One of the largest positions in the portfolio, Aussie Broadband is on a path to make itself larger. They are currently in a tussle with Superloop (SLC) to buy wholesale communications business Symbio (SYM) with a mixed cash and scrip deal worth $3.15/sh as at yesterday’s close, valuing SYM at ~$270m. Symbio runs three divisions, the largest being their Telco as a Service (TaaS) arm which provides a range of mobile products including mobile broadband and hosted phone numbers with 180k services in operation. Their next biggest in the Communications Platform as a Service (CPaaS) which provides software to customers of major global telcos and software companies for global connectivity having 7.3m customers at the end of FY23. The final arm is a Unified Communications as a Services (UCaaS) stream which powers internal communications systems for cooperates and government organisations with 144k users.
The purchase makes a lot of sense for ABB from both a product side and a valuation side. There is a clear uplift in the mobile product where Aussie Broadband is looking to improve its offering. There is also a significant cross-sell opportunity for the enterprise business with additional product streams. On the valuation front, ABB trades on ~7x EV/EBITDA whereas the takeover would likely be completed based on a ~6x EV/EBTIDA for Symbio based on expected FY24 earnings – the more expensive buying the cheaper makes sense.
- ABB have a proven track record of executing and integrating takeovers, we like the plan here if the deal goes ahead.
MM is bullish ABB
Add To Hit List
