Release Date: August 26, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Aussie Broadband Ltd (ASX:ABB, Financial) reported a 27% year-on-year revenue growth, reaching almost $1 billion.
- The company declared its first fully franked dividend of $0.04, showcasing a strong balance sheet.
- Aussie Broadband Ltd (ASX:ABB) successfully launched Buddy Telco, with promising early results and high customer satisfaction.
- The company's fiber network expanded to over 1,700 kilometers, covering major metropolitan hubs and growth corridors.
- Symbio, acquired in February, contributed $12 million in EBITDA and is expected to deliver 30% greater EBITDA in FY25.
Negative Points
- The company experienced some churn following price increases in November and June, although it returned to normal levels.
- The enterprise and government market remains highly competitive, putting pressure on pricing and margins.
- Aussie Broadband Ltd (ASX:ABB) faces challenges in integrating and realizing synergies from the Symbio acquisition.
- The net debt position increased by 7.1% to $138 million, including borrowings and lease liabilities.
- The company anticipates further industry consolidation, which may present both opportunities and risks.
Q & A Highlights
Q: Can you provide insights on Symbio's margin growth and the integration with Aussie Broadband's voice business?
A: (Michael Omeros, CEO, Symbio): Symbio's margins have shown steady growth half-on-half in FY24. We expect this trend to continue into FY25 due to a mix of growth areas and efficiencies within the organization. While we are keeping Symbio and Aussie Broadband's voice businesses separate, we are leveraging combined buying power for greater benefits.
Q: What are your expectations for Buddy Telco's growth and its impact on the market?
A: (Brian Maher, Group CEO): We are encouraged by Buddy Telco's initial market reception, with a target of 100,000 connections within 36 months. The brand is gaining traction, and we are optimistic about its growth potential. Buddy Telco is also serving as a safety net for customers who might otherwise switch to other value players.
Q: How has the churn rate been affected by recent price increases?
A: (Brian Maher, Group CEO): The churn rate post-July price increases was slightly higher than in November but within acceptable margins. We anticipated this and have seen a return to normal churn rates. We lobbied against the July increase due to its potential impact on consumers.
Q: Can you elaborate on the remaining overhead costs post-Origin and their potential allocation to Buddy Telco?
A: (Andy Knopp, Group CFO): The remaining $8 million in overhead costs are primarily labor-related and not intended for allocation to Buddy Telco, which is designed to be highly automated. We are assessing new business opportunities and planning to remove these costs by FY26 if necessary.
Q: What factors contributed to winning the Bunnings Warehouse contract, and how is the competitive environment in enterprise and government?
A: (Brian Maher, Group CEO): The Bunnings contract win was driven by our ease of doing business, flexibility, and innovative thinking, despite fierce competition. The competitive environment remains tight, but our approach to customer service and innovation gives us an edge.
Q: How do you see the pricing environment for Symbio's telco as a service business?
A: (Michael Omeros, CEO, Symbio): The pricing environment has stabilized after a period of increased competition and repricing. We expect unit economics to reflect recent history, with continued growth in numbers and minutes.
Q: Is there potential for a share buyback in addition to dividends given your strong financial position?
A: (Phillip Britt, Managing Director): All options are on the table, including a share buyback. We will evaluate the best use of capital over the next 12 to 18 months to maximize shareholder value.
Q: How will recent contract wins in enterprise and government impact FY25, and what are the associated costs?
A: (Brian Maher, Group CEO): Recent contract wins will contribute to growth in FY25, with provisioning times improving. We are expanding our sales team and support structure to efficiently manage this growth.
Q: Can you clarify the accounting approach for Symbio's synergies and any associated costs?
A: (Michael Omeros, CEO, Symbio): We have adopted a more conservative accounting approach, including share-based payments above the line. Synergies are primarily driven by operational efficiencies rather than labor cuts, with any one-off costs to be clearly identified.
Q: Could Symbio be more integrated into Aussie Broadband in the future?
A: (Phillip Britt, Managing Director): Currently, we are satisfied with Symbio operating as a separate entity. We will continue to evaluate the structure and potential benefits of further integration over time.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
