The Aussie Broadband Ltd (ASX: ABB) share price is soaring today, up 9% to $2.77 at the time of writing, after releasing its half-year results to the market.
Listing in 2020, Aussie Broadband is an Australian-owned and operated telecommunications company that focuses on delivering NBN subscription plans. The company was recently awarded Customer Service Organisation of the Year – Large Business in the Australian Service Excellence Awards.
Rapid growth beats prospectus guidance
Revenue for the first half was $157.4 million, an increase of 89% on last year’s result, driven by strong growth in new customer connections.
Residential broadband connections since June 30 increased 30% from 241,627 to 313,193 connections. Business broadband connections since June 30 increased 49%, albeit off a lower base, from 19,734 to 29,441 connections.
This translated into EBITDA of $7.3 million, an increase of 87%. The company remains loss-making, recording a net loss after tax of $10.5 million.
Overall, Aussie Broadband gained market share in NBN fixed-line and fixed-wireless technologies, rising from 2.8% to 4.2%.
The company began its Fibre Network rollout to increase the reliability of the network and reduce costs. It completed 79km of dark fibre construction during the half, connecting six data centres and seven NBN POIs (Points of Interconnect). The project is tracking to schedule and budget.
Additionally, Aussie Broadband has relaunched its mobile plans, utilizing the Optus network. New plans and handsets are expected to be available in the fourth quarter of FY21.
Guidance upgraded
On the back of these results, the company upgraded prospectus guidance. Full-year revenue is expected to be in the range of $345 million to $355 million, with normalised EBITDA between $13.0 million to $15.0 million.
Management expects residential broadband connections to be between 380,000 and 410,000, while business broadband connections are estimated to be in the range of 37,000 to 42,000.
My take
In what is largely a commoditised industry, Aussie Broadband has built a strong brand on speed, reliability, and customer service.
Despite its plans being more expensive than those offered by competitors, Australians seem more than willing to pay a little extra to minimise downtimes and increase bandwidth.
With a 4.2% market share, the company has ample opportunity to take market share from incumbents Telstra Corporation Ltd (ASX: TLS) and Optus.
This is a stock I’ll definitely be adding to my watchlist, given the company’s ability to underpromise and overdeliver.
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