Aussie Broadband (ASX:ABB) share price rallies 4% on bumper earnings

The Aussie Broadband share price has tripled since listing on the ASX in October last year.

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The Aussie Broadband Ltd (ASX: ABB) share price opened higher Monday after the company released its FY21 results.

The Aussie share price shot up to $3.84 at market open on Monday.

Aussie Broadband share price higher on FY21 results

Focus on growth

The Aussie Broadband share price has more than tripled from its IPO listing price of $1. The business is focused on growing its share in a market highly concentrated towards four main companies. Those four are the Telstra Corporation Ltd (ASX: TLS), TPG Telecom Ltd (ASX: TPG), Vocus Group Ltd (ASX: VOC) and Optus.

Aussie Broadband achieved well-rounded growth underpinned by its increased market share in several segments. Those segments include residential and business NBN connections, strategic product and services expansion, and key contracts to further enable growth.

What happened to Aussie Broadband in FY21?

Residential NBN broadband connections increased 50% in FY21 to 363,350 connections. Aussie Broadband flagged that NBN connections were impacted in the second half as a result of increased competition. This was generated by NBN's Focus on Fast campaign, its significant appointment system, staffing issues and its stop-sell on HFC connections due to equipment shortages. The company advised that most of these issues should resolve by early FY22.

A new partnership with Optus enabled the company to revamp its mobile offering to residential customers. There was a higher than expected take-up in the first two months of the offering (towards the end of FY21). This translated to a 20% increase in active services over the previous quarter.

Business telecommunications was a key focus for the Aussie Broadband business during FY21. The company took several measures such as putting in place the right people and skills, quality products and services, and a strong emphasis on automation. As a result, the segment achieved a 90% increase in connections to 37,498.

Aussie Broadband continued building its fibre network in FY21, completing 250 km of fibre in the ground and connections to 25 Point of Interconnect (POIs) and data centres at 30 June 2021. The company said that it will complete its fibre build this financial year. This should result in more than $15 million per year saving in backhaul charges from FY23 onwards.

Management commentary

Aussie Broadband Managing Director Phillip Britt commented on the results:

With our record of strong financial and operational achievements over the past financial year, we believe Aussie Broadband is positioned well for growth in FY22.

We will continue our marketing and sales focus on organic growth of our residential and business/ enterprise segments, as well as exploring new channels for growth… continue to review merger and acquisition opportunities that are aligned with our strategy and culture and would deliver value for our shareholders.

We anticipate that our fibre network will start to show financial benefits not only through offloading existing leased infrastructure, but also through the opportunity to directly connect customers to our own network.

What's next for Aussie Broadband?

Aussie Broadband said its business experienced record broadband and mobile sales in July. It is expecting a new record month for August.

The company was unable to provide guidance for FY22 due to the volatile nature of the retail telecommunications market and ongoing lockdowns.

The Aussie Broadband share price is currently 2.71% higher to $3.79. This is within arms reach of its 12 August all-time high of $3.97.

Motley Fool contributor Kerry Sun owns shares of Aussie Broadband Limited. The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns shares of and has recommended Aussie Broadband Limited. The Motley Fool Australia owns shares of and has recommended Telstra Corporation Limited. The Motley Fool Australia has recommended Aussie Broadband Limited and TPG Telecom Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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