A new report from Macquarie explores whether there is still opportunity for Superloop Ltd (ASX: SLC) and Aussie Broadband Ltd (ASX: ABB) shares.
These two telecommunication companies have risen significantly in the past year, increasing 102% and 41% respectively.
According to the broker, investors have been concerned with two main factors:
- Will there be more industry consolidation—specifically, could Aussie Broadband (ABB) and Superloop (SLC) merge again?
- Are these stocks now too expensive, especially since both mainly re-sell internet services rather than owning all their own infrastructure?
Here's what the broker had to say.
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Long term growth potential
According to the broker, some investors think Aussie Broadband and Superloop look expensive based on short-term earnings.
However, Macquarie believes this view doesn't reflect their strong long-term growth potential – especially for Superloop.
They suggest looking ahead to 2028, when both companies should be more mature and earning more steadily.
For example, Aussie Broadband will benefit from growth in its Buddy and Symbio businesses, while Superloop will gain from a bigger contract with Origin and earnings from its Smart Communities segment.
Since Superloop is only expected to turn a profit in 2026, Macquarie recommends comparing it using a different metric (EV/EBITDA), which better reflects its value.
A lower EV/EBITDA can indicate a cheaper or undervalued company (if all else is equal), while a higher ratio might suggest it's more expensive.
On this basis, Aussie Broadband is attractively priced according to Macquarie – similar to bigger players like Telstra and TPG – but with stronger growth potential through 2030.
Beyond FY26E, the strong earnings growth for both companies will continue to compress their earnings multiples over FY27E & FY28E. We believe most investors are viewing FY28E as the year when ABB's & SLC's businesses reach appropriate levels of maturity, given ABB's FY27 (Buddy) & FY28 strategic ambitions, and SLC's Origin & Smart Communities contracts being expected to mature over the next 3-years.
Impending M&A?
In 2024, Aussie Broadband tried to buy Superloop with a $470 million offer, but the deal didn't go through.
Since both companies have strong financial positions (Aussie Broadband has low debt, Superloop has cash), and there's a history of mergers in the telco sector, more takeover attempts are possible in 2025.
While the previous deal faced some regulatory issues, Macquarie thinks future mergers are less likely to be blocked.
A combined Aussie Broadband and Superloop would still face strong competition from bigger telcos, which could actually improve market balance.
Also, past legal concerns (like Superloop's Singapore licence) seem less of a problem now. Aussie Broadband doesn't operate in Singapore, and it has since received regulatory approval there—so another merger attempt would likely face fewer obstacles.
While regulatory hurdles prevented ABB's takeover of SLC last year, we see lower risk of this is reoccurring.
Essentially, a combined Aussie Broadband and Superloop would still face strong competition from big players like Telstra and TPG, so consolidation could actually increase market competitiveness.
Target price and upside for Aussie Broadband and Superloop shares
In addition to the report, the broker provided target prices for these two ASX telecommunications companies.
It seems Macquarie thinks these market beaters can continue to rise.
At the time of writing, Aussie Broadband shares are trading at $4.14 each.
Macquarie has a price target of $5.05 on Aussie Broadband shares.
This indicates an upside of 21.98%.
Meanwhile Superloop Ltd shares are trading at $2.95 each, with a target price of $3.30.
This suggests an upside of 11.86%.
