The Aussie Broadband Ltd (ASX: ABB) share price is up more than 7% in response to its FY24 report.
Aussie Broadband is a growing telecommunications business that predominately sells broadband services to households and businesses. It has a 7.4% market share of on-net NBN services.
FY24 result
Here are some of the highlights from the report for the 12 months to 30 June 2024:
- Revenue increased 26.9% to $999.7 million
- Gross profit grew 29.4% to $360.6 million
- Underlying EBITDA increased 34.5% to $120.5 million
- Net profit after tax (NPAT) grew 21.7% to $26.4 million
- Dividend declared of $0.04 per share
Looking at the number of broadband connections, residential connections grew 13% to 589,123, business connections rose 19% to 56,431, enterprise and government connections increased 19% to 2,015, wholesale connections grew 38% to 7,143 and total broadband connections rose 14% to 84,876.
Aussie Broadband explained that the introduction of a new wholesale pricing regime occurred after completion of the NBN’s ‘special access undertaking’ process saw a highly competitive environment emerge, which impacted all segments. The company said there was a “material increase” in wholesale prices and the introduction of annual CPI inflation increases, which occurred on 1 July 2024.
The ASX telecommunications share said it was a net beneficiary of the customer churn activity that happened during this period.
Aussie Broadband continues to invest in its fibre network, adding 288km in FY24, with total laid fibre of 1,712km and 300 connected buildings.
It has also launched Buddy Telco, a low-cost brand.
Outlook for the Aussie Broadband share price
The company said it’s focusing on growing all business segments in FY25, with earnings growth of between “13% to 21%” (before the investment in Buddy Telco).
Aussie Broadband said the group has had a strong start to the year, with net broadband connection growth of 13,023 in the September quarter to date, which the company said is “positive considering the price rise that occurred from July.”
Buddy Telco has seen 2,192 services connected in its first six weeks of operation. The digital-first model is delivering “excellent results in customer satisfaction and interactions” with the Buddy Bot, live chat, website and Buddy app.
Based on current market operations, its plans, pipeline and trading to date, the business is guiding for EBITDA to be between $125 million to $135 million, including the Buddy investment. That suggests underlying EBITDA could rise between 3.7% to 12%. It is also looking at acquisition opportunities.
Aussie Broadband has done well to shake off the loss of the Origin Energy Ltd (ASX: ORG) contract. I’m not sure if it’s a buy – it depends how much market share it can capture. The business has grown so much already. There are other ASX growth shares I’d rather buy first, but if the telco can keep delivering operating leverage then it could continue impressing the market.