Today, Superloop Ltd (ASX: SLC) announced that AGL Energy Ltd (ASX: AGL) plans to sell its telecommunications business. Superloop currently provides wholesale network services to Southern Phone Company, a subsidiary of AGL, under an agreement expiring in June 2029. The company flagged a potential annual gross margin impact of up to $4 million from the expected subscriber migration.
What did Superloop report?
- AGL Energy intends to divest its telecommunications business.
- Superloop’s wholesale agreement with Southern Phone (AGL subsidiary) expires June 2029.
- Subscriber migration from AGL’s network anticipated in first half of FY27.
- Estimated potential gross margin impact of up to $4 million per year if agreement usage drops fully.
What else do investors need to know?
Superloop supplies network and backhaul transit services to Southern Phone, which has contributed to its wholesale segment revenues. The agreement with Southern Phone runs until mid-2029, but changing circumstances could see a material reduction in usage and income should the migration occur as foreshadowed.
Management estimates the total annual gross margin impact could reach $4 million, depending on the extent of AGL’s migration from Superloop’s infrastructure. There is no mention of a change to guidance at this stage.
What’s next for Superloop?
Investors will watch for further developments as AGL progresses the sale and refocuses its telecommunications operations. Superloop will be assessing the full impact on its future earnings as more details emerge around the subscriber migration.
Superloop remains committed to servicing its large portfolio of consumer, business, and wholesale customers and continues to invest in its fibre and wireless network infrastructure.
Superloop share price snapshot
Over the past 12 months, Superloop shares have risen 8%, outperforming the S&P/ASX 200 Index (ASX: XJO) which has risen 6% over the same period.
The post Superloop flags $4 million margin risk from AGL telecom business exit appeared first on The Motley Fool Australia.
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Motley Fool contributor Laura Stewart has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips. This article was prepared with the assistance of Large Language Model (LLM) tools for the initial summary of the company announcement. Any content assisted by AI is subject to our robust human-in-the-loop quality control framework, involving thorough review, substantial editing, and fact-checking by our experienced writers and editors holding appropriate credentials. The Motley Fool Australia stands behind the work of our editorial team and takes ultimate responsibility for the content published by The Motley Fool Australia.