Aussie Broadband shares soar on AGL telco acquisition
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More news: Aussie Broadband was the top performer across the ASX 200 in early trade after announcing the $125 million acquisition of AGL Energy's telco business this morning.
Aussie Broadband shares were up 15.7% to $5.24 at 10:40am AEDT. The stock is now up 28% over the last 12 months.
Meanwhile, AGL Energy shares climbed 6.2% to $9.40 after the company's first-half result topped market estimates.
What they said: Jefferies analysts Anthony Moulder and Amit Kanwatia said AGL's result reflected "solid margins" across electricity and gas markets, as well as increased coal fleet availability.
"With dividends now expected to be in-line with FY25, and with an improved outlook for the mid-point of EBITDA, despite the lower spot electricity prices, we expect the market will be encouraged that AGL remains well positioned to deliver from its integrated portfolio," they said.
Aussie Broadband to buy AGL Energy's telco business for $125m
More news: Aussie Broadband has agreed to buy AGL Energy's telecoms business in an all-scrip deal, which could rise to $125 million.
An upfront consideration of $115 million will be paid in Aussie Broadband shares, with around 22 million shares expected to be issued to AGL in June 2026. Further Aussie Broadband shares of up to $10 million will be issued in $2 million tranches, subject to meeting specified growth hurdles.
Aussie Broadband said the acquisition will add an estimated 350,000 broadband services and mobile connections to its customer base, together with 46,000 voice services.
Under a long-term exclusive partnership agreement, AGL will continue to promote telco services under the AGL brand, with the telco services and customer experience provided by Aussie Broadband.
The deal is expected to complete in June and the migration is set to be finalised in the first half of FY27.
Aussie Broadband expects the acquisition to deliver revenue of around $235 million, and underlying EBITDA of roughly $21 million, in the 12 months following the migration. The company is aiming to grow AGL telco connections to more than 500,000 over five years.
AGL Energy reports 42% fall in first-half profit
The news: Power producer and retailer AGL Energy reported a 42% slide in half-year statutory profit to $94 million. The result included a $143 million loss on the fair value of financial instruments and $116 million in significant items.
Underlying net profit fell 6% year on year to $353 million. Revenue fell 0.9% year on year to $7.04 billion.
The company declared an interim dividend of 24 cents per share, up from 23 cents a year earlier.
AGL narrowed its FY26 guidance range for underlying EBITDA from $1.92-$2.22 billion, to $2.02-$2.18 billion. It also narrowed underlying net profit guidance from $500-$700 million to $580-$680 million.
The company said the guidance changes reflected stronger consumer margins in the first-half period and lower-than-expected operating costs and depreciation.
What they said: "In customer markets we saw an improvement in customer margins, driven by growth in our customer base and a return to more sustainable margins," said AGL managing director and CEO Damien Nicks.
"The improved availability and flexibility of our generation asset portfolio, including the continued strong performance of our batteries, helped mitigate a period of low price volatility in the [National Electricity Market], which was driven by milder weather, and lower transmission constraints."
