Aussie Broadband gathers speed to grow into Australian telco market

Aussie Broadband gathers speed to grow into Australian telco market

Date of Report: Market close on 2nd November 2021
ASX: ABBPrice A$5.13

52 Week Range: A$1.695 - A$5.25

Market Cap: A$1.13 billion

Sector: Telecommunication service

Every second week we invite a leading fund manager to present at The Insider: Meet the Fund Manager. Nick Guidera, from Eley Griffiths Group, selected Aussie Broadband as one of his three favourite stocks as the company became Australia’s fastest-growing internet service provider.

June 18, 2021

September 01, 2021

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With further easing of restrictions – and thanks to an encouraging national vaccination rate of more than 75% – life in Australia is increasingly returning to normal.

A new normal, that is. It’s perhaps no surprise to learn that working from home has become popular with Australians, with a survey last year revealing that 81% of participants felt secure in their jobs because they had access to fast broadband.

Enter Aussie Broadband (ASX: ABB). One of Australia’s fastest-growing internet service providers, Aussie Broadband claimed 16.5% of net additions to the national broadband network (NBN) in the third quarter of FY21, with a group market share of 4.5%.

Fund manager Nick Guidera, from Eley Griffiths Group, believes this is because ABB has a brand that resonates with the Australian consumer and also because of the company’s high level of domestic support and customer satisfaction.

“Versus a lot of other telco and tech investments, this business actually makes money at the EBITDA line and in the next 12-18 months that will only accelerate,” Mr Guidera said.

Aussie Broadband is continuing its phase of growth by investing into its own network to drive its overall growth margin. Mr Guidera expects the company to generate significant cash flow as it grows its subscriber base and reaps the benefits of scale.

“We’re really a technology company. Whilst we’re a telco at heart, our technology platforms enable us to grow,” ABB’s Managing Director Phillip Britt said.

Mr Britt sees Aussie Broadband as more than an NBN reseller. Nick Guidera also thinks that the business has a very good enterprise division with its recent Westpac win and is viewed as a key competitor to the likes of major players TPG and Vodafone.

Despite being considered an expensive stock for an internet service provider, Aussie Broadband presents an attractive proposition in building its own infrastructure, which Mr Britt expects will enable the company to improve its margins and save more than $15 million a year in FY23 onwards.

Click here to view more videos from Nick Guidera’s ‘Meet the Fund Manager’ session, or click here to view the full ‘ The Insider: Meet the CEOs’.

The CEOs of all the companies chosen as Fund Manager favourite stocks are invited to present at our Meet the CEO series. Reach does not assume responsibility for the accuracy or completeness of any information provided, and the views expressed are not reflective of Reach Markets position.

Any advice contained within this presentation is general advice and does not consider your personal circumstance, you should consider whether it’s appropriate for you.

The information we are giving you is for educational purposes only. “Investing is about understanding your risk” and every time you invest in the share market there is a risk of loss.

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The CEOs of all the companies chosen as Fund Manager favourite stocks are invited to present at our Meet the CEO series. Reach does not assume responsibility for the accuracy or completeness of any information provided, and the views expressed are not reflective of Reach Markets position.
Any advice contained within this presentation is general advice and does not consider your personal circumstance, you should consider whether it’s appropriate for you.
The information we are giving you is for educational purposes only. “Investing is about understanding your risk” and every time you invest in the share market there is a risk of loss.