ABB -3.90%: the telco market took a hit today after the ACCC rejected a new NBN wholesale pricing plan which would’ve reduced the cost burden on internet service providers. The sticking point related to the reduction in charges for high-speed 50mbps plans where the Government has legislated cost recovery requirements that the NBN’s plans would’ve challenged. Overall though, there is a trend to improve the pricing of the NBN, and there was no challenge to the ultra-high speed tiers where ABB has a significant skew of customers relative to their overall market share. While this further delays a potential margin improvement for Aussie Broadband, we now suspect the NBN will focus on pushing through reduced costs for ultra-fast speed access, or a push from legislators to amend the cost recovery requirements on the back of industry pressure.
MM remains long & bullish ABB
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