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 major new channel for growth and expanding presence in the MVNO mobile segment.

• Multiple acquisition channels now include energy and banking 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.

• Up to AUD 10 million in additional shares may be issued to AGL as growth incentives, contingent on net connection growth.

• The acquisition multiple is approximately 5.5x estimated underlying EBITDA for the first 12 months post-migration (AUD 21 million EBITDA on AUD 235 million revenue).

• Shares issued represent about 7.5% of current capital, making AGL a substantial shareholder.

Synergies and expected cost savings

• Integration of connections onto the upgraded network is expected to improve unit cost metrics over time, leveraging existing capacity and driving economies of scale.

• Productivity gains anticipated from bringing customer service under the existing platform, reducing inbound calls, and expanding self-service and digital channels.

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

• EBITDA margins for AGL Telco expected to meet or exceed 12.5% strategic plan target.

• No revenue-sharing; all customer economics accrue to the acquirer, with routine promotional discounts funded as part of the agreement.