ABB - Aussie Broadband

[Dona Ferentes]

ABB has raised $20 million through a heavily oversubscribed Share Purchase Plan (SPP).


As announced to ASX on 8 September 2021, the company offered each eligible shareholder the opportunity to participate in the SPP offer to raise $10 million.

The details of the SPP were distributed to eligible shareholders on 15 September 2021 and closed on 01 October 2021. As set out in the SPP Booklet, the company reserved the right to accept oversubscriptions and as a consequence of the high demand it has been decided to accept a total of approximately $20 million.

Even at this higher level a significant scale back is required. In implementing the scale back the company has applied the general principle that scale back will be undertaken on a pro rata basis, subject to a minimum allocation of $500 worth of shares (for eligible applications) and having regard to participant’s applications under the SPP.

Shareholders that applied for an ineligible parcel of shares were rounded down to the nearest eligible parcel, as outlined in the original offer, and the pro rata was applied to the eligible parcel of shares.

....if applied for $30k, received only $5,400

 

[Dona Ferentes]

and more acquisitions in the works

Aussie Broadband Limited (ASX:ABB) notes the recent article in The Australian newspaper and confirms that it has commenced a period of exclusive discussions with Over the Wire Holdings Limited (ASX:OTW) regarding a possible combination of the two entities. The discussions are preliminary and incomplete, and no agreement has been reached in relation to any transaction. There is no guarantee that any agreement will be reached or that a transaction will eventuate.

.... market has pushed ABB higher; OTW in a trading halt

 

[Dona Ferentes]

Livewire readers love small caps. That said, your most-tipped smalls for 2021 took quite the tumble. These reader favourites fell 14% in a year when the benchmark, the S&P/ASX Small Ordinaries, lifted 12.75%...

... we surveyed thousands of Livewire readers in December to see how you are thinking about markets in 2022. So in this episode, we'll be taking a look at one of the interesting findings from that survey. Of course, it wouldn't be Buy Hold Sell without us asking our pros to analyse some of your favourite stocks. In this case, it's your top-tipped small caps 2022....

Ally Selby ( Livewire Markets ) : Let's move on to Aussie Broadband now. It listed in October 2020 and it's performed exceptionally well since then. Josh, staying on you, is it a buy, hold or sell?

Josh Clark ( QVG Capital ) (BUY) : I think Aussie Broadband is a buy. It's an internet service provider, as most people would know. It's an incredibly competitive industry - I think there's something like 100 providers. But despite that, they've been able to differentiate themselves, essentially through operational excellence and catch some of their competitors napping, which has been really impressive and speaks to the motivation and quality of the team.

There's a lot of earnings coming through in the next two years that justifies the current valuation. And then I think you've also got a longer-term journey where they're transitioning it to higher quality business, bringing higher value business and SME customers into the mix that are also a lower churn. And also owning some physical infrastructure at high rates of return on that capital.

Ally Selby: Late last year it acquired Over the Wire for $390 million. How's that set to transform this telecom player? John, over to you, is it a buy, hold or sell?

John Deniz ( Paragon Funds Mgmt. ) (HOLD): It's a hold for us, Ally. The recent Over the Wire acquisition was sizeable. And so we'd like to see the two businesses successfully integrated. We basically want to see the synergies realised and, keeping it simple, we want to see one plus one equals three. So until then, it's a hold for us.

 

[Dona Ferentes]

Over The Wire acquisition
On 2 December 2021, ABB announced that it had entered a Scheme Implementation Deed with Over the Wire Holdings Limited (ASX: OTW) under which it is proposed that ABB will acquire 100% of the share capital in OTW. The scheme booklet has been lodged with and approved by ASIC, authorised by the Federal Court and has been despatched to OTW shareholders. The Scheme meeting is scheduled to be held on 24 February 2022 and the Scheme is expected to be implemented following Federal Court approval in March 2022.

Quarterly highlights:

• 2Q overall broadband connections increased 11% and business broadband connections increased 13% on the previous quarter.
• 2Q mobile services increased 9% from the previous quarter, 29,560 to 32,207 services.
• 2Q FY22 revenue grew 11% quarter on quarter (QoQ)
• Wholesale and white label services increased by 188% including 8,725 white label migrations.
• QoQ NBN CVC charges decreased by 45% over the previous quarter due to easing of lockdowns, and careful CVC management.

Half year result & full year guidance:

• Based on preliminary, unaudited management accounts the company expects half year EBITDA to be approximately $9.1m excluding transaction costs associated with the Over the Wire (ASX:OTW) acquisition.
• Full year EBITDA guidance of $27m to $30m (excluding transaction costs and contribution from OTW).

 

[Ann]

​

@Dona Ferentes, just for your interest my daughter currently lives in a fairly remote and mountainous area in Victoria. She was having problems getting broadband connected. She sent a complaint form to ABB and they responded immediately saying they would respond within two working days and provided her with the contact name, email and mobile number of the person who was going to be responding to her query. She was thoroughly impressed with their service and response. If this is how they look after their customers I can see people being very happy with them.

 

[Ann]

Just dropping a chart off for ABB from my trading journal https://www.aussiestockforums.com/threads/kiss-with-ann.36706/

 

[Dona Ferentes]

Home internet business Aussie Broadband has forecast between 580,000 and 590,000 active broadband connections by June 30, 2022. It said it expected to make net customer additions between 85,000 and 95,000 over the six months .

Adjusted EBITDA is forecast to finish between $27 million and $30 million over H2 FY 2022.

.......... holding around $5.35

 

[Dona Ferentes]

Aussie Broadband expects total active broadband connections at 30 June 2022 to be in the range of 580,000 to 585,000, and full-year EBITDA (before transaction costs and excluding any contribution from Over the Wire) to be in the range of $27 million to $28 million.

• Overall broadband services increased by 11 per cent in the third quarter,
• Business broadband services rising 10 per cent on the previous quarter.
• Wholesale and white label services increased by 91 per cent, from 27,286 to 52,125 services, which included remaining white label migrations.
• Mobile services increased 9 per cent on the previous quarter, from 32,207 to 34,985 services.

 

[bk1]

And currently being belted by the market to the tune of 20%.

"Call centre wait times increased during late February and March due to increased call volume as a result of white label migration work, some network outages generating large call volume and challenges in recruiting additional call centre staff. This has resulted in increased churn late in the quarter."

 

[peter2]

The announced downgrades in guidance were minor. Can't believe it was this that has panicked the sellers to dump ABB -25%.
There's got to be a more serious issue to be revealed.

Edit: I stopped buying falling knives.

 

[divs4ever]

i would be GUESSING new regulatory changes ( OR TLS actually buying the NBN )

i squeaked out a small profit ( not counting divs ) when exiting TLS , i hold TPG ( 'free-carried' ) and hold TUA and SPK and exited CNU after a very nice run

maybe i am biased but telcos operating outside Australia are doing better for me ( after David Teoh left the TPM/TPG board )

maybe ABB and SWP can gain a lot of market share in the future , but i am not rushing to tip in the cash , for skin in the game ( i want to watch both of them longer )

in my opinion the Federal Government sees spectrum auctions as the treasure chest that keeps on giving

 

[Miner]

The announced downgrades in guidance were minor. Can't believe it was this that has panicked the sellers to dump ABB -25%.
There's got to be a more serious issue to be revealed.

Edit: I stopped buying falling knives.

I was posting on ABB fall but stopped so reading your posting and falling knife warning.
Thanks

 

[Ann]

There's got to be a more serious issue to be revealed.

I think you may be right Peter, my chart kept telling me this thing is going down, nothing happened for ages and I thought volume spikes were misleading me, clearly not, it just took time for them to activate. Glad I sold this on the power of the VS.

As I am still in the early process of learning about volume spikes, normally I would put a green arrow up on yesterday's volume spike but I am thinking a falling knife situation may negate the up value of a volume spike at the bottom level. It will be interesting to watch.

Edit. I always avoid a falling knife, if I lose a bit of upside from not buying, so be it, there is plenty more to choose from which is likely to make me money with less risk.

 

[over9k]

I'm actually really bullish on this company long term. Tempted to buy today. Hmm.

 

[Miner]

I'm actually really bullish on this company long term. Tempted to buy today. Hmm.

Hmm. ABB rose 8.5% . Interesting but unable to comment on charting here.
Technically (business wise) ABB is a good stock in my opinion but i have listened to the falling knife incidences and most of the times, the recovery unlike this time, takes long time.
Generally today however the IT based stocks have gone up so far .
May be @peter2 , @Ann or someone who is researching and dealing with ABB directly may share their thoughts on the movement from yesterday to today.
DNH

 

[over9k]

There's a lot of stuff from their MD phil on whirlpool. All very encouraging.

 

[Ann]

May be @peter2 , @Ann or someone who is researching and dealing with ABB directly may share their thoughts on the movement from yesterday to today.

If a share falls so rapidly there can often be a bit of a rebound up again on the following day but I feel it is always wise to wait a few days or even a number of days to see what may become of it. If it was just merely a row of stop loss levels triggered and nothing more, I would expect it to recover reasonably quickly, but if there is a bigger problem then it may languish for a while or even fall further, I agree with @peter2 , I think there is more to this. For those who like a gamble, I say go for it, I am just not a gambler. At 1pm today it is only up 3% after a 28% fall, not encouraging IMO.

 

[Miner]

Could this between the lines published today's market update have triggered the falling knife ?

 

[Miner]

DIRECTORS BOUGHT AND SOLD -
Walking tip toe on water -

https://cdn-api.markitdigital.com/apiman-gateway/CommSec/commsec-node-api/1.0/event/document/1410-02518167-7GCI8A9TIRKLPSGATLEHACE2IF/pdf?access_token=0007v6ulbvuRGA3ioN2w3ATKhElj

https://cdn-api.markitdigital.com/apiman-gateway/CommSec/commsec-node-api/1.0/event/document/1410-02518171-0NC8AF0UESOHTRO462O367MOMJ/pdf?access_token=0007v6ulbvuRGA3ioN2w3ATKhElj

 

[Dona Ferentes]

Could this between the lines published today's market update have triggered the falling knife ?

and an Update today didn't assist, dropped 15% and took out any slight recovery.. .... basically from $6 to $3 in a couple of months.

Everything was up, up and away, beautiful numbers, growth hither and yon, and ....

Based on unaudited financials, the Aussie Broadband group (including the contribution from Over the Wire since acquisition) expects to generate EBITDA at the top end of the existing guidance range of $38 million to $39 million.

But,all is not happy. The 3rd quarter woes are explained away, with the number crunchers still doubtful:
“Total broadband services increased by 35,882 to 584,793 over the fourth quarter of FY22 up 7%. Comparing the progress over the full 12 months of FY22, total broadband services were up 46%. “We are pleased with this result given the third quarter challenges we faced, and have been very focused on addressing over the past three months. Pleasingly, TV marketing has recommenced at customer acquisition costs more reflective of historic levels, and our call centres are returning to their previous strong customer service levels in terms of wait times. “

And NBN pricing looms . Still.
The Minister for Communications had instructed NBN to withdraw its proposed Special Access Undertaking (SAU) lodged with the ACCC, calling for a reset of the process and a rethink of NBN’s pricing approach. As part of the request, the Minister instructed NBN to put in place interim pricing arrangements from 1 December 2022 when current industry agreements expire, and to have a final pricing structure in operation by 1 July 2023.
Aussie Broadband welcomes the Minister’s intervention, and looks forward to continuing working with NBN, the ACCC and other stakeholders to create a sustainable pricing structure that provides certainty to the industry and consumers, and removes volume-based charging like the CVC (Connectivity Virtual Circuit).