Aussie Broadband (ABB) M&A announcement summary

Deal rationale and strategic fit

• Acquisition of AGL Telco and associated customer assets, including AGL and Southern Phone brands, adds 350,000 broadband and mobile connections plus 46,000 voice services, aligning with the Lofty28 strategy for significant growth in residential connectivity.

• The deal provides access to AGL's 4.5 million customer base, offering a new growth channel and expanding presence in the MVNO mobile segment.

• Multi-channel approach now includes energy, banking, and real estate partnerships, diversifying market reach and reducing reliance on direct NBN channels.

• Long-term exclusive partnership leverages network infrastructure and customer service with AGL's brand and customer base.

• Expected to become the third largest NBN provider with over 1.25 million broadband connections post-migration.

Financial terms and conditions

• Consideration is AUD 115 million in equity (22 million shares, ~7.5% of issued capital), with shares subject to standstill and disposal restrictions.

• AGL may receive up to AUD 10 million in additional shares, contingent on net connection growth milestones.

• Transaction expected to deliver AUD 235 million in revenue and AUD 21 million underlying EBITDA in the first year post-migration, with an acquisition multiple of approximately 5.5x estimated underlying EBITDA.

• Excludes one-off transaction, migration, and service establishment costs, as well as contract incentive amortization.

• Shares issued make AGL a substantial shareholder.

Synergies and expected cost savings

• Network upgrades underway to accommodate new connections, with anticipated improvement in unit cost metrics as capacity is utilized.

• Productivity gains expected from integrating customer service operations, leveraging omnichannel solutions, and deploying self-service and AI tools.

• Scale benefits and efficiency gains from network synergies anticipated to drive significant earnings upside.

• Economies of scale and efficiency initiatives projected to support margin improvement from current low levels toward a 12.5% EBITDA margin target.