Aussie Broadband Limited (ASX:ABB) forges strategic swap partnership with VicTrack

Highlights

  • Aussie Broadband Limited has announced a ten-year deal with Victorian Rail Track Pty Ltd to swap access to their respective fibre networks.
  • The initial term of the agreement is ten years.
  • The Australian telecommunication carrier will finance the cost of the initial Victrack POI connections, pegged at around AU$1.4 million.

On Monday, ASX-listed Australian telecommunication carrier Aussie Broadband Limited (ASX:ABB) struck a ten-year deal (including two ten-year options) with VicTrack (Victorian Rail Track Pty Ltd) to swap access to their respective fibre networks.

Through this agreement, VicTrack will offer access to its fibre network across Victoria.

Relevance of the swap:

The swap will significantly increase the penetration of Aussie Broadband’s fibre network, especially into regional Victoria. This in turn will help the rollout of Aussie Broadband’s own business fibre services into regional areas such as: Pakenham, Traralgon, Warragul, Geelong, Morwell, Bendigo, Ballarat, and Warrnambool at speeds of up to 100G.

Post this swap deal, the metro coverage of Aussie Broadband’s Victorian fibre network will not only increase but will also provide extra redundancy and protection options sans any need to construct more backbone links. This will permit capex initially planned for Victoria to be utilised to expand the network in other states.

The Australian telecommunication carrier will finance the cost involved in the original Victrack POI connections approximated to be AU$1.4 million.

In its initial assessment with respect to operating lease, the Aussie Broadband has maintained that the impact on after-tax earnings will be immaterial, but EBITDA will be improved by the impact of the operating lease income.

Commenting on this development, Managing Director Phillip Britt said:

Bottomline

The swap agreement is a win-win situation for not only VicTrack and Aussie Broadband Limited, but also for the customers. Post this deal, consumers can have access to high speed and uninterrupted internet connections.

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