Superloop Limited (ASX:SLC) has signed an exclusive six-year contract to provide wholesale internet services to Origin Energy Limited and its subsidiaries.
When combined with the recent significant backhaul contract signed in November 2023, Superloop will now provide wholesale services to two of Australia’s largest energy companies.
Key terms of the wholesale contract:
- An exclusive six-year wholesale contract which will see the migration of Origin’s broadband customer accounts, currently 130,000 and growing, onto Superloop’s network. The transition of Origin’s current subscriber base is expected to occur during FY25.
- The contract is expected to add in excess of $19 million of annualised EBITDA once the current subscriber base is fully transitioned, with further upside based on Origin’s rapidly growing broadband customer base
In consideration for the contract award, Origin is:
- Issued 9,847,690 Superloop shares upfront on signing, another 9,847,690 Superloop shares on the completion of the migration of 130,000 customers, and up to another $30 million of Superloop shares subject to achieving further customer growth milestones. Origin has previously communicated its ambition to grow its broadband customer base to 600,000 subscribers by FY26.
- Granted 55,672,002 options upfront on signing (equating to approximately 10% of Superloop’s diluted share capital), entitling Origin to purchase the same number of Superloop shares at the prevailing volume weighted average price (VWAP) of Superloop shares on the trading day before Origin exercises its option.
“Securing the Origin contract is a key progress milestone in Superloop’s three-year growth strategy. It delivers a step-change in our customer numbers and cements our market position as a leading wholesale broadband and backhaul provider. In order to create strong alignment and pursue growth in broadband customers, we are delighted to welcome Origin as a shareholder and to issue it an option to acquire further shares,” Superloop CEO Paul Tyler said.
Approximately 130,000 Origin broadband customers will be migrated from Origin’s current network provider to Superloop, estimated to increase Superloop’s total customer numbers to approximately 560,000 at that time.
The contract contains customary warranties, indemnities and limitation of liability clauses that apply to each party, and customary termination provisions.
“Australia’s energy retailers are investing heavily in product bundling and we are very pleased to be the partner of choice for reliability, service and value,” Mr Tyler said.
“In addition to Origin’s wholesale subscriber base, we are pleased to report that Superloop has continued the strong momentum in its own subscriber base, adding 21,000 subscribers in the first two months of this calendar year (in addition to the 40,000 subscribers added in the six months to December 2023). With accelerating growth in our Consumer segment and the record H1 sales backlog ($9 million annualised new sales) in Wholesale which will all be billing by the end of the half, Superloop expects to continue strong growth in FY25.
“The announcement of this material wholesale contract, coupled with the strong operational performance demonstrated in our existing business, reaffirms our confidence in the delivery of our three-year ‘Double Down’ strategy and the underlying value being created for shareholders.”
