Aussie Broadband (ABB) share price tumbles while Superloop (SLC) soars
ABB -18.01% / SLC +24.76%: opposing outcomes today for the smaller telco companies, Aussie Broadband losing their white label deal with Origin Energy to Superloop, oddly enough ABB had looked to takeover SLC not too long ago. 130k users will migrate over to Superloop over the next few months, a deal that is expected to earn ABB ~$14m EBITDA over FY24, though new terms offered to Aussie Broadband would have seems margins decline with an estimated $10m EBITDA in the first year once the updated deal was in place. Superloop look to have given up a lot to get this deal – approx. 19.5m shares issued to Origin over the course of the migration, a further $30m of shares contingent on future milestones as well as an option to buy 55.7m shares at the prevailing market price, Origin could end up with ~25% of SLC if the full outcome is achieved and taken up. They did upgrade EBITDA expectations for FY24 to the top end of previous guidance while now expecting EBITDA growth of 60-70% in FY25.
- ABB was hit hard on the news despite maintaining near-term guidance. SLC look to have given a lot away to land the deal, though this is an opportunity to substantially grow longer term.
