and Margin growth in the next 2-3 years.
  • The market share of NBN is around 8%. 

My previous on TPG and NBN Co FY23 Results and its strategic play. 

Source: AFRTPG, ACCC, ITnews, Reuters, ABB, UBS