Aussie Broadband (ASX:ABB) CEO Brian Maher told investors the company has signed an agreement with AGL to acquire AGL Telco and associated customer assets, alongside an “exclusive long-term partnership” under which AGL will continue to market AGL-branded telecommunications services.
Maher said the deal is intended to accelerate execution of the company’s “Lofty28” strategy by delivering a “material uplift in owned customer connections” and adding another growth channel in residential connectivity through AGL’s energy customer base. He emphasized the company would not be discussing its first-half FY26 results during the call, noting those results are due on February 23.
Transaction scope and connection uplift
Under the partnership, AGL will continue to market and promote AGL-branded telco services to its 4.5 million existing customers and the wider market. After the migration, which is expected to occur in the first half of FY27, Aussie Broadband will manage service provision and the customer experience, while AGL continues sales and marketing through its channels.
Financial expectations and margin targets
Management said it expects the migrated connections and voice services to generate approximately AUD 235 million in revenue and “at least AUD 21 million in annualized underlying EBITDA” in the 12 months post-migration, which Maher said is expected to be EPS accretive. He said the EBITDA figure excludes one-off costs related to the transaction, migration and service establishment, as well as any contract incentive amortization.
Over the medium term, Aussie Broadband expects the AGL Telco business to exceed 500,000 connections, with management targeting an EBITDA margin consistent with its Lofty28 target of at least 12.5%. In response to investor questions, management described levers to improve margins over time, including gradually lifting gross margin while balancing churn and partner considerations, growing into network capacity, and productivity initiatives in customer service. Group Executive Residential Jonathan Prosser said bringing AGL customers into Aussie Broadband’s customer service environment and digital tools (including live chat and app self-service) should improve efficiency. He also said the company is “actively experimenting” with AI tooling to support call deflection and agent capability, though he noted deployment is not yet at scale.
Consideration: equity issuance and growth incentives
In consideration for the acquisition, Maher said Aussie Broadband will issue AUD 115 million in equity to AGL, expected to occur in June 2026. He said this equates to 22 million fully paid ordinary shares based on the 90-day volume-weighted average price to February 9, 2026. Those shares will be subject to standstill and disposal restrictions and controlled transaction voting restrictions, and represent about 7.5% of the company’s current issued capital.
Using the estimated underlying EBITDA of AUD 21 million for the first 12 months post-migration, Maher said Aussie Broadband is acquiring AGL Telco at a multiple of about 5.5x, excluding any value attributed to the long-term exclusive partnership with AGL. Maher also said AGL will be eligible to receive up to a further AUD 10 million in ordinary shares in tranches of 2 million each, contingent on meeting net connection growth milestones over time, with each tranche issued at the prevailing 90-day VWAP.
Operational considerations: network migration and pricing control
Maher said the acquired connections will be brought onto Aussie Broadband’s network and that the company has been upgrading network capacity, initially in anticipation of the Moore/Tangerine onboarding and also with “one eye” on the AGL agreement. He said the network upgrade is about halfway complete and is expected to finish in the second half of the year, providing “plenty of capacity for growth over the next few years.” He described network unit economics as having a “sawtooth effect,” with unit costs highest when capacity is added and improving as the company grows into that capacity.
On pricing and promotions, Maher said Aussie Broadband will have “complete control” over pricing and bundle discounts, with an obligation to maintain a non-trivial bundle discount. Prosser said the AGL offer will need to be priced lower post-bundle than Aussie Broadband’s main brand, and that the company expects an initial period of learning as it seeks to compete without further “value dilution” in the broader market.
Maher said Aussie Broadband will pay customer acquisition fees to AGL for new sales and fund routine promotional activity, with acquisition costs expected to be comparable to the company’s recent experience. He also said there is no revenue-sharing arrangement and that Aussie Broadband “owns all the economics of the customer.”
Scale ambitions across NBN and mobile
Maher said that with AGL Telco NBN connections and the Moore/Tangerine connections migrating onto the Aussie network in coming months, the company expects to exceed 1.25 million NBN connections by the end of the calendar year, which he said would make Aussie Broadband the third-largest NBN service provider in Australia based on the most recent quarterly ACCC reports.
He also said the transaction expands the company’s presence in the MVNO mobile segment. Adding more than 140,000 mobile connections from AGL is expected to bring Aussie Broadband’s mobile connections to “almost 400,000” across all three segments.
During Q&A, Maher said the AGL customer base skews more toward lower-speed NBN plans (25/50) compared with Aussie Broadband’s main brand, which he said is more represented in higher-speed tiers. Management also noted churn in the AGL book has historically been higher than Aussie Broadband’s, though Maher said AGL has brought churn down over time and both parties are hopeful it can be reduced further post-migration.
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.
