The Aussie Broadband Ltd (ASX: ABB) share price is down after reporting its quarterly update to March 2024.
March 2024 quarter update
The telco company said its core business remains “strong” and continues to show growth, with 18,788 broadband services in the third quarter.
Aussie Broadband reported five different sets of growth numbers over the three months.
Residential broadband saw 14,788 net additions to 575,611. This is good for the Aussie Broadband share price.
Business broadband experienced 2,499 net additions to 54,026
The enterprise and government segment saw net additions of 234 to 12,458. This division saw new clients across retail, food and local government sectors.
Aussie Broadband’s white label division experienced 14,371 net additions to 132,982.
Wholesale numbers saw an increase of 1,267 net additions to 23,888.
During the quarter, the company also completed the acquisition of Symbio, adding scale to its voice business and increasing its capabilities. Symbio is reportedly on track to achieve the FY24 contribution of the ASX share’s guidance.
Management comments
The co-founder and Managing Director of Aussie Broadband, Phillip Britt, said:
The group continues to assess other strategic investments to advance our ongoing growth ambitions. We expect to see further market consolidation and will look to participate in that where value can be created, and it makes strategic sense to do so.
While the outcome of negotiations with Origin was disappointing, I remain confident in our growth trajectory. We have a number of strategies in place to deliver on our growth agenda, which we are in the process of executing.
Our customer service continues to be recognised as market leading. Aussie Broadband was the first business to win three awards in a single year from Roy Morgan:
• Mobile Phone Service Provider of the Year for the first time
• Internet Service Provider of the Year for the third year running and
• The prestigious ‘Best of the Best’ Customer Satisfaction Award, across all industries, for the first time. We are the first telco to win the ‘Best of the Best’ award.”
Outlook for the Aussie Broadband share price
Aussie Broadband reaffirmed its upgraded FY24 EBITDA guidance of between $105 million to $110 million. The ASX share also expects four months’ EBITDA contribution from Symbio of approximately $11 million, taking total EBITDA guidance to between $116 million to $121 million.
I like what the business has achieved, but I’m not sure how large its market share can become. I’m also uncertain what will happen in the longer-term if households and businesses turn to 5G-powered broadband, rather than the NBN. Aussie Broadband has done well up until now, but I’m cautious about it being a strong market beater from here, particularly if it’s relying on acquisitions for growth.
I’d focus on other ASX growth shares.
