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: AFR, TPG, ACCC, ITnews, Reuters, ABB, UBS
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