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Aussie Broadband grows across all key metrics and announces Aussie Broadband Group leadership

Media Release | Thursday 22 Feb 2024 | 12 min read

(L-R) Michael Omeros, Phillip Britt, Brian Maher

Aussie Broadband Limited (ASX:ABB) today is announcing the formation of the Aussie Broadband Group entity and its leadership structure, alongside its H1 FY24 results.

This is a combination of two ABB releases for convenience. Each announcement can be viewed individually via our Investor Centre or on the ASX.

Aussie Broadband leadership evolves for next phase of growth

Aussie Broadband Limited (ASX:ABB) is pleased to announce the following changes to its leadership team to underpin the Company’s next growth phase following the acquisition of Symbio: 

  • Current Co-founder and Managing Director, Phillip Britt, will become Group Managing Director for the Aussie Broadband Group and be responsible for Group Strategy, Merger and Acquisition activities (M&A), and will remain an active contributor to the technology divisions across the Group. The new CEOs of Aussie Broadband and Symbio will report to Phil.   

  • Current Chief Financial Officer, Brian Maher, appointed CEO of the Aussie Broadband business with effect from 23 February 2024  

  • Current Executive Director, Michael Omeros, appointed CEO of the Symbio business with effect from 28 February 2024, the scheme of arrangement implementation date 

  • Current CEO and Co-founder of Symbio, Rene Sugo, to remain with Symbio as an advisor to Michael Omeros as that business transitions to Aussie Broadband 

  • Andy Giles Knopp, appointed Interim CFO from 11 March 2024 while an executive search is undertaken for Brian Maher’s replacement as CFO  

  • Cheryl Cai, General Manager Legal, appointed Group Company Secretary and the person responsible for communications with the ASX under Listing Rule 12.6 with effect from 23 February 2024.  Brian Maher will retire as Company Secretary. 

Aussie Broadband Chairman Adrian Fitzpatrick said: “Since listing on the ASX almost four years ago, Aussie Broadband has rapidly grown from a regional telco into a diversified technology business. 

"The leadership changes announced today will solidify the Group's management structure for its next phase of growth. Our internal succession plan has allowed for a seamless transition to such a high calibre leadership team." 

Aussie Broadband Co-founder & Group Managing Director Phillip Britt said: “The new leadership structure reflects the company's evolution since our ASX listing in 2020, and the exciting opportunities ahead. 

“The changes will allow me to better concentrate on strategic opportunities and growth, while remaining an active contributor to the technology divisions across the Group.  I am pleased and confident that Aussie Broadband and Symbio will thrive under Brian and Michael's leadership." 

Brian Maher bio 

Brian joined Aussie Broadband in 2019 as CFO and Company Secretary, he was integral to the success of the Company’s ASX listing in 2020.  

Brian has a diverse work experience, focusing on financial management and leadership roles across a range of industries, including health and general insurance, waste management, materials handling, and professional services.  

He has worked in finance and executive roles since 1990, including as CFO at Australian Health Management (“ahm”), LocalAgentFinder, health.com.au and Insurance Box, Executive Manager at Suncorp Group, CEO of health.com.au and, during 2023, Acting CEO of Aussie Broadband. 

Brian is a Chartered Accountant and Chartered Secretary, and has experience across a spectrum of business types, including ASX, private equity, mutual not-for-profit, and private companies. He has a deep understanding of developing fast growth businesses.  

Michael Omeros bio 

Michael was a co-founder and Managing Director of Over the Wire Holdings Limited prior to its acquisition by Aussie Broadband.  He has over 20 years of experience in the telecommunications and IT services sectors, with extensive experience in wholesale voice.   

Michael holds a Bachelor of Engineering – Electronics (First Class Honours) and Bachelor of IT (with Distinction) from Queensland University of Technology. Prior to Over the Wire, Michael held a Senior Management role at GBST, worked for Zurich Insurance in the UK and founded Celentia which was subsequently absorbed by Over the Wire.  

Andy Giles Knopp bio  

Andy joins Aussie Broadband as Interim CFO with more than 25 years’ experience leading large and complex organisations in the public and private sectors. 

Most recently, Andy spent 7 years in the forestry and timber industry at OneFortyOne as CFO from 2016 to 2020 and CEO from 2020 to 2023. Prior to this, Andy spent 10 years at Telstra as Executive Director in finance and small business sales & service roles. 

His experience in the telecommunications sector is further complemented by the senior management positions he held in his native United Kingdom, for Hutchinson “3” and Vodafone, among others.  Andy is a strategic thinker, and his experience has seen him be the leader of large change initiatives, including a number of acquisitions. He holds a Bachelor of Arts (BA) in Accounting and Financial Management.  

Aussie Broadband H1 FY24 Results

Aussie Broadband continues to grow across all key metrics with strong revenue and EBITDA growth

Aussie Broadband Limited (ASX:ABB) announces its financial results for the six months ended 31 December 2023 (1H FY24), demonstrating ongoing strength across the business and growing market share.   

1H FY24 highlights (vs 1H FY23): 

  • Revenue grew 17.7% to $445.9 million

  • EBITDA before non-recurring items grew 12.7% to $46.3 million

  • Operating cash flow grew 57.8% to $40.7 million

  • Total broadband connections grew 20.6% to 765,800 with strong growth across all segments

  • Increased NBN broadband market share (excluding satellite) 1.3 ppt to 8.3%

  • On track to complete the acquisition of Symbio Holdings (due 28 February 2024, post balance date) providing cloud-based voice and messaging capabilities. Strategically complementary to Aussie’s business

  • Successfully raised $140 million through a strongly supported institutional placement and retail share purchase plan, strengthening the balance sheet and providing funding for the Symbio acquisition and other potential M&A

  • Aussie Broadband awarded Service Champion for Customer Service Organisation of the Year, and Service Champion for Project of the Year Customer Impact at the Customer Service Institute of Australia ASEA awards

  • Aussie Broadband again recognised by The Roy Morgan “Risk Monitor” rankings as Australia’s most trusted telco.

Commenting on the Company’s operational and financial performance in 1H FY24, Co-founder & Group Managing Director Phillip Britt said: 

“Aussie continued to demonstrate positive operational performance in the first half of FY24. The Company’s transition from being a largely residential-focused retail service provider into a multi-faceted communications and technology service provider is well on track and delivering strong results. At the same time, our award-winning customer service has underpinned our success while continuing to grow our NBN market share.  

“Revenue grew 17.7% to $445.9 million, reflecting our strong customer offering across all business segments. EBITDA grew 12.7% to $46.3 million as we continued to focus on more profitable services, leveraging our recent investment in the fibre network, while operating cashflow grew 57.8% to $40.7 million. These results are testament to the wonderful team we have at Aussie and their dedication to providing the best customer experience possible. 

“During the half we progressed the acquisition of Symbio Holdings and are excited by this combination given Symbio is highly complementary to Aussie’s offering. The acquisition will fast track Aussie’s presence in the Wholesale and Enterprise & Government market segments while further diversifying our revenue streams and strengthening our financial profile.   

“We believe that the ACCC’s finalisation of the new NBN SAU regulations that came into effect on 1 December 2023 will be positive for Aussie. Following these changes, we were able to reduce prices in 100Mbps speed and above while improving margins in market segments that Aussie is already strong in. The full effect of these changes will flow through from the second half of FY24. 

“Meanwhile, our investors once again demonstrated their faith and confidence in our growth strategy by strongly supporting our successful $140 million capital raising. The proceeds from this raise strengthened our balance sheet and provided capital for further potential M&A opportunities.” 

Diversification brings rewards 

In 1H FY24, Aussie Broadband performed well across all key metrics and delivered strong revenue growth, up 17.7% to $445.9 million. The diverse nature of the business contributed to the overall result, with Residential, Business, and Wholesale segments all reporting double-digit revenue growth. E&G revenue declined by 1.2% in 1H FY24 due to a reduction in non-recurring revenue.  

Overall, gross margins increased to $154.3 million, up 16.7% on the prior corresponding period.  

Residential margins were also influenced by a period of intense promotional activity around the SAU changes. Partly offsetting this decline were the higher margins in the Enterprise & Government segment which benefited from a change in revenue mix and the Wholesale segment improved as a result of stronger voice margins.  

In 1H FY24, EBITDA before non-recurring items increased 12.7% to $46.3 million. 

Revenue ($m)
Segment1H FY231H FY24Change
Residential246.1283.915.4%
Business43.248.011.1%
Enterprise & Government 42.241.7(1.2%)
Wholesale inc. Voice 47.472.352.5%
Total Revenue 379.0445.917.7%

 Continuing double-digit broadband growth 

Broadband Connections
Segment1H FY231H FY24Change
Residential 494,954560,82313.3%
Business43,061 51,52719.7%
Enterprise & Government 9,783 12,224 21.7%
Wholesale 87,444 141,232 61.5%
Total BB Connections 635,242 765,806 20.5%

The Residential segment continued to perform well in 1H FY24, demonstrating strong momentum in revenue and connection growth.  Revenue grew 15.4% to $283.9 million, while 38,318 connections were added during this half, which exceeded the connections made in both halves of FY23.  Aussie continued to capture a growing share of the NBN market (excluding satellite services), increasing our overall market share by 1.3ppt to 8.3%. Residential gross margins declined 0.4ppt to 30.2%, impacted by unfavourable mobile data charges.  

In the first half, Aussie strategically realigned all segments - including Residential - for the SAU changes and repriced NBN plans. As a result, the Company went through the pain of changing prices and saw elevated churn, which was lower than expected.  Churn is expected to go back to historical levels in the second half and we are already seeing evidence of this through January and February.  

Now that Aussie has experienced the impact of the new pricing, all customers are on the new plans, which, along with our continued growth in net additions, provides confidence in revenue and EBITDA targets. 

Marketing investment rose during the first half, which delivered increased growth in connections while maintaining lower cost to acquire than the previous two halves.  It is expected that marketing investment will remain elevated in the second half of FY24. Since the move to the new pricing, 69% of new customers are signing up to the higher speed tiers (100Mbps and above).  

The Business segment remains very stable with no change to customer churn experienced during the half.  Net broadband additions of 4,196 in the first half of FY24 were 3.8% higher than in the prior corresponding period.  Revenue grew 11.1% to $48.0 million while gross margins reduced by 1.6ppt to 45.1% due to unfavourable mobile data charges. Margins are expected to return to growth in 2H FY24 as they benefit from a full-half impact of SAU.    

Enterprise & Government revenue declined modestly to $41.7 million, largely due to a reduction in one-off revenue. Recurring revenue grew 7.3% to $38.4 million on the first half of FY23 but was slightly reduced versus the second half of FY23. New business growth in this segment has been partly offset by recontracting legacy customers onto new NBN and Aussie Fibre plans. Gross margins increased 1.7ppt to 52.7%, driven by a change in revenue mix.  

The Wholesale segment continued to demonstrate robust growth across white label broadband and wholesale voice services. Revenue grew 52.5% to $72.3 million while gross margins increased 2.6ppt to 34.4%. Stronger voice margins remain a key driver of the gross margin and Aussie expects that the combined NetSIP and Symbio business will be a strong catalyst for future monthly minutes growth.  

Strategy and operational performance  

Symbio Holdings acquisition 

In September 2023 Aussie Broadband proposed to acquire 100% of the shares in Symbio Holdings Limited via a Scheme of Arrangement.  In February 2024 that Scheme was approved by Symbio shareholders and is due to complete on 28 February 2024.  

Symbio is highly complementary to Aussie’s existing business and strategy, with significant operational and efficiency opportunities identified.  Symbio will be led by Aussie Broadband’s Executive Director, Michael Omeros, and is attractively positioned as a diversified modern voice business and unified communications provider in Australia. The acquisition allows Aussie to fast track its presence in the Wholesale and Enterprise & Government market segments while at the same time further diversifying revenue streams and strengthening the Company’s financial profile.  

Equity capital raising 

In November and December 2023, Aussie successfully raised $140 million from a strongly supported institutional placement ($120 million) and non-underwritten share purchase plan ($20 million). This capital raising was undertaken to strengthen Aussie’s balance sheet in light of the Group’s capital investment pipeline, support the Symbio acquisition, and fund future M&A opportunities.  

NBN’s long-term pricing and the SAU 

After an extended period of consultation, the NBN Special Access Undertaking (SAU) was approved by the ACCC and took effect from 1 December 2023. The impact of the new SAU has resulted in an increase in wholesale prices on speed tiers 50 and below, and a reduction in wholesale prices on speed tiers 100 and above. 

While Aussie has absorbed cost increases over the past three years, the finalisation of the new SAU arrangements has enabled the Company to reduce prices for all products at 100 speed and above. The Company increased prices on 50 speed and below services to maintain margin levels following NBN’s increase in wholesale cost. Aussie continues to focus on providing value to our customers in order to sustain our industry leading service levels.   

Gross margins, particularly in the Residential and Business segments are expected to benefit from the changed pricing schedule from 2H FY24 onwards.  

Upgraded FY24 guidance – EBITDA and Capex  

Based on current market conditions, operating plan, pipeline, and trading to date, Aussie Broadband has upgraded its FY24 EBITDA guidance in the range of $105 million to $110 million from previous guidance of $100 million to $110 million.   

The Company also updated its capex guidance to $40 million to $45 million (from previous guidance of $47 million to $52 million), based on the reduced capex charge in the first half of FY24.  

Although only limited information on Symbio has been provided to Aussie at this time, we anticipate that Symbio will contribute approximately $11 million additional EBITDA for the four months owned by the Group, taking the upgraded FY24 EBITDA guidance for the combined Group to a range of $116 million to $121 million.  

Progress to meet guidance is tracking well. As of today the Company has added more than 19,000 additional broadband services for the quarter so far.  

The Group remains focused on organic growth, but is open to acquisition opportunities should they arise and which align with our strategic objectives. 

Investor briefing at 10:30am AEDT today 

A briefing session with Co-founder & Group Managing Director Phillip Britt and Aussie Broadband CEO Brian Maher, along with an opportunity for questions, is being held for investors and analysts at 10:30am AEDT today.   

To participate, please register via: https://s1.c-conf.com/diamondpass/10035401-3knchj.html 

Registered participants will receive their dial in number upon registration. 

ENDS 
Authorised for release by the Aussie Broadband Board. 

Investor enquiries contact Howard Marks on 0402 438 019 or howard.marks@team.aussiebroadband.com.au 

Registry queries contact Link Market Services on 1300 554 474 

All information contained in this media release, including references to costs, speed, and capability of the Aussie Broadband network, was correct at time of publication, and may have since changed.

Media Enquiries

Alex Walker | Media Advisor

media@team.aussiebroadband.com.au

+61 448 110 962

About Aussie Broadband Limited

Aussie Broadband is an Australian operated telecommunications company that was formed in 2008 and is based in Morwell Victoria, Australia.

The company's main focus is nbn® (NBN) subscription plans and bundles to residential homes, small businesses, not-for-profits, corporate/enterprise and managed service providers.

As a licensed carrier, the company provides these services through a wholesale agreement with NBN Co, a mix of leased backhaul infrastructure from third parties and its own network equipment.

The company also offers a range of other telecommunications services including VoIP, mobile plans and handsets, entertainment bundles through its partnership with Fetch TV and connections through its own fibre, the OptiComm network and its white label platform.

With its acquisition of Over the Wire, the company is also a Tier 1 voice provider, and offers a range of tailored cloud, connect and collaborate solutions to business, government and enterprise customers.

Along with being a proud member of the Pledge 1% Movement, Small Change Big Change and more, Aussie Broadband is a certified B Corporation and the largest telco in Australia to hold accreditation.

Aussie Broadband has remained Australia's Most Trusted Brand in Telecommunications since December 2020 and was more recently named Australia's Most Trusted Telco for the second year in a row at the Roy Morgan Trusted Brand Awards for 2023.