Aussie Broadband (ASX: ABB) has kicked off FY25 with impressive momentum, as outlined in its 1Q trading update released on 25 October 2024. The company reported significant growth in broadband connections, key enterprise and government contract wins, and new partnerships across its residential, business, and wholesale segments. This sets a positive tone for the rest of the financial year, reinforcing Aussie Broadband's market position as one of Australia's fastest-growing telecom providers.
The company added 22,119 broadband services in the quarter, a 21% increase on the previous quarter's growth, lifting its total broadband connections to over 706,000. This was driven by a healthy performance across residential, business, and wholesale segments. Aussie Broadband’s NBN market share increased to 7.60%, up from 7.38% as of 30 June 2024, a significant jump considering the competitive nature of the sector.
Residential broadband connections grew by 16,285, bringing the total to 605,408, while the business segment also saw solid gains with 58,768 connections. Wholesale, a vital growth driver for the company, surged 10.2% in connections, now totalling 28,506. Aussie Broadband’s ability to win new customers and retain existing ones continues to underpin its market expansion.
Aussie Broadband’s enterprise and government (E&G) segment shone during the quarter, securing major deals that signal the company’s growing influence in the sector. Notably, Aussie Broadband signed a five-year contract with The Reject Shop, covering 400 sites nationwide. The deal incorporates a Managed Fortinet SD-Branch solution with WAN/LAN connectivity, 4G backup, and a hosted telephony system. This solution promises enhanced security and simplified network management across all retail and corporate locations.
The company also inked a 36-month contract with Auto & General, a leading insurance company, to provide high-speed connectivity between its Australian and South African sites. Another standout win was a managed SD-WAN deal with Ventora Group, a building products manufacturer, which will boost network performance and scalability through Aussie Broadband’s fibre and NBN Enterprise Ethernet connections.
Aussie Broadband’s ability to land household names and nationwide businesses speaks volumes about its growing reputation in the enterprise space. These contracts not only provide recurring revenue but also validate the company’s position as a serious player in delivering high-performance network solutions.
Further highlighting its diverse growth strategy, Aussie Broadband announced two significant partnerships. The first, with Red Energy, allows Red Energy and its affiliate Direct Connect to sell broadband alongside energy products. Launched in mid-September, this partnership marks Red Energy’s first venture into broadband and positions Aussie Broadband to benefit from its marketing reach. As this partnership scales, Aussie Broadband expects it to drive further growth in residential connections over the financial year.
The second key partnership was a five-year extension with MEDION Australia, one of Australia’s largest mobile virtual network operators (MVNOs). This deal, executed through Aussie Broadband’s Symbio division, positions Symbio to continue powering MEDION’s mobile services through its industry-leading software stack. As the MVNO market evolves, Symbio is set to support further growth, benefiting from MEDION’s continued success in the competitive mobile space.
Aussie Broadband’s value-focused brand, Buddy Telco, which launched earlier in 2024, has also made a mark. Despite a swift response from competitors, Buddy Telco’s subscriber base grew to over 4,500 by the end of the quarter. The brand is helping to reduce churn across the broader Aussie Broadband group, with churn now lower than prior to Buddy’s launch. Looking ahead, the group expects to ramp up interest in Buddy with new marketing activities planned for November.
Moreover, Buddy Telco has become an incubator for innovation within the company. More than 20 improvements have been introduced to the MyAussie app, including enhanced self-help features and better payment options. These innovations will benefit both Buddy and broader Aussie Broadband customers, strengthening the company's customer experience.
Aussie Broadband reaffirmed its full-year guidance, projecting EBITDA between $125 million and $135 million, including investment in Buddy Telco. Capital expenditure is expected to range between $55 million and $60 million, which includes ongoing capitalised software development.
Co-founder and Managing Director Phillip Britt said, “We are happy to report that Aussie Broadband has started the year positively with growth across all segments, furthering the company's track record of excellent operational and financial performance.”
He added, “Our enterprise & government team is continuing to make inroads into the sector with a number of key wins, bringing on more household brands and major nationwide Australian businesses. We are also happy to see that Buddy Telco is helping reduce overall churn across the Aussie Broadband Group, while also serving as an incubator for new ideas and innovations.”
With strong growth in broadband services, key partnerships, and high-profile client wins in the enterprise space, Aussie Broadband is well-positioned to continue its upward trajectory in FY25. The company’s broad suite of services across residential, business, and wholesale markets, combined with its focus on innovation, should enable it to capture further market share in the fiercely competitive telecom sector.