Aussie Broadband (ASX:ABB) reported “another exciting period” in its FY2026 first-half earnings call, highlighting double-digit growth across all three operating segments, improving profitability and productivity metrics, and a series of strategic transactions intended to expand scale and capability.
Leadership changes and interim dividend
CEO Brian Maher opened the call by noting a transition in the finance function, with outgoing CFO Andy Giles Knopp set to leave the business and incoming CFO Darren Rowland commencing on the day of the results call.
Financial performance and cash flow
CFO Andy Giles Knopp said H1 FY2026 was “another excellent half” driven by organic growth. On a reported basis, management reported:
- Revenue up 8.4% to AUD 637.8 million
- Underlying EBITDA up 13.5% to AUD 74.7 million
- Underlying NPAT-A up 24.5% to AUD 31.3 million
- EPS of AUD 0.107, up 26.5%
- Operating cash flow up 16% to AUD 57.1 million
Knopp also provided an “underlying” P&L view that removed one-off items and included the prior period’s contribution from Origin in H1 FY2025. Excluding that Origin impact, he said revenue grew 13.5%, underlying EBITDA grew 27%, and underlying NPAT-A grew 50% year-over-year.
Gross margin was reported at 36.3%, which management said was robust and in line with H2 FY2025, though lower than H1 FY2025, despite market competitiveness and changes linked to NBN’s Accelerate Great program.
Cash conversion was 76.5% for the half. Management attributed the result to several items including a AUD 2.5 million one-off cash incentive payment to More, AUD 3 million of advance payments on customer-related hardware in the Business, Enterprise & Government (B&EG) segment, and AUD 5 million of upfront payments tied to three-year commitments with “attractive commercial terms.” Knopp said he expected cash conversion to improve across FY2026 to be in line with FY2025.
Net leverage was described as comfortably below the company’s target range, at 0.9 times. Net debt increased from AUD 101.2 million to AUD 139.2 million, which Knopp said was largely due to AUD 43 million of excess cash returned to shareholders through a share buyback and special interim dividend in H2 FY2025. He also noted refinancing was completed in the prior month, maintaining a AUD 195 million redraw facility intended to support, among other uses, the Nexgen acquisition.
CapEx for the half was AUD 27 million, with full-year guidance unchanged at AUD 55 million to AUD 60 million. The company said investments were focused on enabling customer growth capacity, platform uplift (including Nitrogen), supporting migrations related to More/Tangerine and AGL, and ServiceNow to support B&EG.
Operating metrics and segment results
Maher said group broadband connections increased by 39,000 during the half to 828,000, and NBN market share increased by 0.4 percentage points to 8.8% in December. Mobile services across the group grew by 24,000 to 240,000.
Within Symbio and NetSIP Tier One voice networks, the company reported hosting 8.1 million numbers as of Dec. 31 and carrying 4.5 billion core minutes across networks during the first half.
On Aussie Fibre, the company reported 1,317 customers across 1,057 connected buildings, or about 1.25 connections per building.
Segment-level commentary included:
- Residential: revenue up 14.7%, supported by an 8% increase in NBN broadband services and 20% growth on the OptiComm network. Mobile connections in residential grew to 85,000, up 33% from the preceding period, which management tied to new bundles under its five-year Optus agreement announced in April.
- B&EG: revenue up 10.8%, with a record month for new business broadband connections in October. Management said average contract value from new customers was 38% higher than H1 FY2025 and pointed to its “largest ever E&G deal” with Bakers Delight, alongside wins including Korr and the John Laing Group. The team reduced average project delivery time by 15 days. Gross margin percentage was described as marginally lower due to repricing ahead of Accelerate Great and changes in broadband speed mix.
- Wholesale: revenue up 12.5%, with management citing strong growth in data and mobile. Mobile SIOs grew 12.7% in the half, and broadband connections increased 90.5% year-over-year (including 17,000 Symbio connection migrations in June last year). Gross margin was affected by product mix as data and mobile outpaced voice and due to growth in lower-margin international swaps trading.
Strategic moves: migrations, acquisitions, and divestments
Maher emphasized the company’s enhanced Nitrogen platform, describing it as completed and ready for scaled migrations. He said the next step is moving about 290,000 More and Tangerine connections onto the Aussie Broadband network, which he described as the largest NBN connections migration to date and expected to provide a “material lift” to earnings from FY2027.
In additional detail, Maher said the More/Tangerine migration is entering a pilot phase, with some customers from new sales starting to come onto the Aussie network. Once the migration is completed, management expects these connections to provide AUD 12 million in annualized EBITDA and be accretive to underlying EPS on a pro forma basis. The company reiterated that the net impact of the agreement was expected to be immaterial in FY2026, with a positive contribution anticipated in H2 to offset H1 impacts including one-off capacity investments.
The company also discussed several transactions announced over the prior six months:
- AGL Telco acquisition and partnership: Management said the agreement adds 350,000 broadband and mobile services and 46,000 voice services, alongside a long-term exclusive partnership where AGL promotes branded telco products to its energy customer base through bundles. Management said the deal should deliver about AUD 235 million in revenue and AUD 21 million in underlying EBITDA in the first 12 months post-migration and be EPS accretive in the first year. Aussie Broadband agreed to pay AUD 115 million in equity, expected to result in around 22 million shares issued in June 2026, plus AUD 10 million in additional shares issued in tranches subject to growth hurdles. The migration is expected to be finalized by Q2 FY2027.
- Nexgen acquisition: The company entered a binding agreement to acquire 100% of Nexgen, a provider of business communication solutions. Management said Nexgen adds 6,000 SME NBN connections, includes an “agentic AI feature” targeted at SMEs, and is expected to contribute AUD 2.7 million of EBITDA in FY2026 and AUD 8.1 million on an annual basis. Expected annual cost synergies were given as AUD 2 million to AUD 4 million within two years. Purchase consideration was AUD 44.1 million plus up to AUD 5.9 million subject to EBITDA targets in FY2026 or FY2027.
- buddii sale: Management said final cash consideration depends on customers transferred to Tangerine and adjustments, with customers at about 16,000 as of Feb. 20. The company expects consideration of AUD 6 million to AUD 7 million, with migration expected to begin in mid-March.
- Digital Sense Hosting divestment: The company agreed to sell its cloud business to 11:11 Systems for AUD 18 million (AUD 14 million upfront and AUD 4 million deferred). Management expects a negative EBITDA impact of about AUD 2 million in FY2026 and recorded a AUD 14.8 million non-cash goodwill impairment. Management cited industry changes following Broadcom’s VMware acquisition, saying the outlook for smaller-scale cloud players had deteriorated. Completion is anticipated in March 2026.
On capital allocation, management said it refined its Aussie Fibre strategy to focus future investment “almost exclusively” on less capital-intensive on-net (and later “near net”) buildings, while redirecting capacity to accelerate replatforming work across core OSS/BSS systems. Maher said the company anticipates AUD 30 million of OSS/BSS investment from FY2026 to FY2029, within the existing CapEx envelope, and estimates a 30% reduction in maintenance CapEx over four years.
Updated ambitions and FY2026 outlook
Maher said the company upgraded its “Look to 28” ambitions, including increasing its revenue ambition from AUD 1.6 billion to AUD 2 billion and targeting an underlying EBITDA margin of greater than 13.5% (from 12.5%). He also outlined a goal to grow NBN market share to more than 17%, or around 1.5 million connections, and to deliver shareholder returns measured as EPS CAGR of at least 30%, while emphasizing these are ambitions rather than guidance.
For FY2026, management revised EBITDA expectations toward the upper end of its prior range, stating it now expects to land in the upper end of AUD 162 million to AUD 167 million (17% to 21% annual growth). CapEx guidance remained unchanged at AUD 55 million to AUD 60 million. Maher also cited 12,000 net new connections in the quarter to date as part of the trading update.
During Q&A, executives pointed to momentum in connections, better-than-expected margin retention after uncertainty around Accelerate Great, and continued productivity initiatives as key drivers behind the outlook. Management also discussed promotional activity and said it has been running a January-February promotion strategy for three years, aiming to shape demand across key retail periods.
About Aussie Broadband (ASX:ABB)
Aussie Broadband Limited provides telecommunications services to residential and businesses in Australia. It operates in four segments: Residential, Business, Wholesale, and Enterprise & Government. The company offers g fixed broadband, telephony, mobile, and other value add services; and connectivity, voice, managed network, security, cloud, and support services. It also provides a range of other telecommunications services, including voice over internet protocol (VoIP), mobile plans and headsets, and entertainment bundles to residential, small business, and enterprise customers.
