Shares in Aussie Broadband are running higher today after the company released some positive news. Here are the details.
The post Why the Aussie Broadband (ASX:ABB) share price is lifting today appeared first on The Motley Fool Australia. –
The Aussie Broadband Ltd (ASX: ABB) share price is rising today following news the company’s earnings before interest, tax, depreciation, and amortisation (EBITDA) could be 38% to 62% higher than previously predicted.
At the time of writing, shares in Aussie Broadband are trading 0.75% higher than yesterday’s close at $2.67. During morning trade, the Aussie Broadband share priced jumped by more than 11% before retreating to its current level.
The telecommunications company also announced it has lowered its guidance on the number of residential connections it expects to see added to its network in 2021.
Finally, Aussie Broadband has named the first customer for its new white label solution and updated the market on its optic fibre rollout.
Let’s take a closer look at the company’s news.
Aussie Broadband’s update
Aussie Broadband stated this morning it now expects EBITDA of between $17 million and $20 million, excluding approximately $1 million of expenses from the company’s initial public offering (IPO).
Previously, Aussie Broadband estimated its EBITDA for the 2021 financial year, excluding IPO costs, would be $12.3 million.
The company said the updated guidance comes as it experiences strong growth in the average revenue per user in its retail segment. It’s also seen growth in its business segment.
According to Aussie Broadband, revenue is also expected to benefit from rebates related to the National Broadband Network (NBN).
Drop in estimated new customers
In further news that could be impacting the Aussie Broadband share price, the company stated it has lowered its residential connection guidance.
Previously, Aussie Broadband said it hoped to connect between 380,000 and 410,000 households to its services in the 2021 financial year. That figure has now been lowered to between 360,000 and 365,000.
The estimated drop comes as the onboarding of the first customers of Aussie Broadband’s white label solution is delayed until the 2022 financial year.
The company has also been affected by an increase in high-speed market competition caused by NBN’s Focus on Fast campaign. It has also been hit by recent connection issues caused by the NBN.
Aussie Broadband’s business customer connections look likely to achieve the lower-end figure of 37,000 provided in previous guidance – although its estimated top-end figure has decreased from 42,000 to 38,000.
In more positive news for Aussie Broadband (though, not for Victoria), the company expects its network utilisation to increase over the next 7 days due to the COVID-19 lockdown.
White label solution
After tantalising the market in April by electing not to name its foundation white label solution customer, Aussie Broadband today announced it is Origin Energy Ltd (ASX: ORG).
As part of the white label solution, Origin Energy will sell Aussie Broadband’s NBN, Opticomm, and VoIP services under its own brand. Aussie Broadband will be providing customer support and service delivery for Origin’s telecommunication customers.
Aussie Broadband is in contact with other brands interested in being involved with its white label solution.
Optic fibre rollout
Finally, Aussie Broadband today advised its optic fibre network rollout is going to plan.
The company currently has more than 250 prospective optic fibre sales in its pipeline.
Once complete, the company’s fibre network will include 76 points of interconnections and more than 20 data centres. A point of interconnection is needed to connect a customer’s home to the NBN. Currently, it has almost completed a complex section of its Sydney build.
Aussie Broadband has begun construction of the network in Western Australia and Queensland and is continuing the rollout in New South Wales and Victoria. Work in South Australia is due to start in the coming weeks.
The company expects to have between 28 and 31 points of interconnection and data centres completed by 30 June.
Aussie Broadband share price snapshot
Aussie Broadband shares need today’s good news as they tackle a tough month on the ASX.
Since the start of May, the Aussie Broadband share price has fallen by around 12%.
Despite the poor month’s performance, the company’s shares are still up by around 34% year to date. They’ve also gained around 40% since their debut on the ASX in October 2020.
The company has a market capitalisation of around $500 million, with approximately 190 million shares outstanding.
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