The Aussie Broadband Ltd (ASX: ABB) share price is flying today as the company announced strong half-year results for FY21. Shares in the telecom company are currently trading 8.66% higher, at a price of $2.76.
Established in 2008, Aussie Broadband is an Australian owned and operated telecommunications company based in Victoria. It currently has a market capitalisation of $523 million.
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What's driving the Aussie Broadband share price?
For the half-year ending 31 December 2020, the small-cap Aussie telecom provider saw its revenue increase 89% to $157.4 million. Handily outpacing its prospectus forecasts of an 84.1% increase.
Thanks to the strong increase in revenue, earnings before interest, tax, depreciation and amortisation (EBITDA) also grew strongly to $7.3 million. This is an increase of 87% on the prior corresponding period and again, ahead of forecasts.
What's more, this number comes in at $8.4 million when IPO expenses are deducted. EBITDA was driven by customer growth, lower marketing expenses, NBN extending customers COVID-19 credits and promotional rebates.
Marketing expenses for the period were $9.7 million, 16% lower than forecast. This was largely a result of the pandemic affecting supply chains. Nonetheless, despite the lower marketing expenses, Aussie Broadband said it exceeded its customer connection targets for the period.
Moreover, the company increased its broadband connections by 31% from June 2020. It had provided 342,634 connections on the NBN and OptiComm networks at the end of the period. As such, Aussie Broadband's market share increased to 4.2%, compared to 2.85% last term.
Management comments
Commenting on the results, Aussie Broadband managing director Philip Britt said:
In a year with significant disruption to the community and many people and businesses doing it very tough, our team has managed to significantly grow our market share, maintain network performance and further improve our already great customer experience …all during the peak of a pandemic and whilst listing the company on the ASX.
We have continued to build out critical infrastructure for our network that will shape the quality of our service for years to come, and invested heavily in our Australian team and technology capability, including internal software enhancements and network automation.
What now
With the high degree of uncertainty continuing to exist around the marketplace, Aussie broadband noted there was potential for guidance to change.
Nevertheless, Aussie Broadband estimates that revenue for FY21 will be between $345 to $355 million. Well above the $338 million estimated in the company's prospectus report. Residential broadband is also expected to continue its strong run with the company estimating to have between 380,000-410,000 connections at the end of the financial year.
