Aussie Broadband shares plummet on lowered guidance
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The news: Aussie Broadband shares plummeted in early trading after the telco lowered its earnings guidance as a result of the launch of its low-cost NBN brand Buddy Telco.
The numbers: Shares were down over 18% to $2.90 by 10:40am AEST. Over the last 12 months its shares have risen 8.7%.
Aussie Broadband had forecast a FY25 earnings range of $135 million to $145 million prior to the impact of Buddy, but lowered forecasts to $125 million to $135 million based on an estimated $10 million investment in the new product during FY25.
Aussie Broadband also provided capex guidance of $55 million to $60 million, including software development, which is about $8 million lower than FY24 guidance. It noted the lower guidance was due to excess capacity following the migration of Origin Energy customers. Origin terminated its broadband contract with Aussie on 12 April.
The context: Buddy will incorporate machine learning and automation to improve customer experience, allowing customers to manage connections, usage, and outages on a purely digital platform.
Buddy will operate on Aussie Broadband’s full network, connecting to its fibre backbone and all 121 of NBN’s Points of Interconnect (POIs).
This investment in low-cost household NBN follows Aussie Broadband’s takeover attempts of rival Superloop.
After Superloop rejected Aussie Broadband’s $467 million takeover bid in February of this year, Superloop quickly replaced Aussie Broadband as Origin Energy’s wholesale internet services provider in a six-year contract.
In March, Superloop instructed Aussie Broadband to reduce its 19.9% stake to below 12%, after it failed to seek relevant approvals to hold more than 12%. While Aussie Broadband challenged this in the Federal Court of Australia, it ultimately cut its holding to 11.99% after the court ruled in Superloop's favour.
Buddy’s pricing puts it into competition with Superloop’s value-seeking home NBN services.
What they said: “Our strategic investment in Buddy allows the group to compete in both the premium and value-led broadband sectors, further diversifying the markets we operate in,” Aussie Broadband managing director Phillip Britt said.
The sources: ASX announcement, ASX announcement
