Aussie Broadband share price whipsaws as company denies rumours

Aussie Broadband shares are having a wild month indeed.

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It's been a wild and woolly month for the Aussie Broadband Ltd (ASX: ABB) share price. Over the past four weeks, this ASX All Ords telco has traded as high as $4.80 a share and as low as $3.41.

The company began March on a high after the earnings report Aussie Broadband delivered in February got rave reviews from investors. Those same investors were also evidently feeling upbeat about the freshly announced plans for Aussie Broadband to purchase its telco rival Superloop Ltd (ASX: SLC).

However, investors were subsequently given a cold shower this month. On 14 March, it was revealed that Aussie Broadband had its white label agreement to provide telco services to Origin Energy Ltd (ASX: ORG) customers terminated, effective 12 April. Origin will be instead using none other than Superloop for its telco offerings from that date.

When this announcement was released, it saw Superloop shares gain 34%. But Aussie Broadband saw its shares slump 25%.

This complicates Aussie Broadband's Superloop takeover offer. That's because investors were initially offered 0.21 Ausse Broadband shares for every Superloop share owned in an all-scrip deal.

Trouble for the Aussie Broadband share price

But even more trouble was brewing for Aussie Broadband. At the time of the offer, Aussie Broadband had amassed a 19.9% stake in Superloop. However, on Monday, Superloop threatened legal action against Aussie Broadband if it didn't reduce this stake to a maximum of 12%, citing its corporate constitution.

Aussie Broadband will be appealing this order at the Federal Court.

But that's not where the drama ends for Aussie Broadband. Today, the company has released another announcement, this time responding to "market speculation".

Here's some of what that said:

Aussie Broadband… has become aware of market speculation and questions raised directly with us, that, at the time ABB purchased a 19.9% stake in Superloop Limited on 26 February 2024, it was aware that it had lost, or would shortly lose, its White Label Agreement… with Origin Energy…

ABB categorically denies this speculation. As ABB stated in its previous announcement on 14 March 2024 relating to the termination of the Agreement, the notice received from Origin was unexpected.

In fact, ABB was engaged in negotiations with Origin towards the renewal of the Agreement right up to the time the termination notice was received by ABB.

How are investors responding?

Investors initially appeared unsure of how to respond to this news today. The Aussie Broadband share price bounced between $3.66 and $3.79 a share in early trading this morning. At present, the market seems to have settled on a positive outlook, with Aussie Broadband shares currently up 0.27% at $3.71 each.

That puts the All Ords telco down 2.3% over the past month and down 3.24% in 2024 to date. The company is also down more than 19% since 5 March.

Motley Fool contributor Sebastian Bowen has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has positions in and has recommended Aussie Broadband. The Motley Fool Australia has recommended Aussie Broadband. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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