The Aussie Broadband Ltd (ASX: ABB) share price is moving higher today after announcing strong connections growth over the first half of FY22.
Aussie Broadband share price rises on first-half growth
Currently, the Aussie Broadband share price is up 4% to $4.69.
Key financial results for the half ending 31 December include:
- Revenue of $229.3 million, an increase of 46% year-on-year (YoY)
- EBITDA of $9.1 million, an increase of 7% YoY
- Net profit of $1.4 million, up from a loss of $10.5 million in the prior half
In what is largely a commodities product, Aussie Broadband has managed to differentiate itself by providing superior customer service.
Illustrating this reputation, the business won Customer Service Organisation of the Year – Large Business at the Australian Service Excellence Awards for the second year in a row.
Total internet services increased 45%. Aussie Broadband continues to grab market share from the likes of TPG Telecom Ltd (ASX: TPG) and Telstra Corporation Ltd (ASX: TLS).
This likely contributed to TPG and Telstra signing an agreement today to share telecom infrastructure.
The emerging mobile services segment increased connections by 70%, albeit off a low base.
The disproportionate increase in earnings stems from increased nbn costs, marketing investments and staff to continue to scale the business.
“EBITDA was impacted by network costs including higher CVC due to lockdowns in the period, as well as promotional and free month offers impacting short-term EBITDA but driving better than expected volume growth”
ESG tailwind
The Aussie Broadband share price is set to benefit from the company applying to become a Certified B Corporation.
The business has made its first submission and expects the assessment to be completed in six to nine months.
B-Corp signifies that an organisation is transparent, has high environmental and social performance and treats stakeholders equitably.
Moreover, becoming a B-Corp would likely lower Aussie Broadband’s cost of capital, meaning it can potentially raise debt at lower interest rates.
What next for the Aussie Broadband share price?
The Aussie Broadband share price is moving higher after flagging a record start to the second half.
Management reiterated the goal of EBITDA of $27 million to $30 million for FY22.
Employee and administration costs will become less of a headwind. Meanwhile, the expected growth of 85,000 to 95,000 new connections will support revenue.
The second half will also be aided by the acquisition of Over The Wire Holdings Ltd (ASX: OTW).
The deal will be voted on by OTW shareholders in February and completed by March.
