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Telco and internet services provider Aussie Broadband (ASX: ABB) has upgraded its growth ambitions after completing a series of strategic acquisitions and divestments that position the telco to become Australia's third-largest NBN service provider.
The Melbourne-based company is now targeting more than $2 billion in group revenue by FY28, along with 1.5 million connections and more than 17 per cent of NBN market share.
The company today confirmed the completion of four transactions executed over the past six months, namely the acquisition of AGL Telco, the acquisition of Nexgen Networks, the divestment of Digital Sense Hosting, and the sale of the Buddy Telco brand to Tangerine, which clears the path for a growth push through to FY28.
The AGL Telco deal, valued at $115 million in Aussie Broadband shares, brings about 350,000 NBN and mobile connections that will migrate to the Aussie Broadband platform by the second quarter of FY27.
The transaction saw the company issue 22 million new shares, representing 7 per cent of issued capital.
AGL Telco is expected to deliver $21 million in underlying EBITDA in the first 12 months following migration completion, giving Aussie Broadband a material earnings uplift as the connections come across.
Separately, the Nexgen Networks acquisition was completed for $44.1 million in upfront cash plus an earn-out of up to $5.9 million, bolstering the company's fibre infrastructure capabilities.
On the divestment side, Aussie Broadband offloaded Digital Sense Hosting and sold the Buddy Telco brand to Tangerine as part of a portfolio reshaping designed to sharpen the group's focus on its core connectivity business.
The completion of all four transactions comes after Aussie Broadband surpassed one million broadband connections last month, a milestone underpinned by about 67,000 organic connection additions in the financial year to 31 May.
Once all migrations from AGL Telco and the More/Tangerine portfolio are complete, the company expects to have more than 1.3 million NBN connections.
The More/Tangerine migration is on track for completion by the end of this month, with about 275,000 active services set to contribute $12 million in annualised EBITDA from FY27, or $7 million after amortised incentives.
Aussie Broadband expects FY26 underlying EBITDA to land in the middle of its $162 million to $167 million guidance range, with net debt to EBITDA sitting at 0.72 times.
The company has upgraded its Look-to-28 ambitions off the back of the completed transactions.
The refreshed targets include more than $2 billion in group revenue, greater than 17 per cent NBN market share, 1.5 million connections, an EBITDA margin above 13.5 per cent, and earnings per share compound annual growth of more than 30 per cent from the FY25 base.
Group CEO Brian Maher says the completion of all four deals marks a transformational period for the business.
"Completing one transaction is significant but completing four transactions within six months, while delivering the largest migration of connections on the NBN network to date and continuing to grow the business organically, is exceptional," says Maher.
“These transactions are central to our upgraded Look-to-28 ambitions, repositioning the company to deliver higher quality and more sustainable earnings streams.
"While competition remains strong, our FY27 pricing plans, continued focus on Australian-based customer service, and high-quality network performance position us well to continue winning new customers, particularly those migrating from legacy technologies and lower-speed services.
“The operational leverage from increased scale is expected to improve capital efficiency and support stronger returns over time.”
The AGL Telco acquisition also establishes a five-year strategic partnership between the two companies, with a target of growing the combined connection base to 500,000 over the period.
Aussie Broadband expects first-year revenue from the AGL Telco partnership of about $235 million, providing a substantial top-line contribution as the company pursues its $2 billion revenue target.
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