Aussie Broadband Limited has released its trading update for the quarter ending 30 September 2021 (1Q FY22), to include the following results:
- 1Q overall broadband connections increased 11% and business broadband connections increased 13% on the previous quarter.
- 1Q mobile services increased 15% from the previous quarter, from 25,606 to 29,447 services.
- 1Q FY22 revenue grew 11.3% quarter on quarter (QoQ) .
- Signed strategic fibre swap agreement with VicTrack.
- Commenced connecting services for our first white label customer.
- QoQ NBN CVC charges up 137% due to lockdowns, supporting the industry’s view that retailers are bearing an unfair share of the cost.
Overall active broadband connections increased by 44,932 or 11% QoQ, business broadband connections increased by 4,639 or 13% QoQ, and mobile services increased by 3,841 or 15% QoQ.
Revenue for the quarter was $111.4 million, an increase of $11.3 million or 11.3% QoQ1. During the quarter, first-month-free promotions on broadband and two months’ free promotions for mobile services were expanded, driving new customer uptake and mobile customer migration. The gross value of promotional credits doubled QoQ.
Due to focused promotional campaigns, the company achieved 32,978 net residential broadband additions, an increase of 39% compared to the prior quarter additions of 23,780.
CARBON & BUSINESS UPDATE
Business broadband net additions were 4,639 and increased by 21% over the previous quarter.
Migration from the Telstra mobile agreement to the new Optus agreement is largely complete, with around 3,000 services left to transfer. Retention of the migrated existing mobile service base has been above 90% to date, and overall feedback has been that customers have been generally happy with the Optus network performance. Net mobile additions declined 45% over the previous quarter primarily due to some migrated customers moving away from the Optus service.
WHITE LABEL UPDATE
Aussie Broadband connected 7,151 new white label broadband services to the network in the quarter. Migration of this white label customer’s existing 32,000 services will start in 2Q with around 20,000 due to migrate during this period. The remaining 12,000 services will migrate early in 3Q.
AUSSIE FIBRE PROJECT UPDATE
As a result of its partnership with VicTrack, the company has been able to increase the number of NBN Points of Interconnection (POIs) that will be connected to Aussie fibre network from 78 to 86. In addition to the POI sites, there are 21 data centre locations under build.
Construction continued throughout the quarter and 41 sites were complete as of 30 September, up from 25 on 30 June 2021.
Total marketing spend for the quarter was $7.8 million excluding promotion costs.
NBN CVC UPDATE
National usage increased by 15% when compared to pre lockdown levels in May 2021. Total CVC expense for the period was $3.3 million, an increase of 137% on the previous quarter after accounting for NBN relief and increased inclusion benefits from NBN’s focus on fast campaign.
Early in 1Q FY22 the company migrated 51,000 broadband services onto NBN’s higher speed tiers to take advantage of the increased CVC inclusions under NBN’s focus on fast campaign. This action reduced the overall CVC expense for the quarter by an estimated $1 million, and will continue to reduce overage expense during 2Q. Had the company not proactively migrated customers under the focus on fast campaign, and had NBN not provided relief during the period, total CVC expense for the quarter would have been an estimated $5.1 million, an increase of 264% on the previous quarter.
During the quarter the company raised $114 million through an institutional placement and a further $20 million through a Share Purchase Plan for existing shareholders.
The company expects broadband net additions of 53,000 to 60,000 for 2Q, including the migration of 20,000 white label services. It is typical to see a slow down over the Christmas period.
The company continues to progress its M&A strategy. All financial information included in this results update is based on management accounts, is unaudited and remains subject to further review and finalisation. The company will hold its annual general meeting at 10:30am AEDT on Thursday 28 October 2021 via an all-virtual meeting platform due to lockdown and social distancing requirements. A notice of meeting was sent to shareholders on Tuesday 28 September 2021 with details on how to attend and vote at the virtual meeting. Enquiries can be directed to Link Market Services. Shareholders are strongly encouraged to lodge their votes by proxy ahead of the meeting.