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Thursday witnessed significant movements in the telecommunications industry, with contrasting fortunes for Superloop Ltd (ASX: SLC) and Aussie Broadband Ltd (ASX: ABB) shares. The direction of these stocks seemed to hinge on developments involving Origin Energy Ltd (ASX: ORG), the catalyst behind the dramatic shifts in market sentiment.
Share performance of ABB
The Aussie Broadband share price plummeted by 18.01% to AU$3.55, reflecting the termination of the white label wholesale agreement with Origin Energy, effective April 12, 2024. Despite estimating a contribution of AU$14 million to EBITDA in FY 2024 from the agreement, Aussie Broadband faces a significant earnings dent due to its premature conclusion. Discussions for a new deal were underway, but the proposed terms would have resulted in diminished future earnings, according to management.
Share performance of SLC
Conversely, Superloop shares surged by 24.76% to AU$1.31 following news of a wholesale agreement with Origin Energy. The exclusive six-year contract entails the migration of Origin's broadband customer accounts, numbering 130,000 and expanding, onto Superloop's network. Expected to be completed during FY 2025, the transition promises to augment Superloop's annualized EBITDA by over AU$19 million upon full integration of Origin's subscriber base, with further growth potential fueled by Origin's rapidly expanding broadband customer portfolio.
As part of the agreement, Superloop is issuing Origin a substantial number of shares, including an initial issuance of 9,847,690 shares upon signing. An additional tranche of 9,847,690 shares will be issued upon the completion of customer migration, with the potential for up to AU$30 million worth of Superloop shares contingent upon achieving further customer growth milestones. Additionally, Superloop has granted 55,672,002 options to Origin.
Commenting on the deal, Superloop CEO Paul Tyler emphasized its significance in advancing the company's growth strategy, characterizing it as a transformative step that solidifies Superloop's position as a leading wholesale broadband and backhaul provider. The issuance of shares to Origin, coupled with the option to acquire additional shares, underscores Superloop's commitment to fostering alignment and pursuing growth in broadband customers.
In a separate development, Superloop has revised its EBITDA guidance for FY 2024 to AU$51 million to AU$53 million, up from the previously projected range of AU$49 million to AU$53 million. This upward revision reflects the company's optimistic outlook and underscores its confidence in achieving robust financial performance amidst evolving market dynamics.
