Aussie Broadband share price plunges 15% as quarterly results fail to impress

A man sits in despair at his computer with his hands either side of his head, staring into the screen with a pained and anguished look on his face, in a home office setting.

A man sits in despair at his computer with his hands either side of his head, staring into the screen with a pained and anguished look on his face, in a home office setting.

The Aussie Broadband Ltd (ASX: ABB) share price is falling hard, down 14.6% in early trade.

Aussie Broadband shares closed on Friday trading at $3.63 each and are currently trading for $3.10 apiece.

This comes following the release of the ASX telco’s quarterly results for the three months ending 30 June (Q4 FY22).

While posting some solid gains in its broadband service figures, the numbers aren’t helping lift the Aussie Broadband share price today. Here are the highlights:

What happened during Q4 FY22?

  • Total broadband services increased by 7% during Q4 to 584,793
  • Across the full 2022 financial year, total broadband services increased 46%
  • Aussie Broadband expects FY22 earnings before interest, taxes, depreciation and amortisation (EBITDA) to come in at the high end of its guidance range of $38 million to $39 million
  • In Q4, the telco was named ‘the most trusted telco brand in Australia’ by Roy Morgan

What else happened during the quarter?

Broadband services experienced a notable uptick across the sectors, with residential broadband services increasing 28% to 464,979 while business broadband services increased 68% to reach 59,488. That includes services provided by Over the Wire which Aussie Broadband acquired earlier this year.

The company also reported a “significant” boost in its wholesale and white label broadband services, which hit 60,326.

Excluding satellite, Aussie Broadband also increased its share of NBN services to 6.46% from 4.74% in 4Q FY21.

What did management say?

Commenting on the results, Aussie Broadband cofounder Phillip Britt said:

We are pleased with this result given the third quarter challenges we faced, and have been very focused on addressing over the past three months.

The acquisition of Over the Wire has bolstered Aussie Broadband’s business segment product and skills capability. It added 16,000 business, enterprise, government and wholesale customers. The integration is progressing as planned and we have already started generating revenue synergies from the combination of the two businesses, including two large regional health alliance and shire council deals recently signed.

Synergies relating to the migration of Aussie voice traffic onto the Over the Wire tier 1 voice network have yielded $2.9 million in annualised savings, higher than our original investment case. A further annualised $2.3 million in other run rate synergies have been achieved, taking the total cost synergies achieved to date to $5.2 million annualised.

The Aussie Broadband share price fell hard in early trade, despite Britt reporting that the company’s investment case of $8 million to $12 million of annualised cost synergies remains on track.

What’s next?

The company reported that its Aussie Fibre Project is now 90% complete and remains on budget. This is forecast to generate $13.5 million of year-on-year savings. The project was facing delays from adverse weather and is now scheduled to be finished in the current quarter (1Q FY23).

Aussie Broadband reports its full year results on 29 August.

Aussie Broadband share price snapshot

With the intraday losses factored in, the Aussie Broadband share price is down 34% since the opening bell on 4 January. That compares to a year-to-date loss of 9% posted by the All Ordinaries Index (ASX: XAO).

The post Aussie Broadband share price plunges 15% as quarterly results fail to impress appeared first on The Motley Fool Australia.

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Motley Fool contributor Bernd Struben has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Aussie Broadband Limited. The Motley Fool Australia has recommended Aussie Broadband Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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