A major contract win with Bakers Delight will help Aussie Broadband Ltd (ASX: ABB) cook up another solid result this year, with the telco expecting underlying earnings to improve by potentially more than a fifth over last year's result.
In his address to the company's annual general meeting on Tuesday, Chief Executive Officer Brian Maher announced that Aussie Broadband had won its largest ever enterprise contract, servicing Bakers Delight across its domestic and international network for the next five years.
That contract win, plus the expectation of solid results in other parts of the business, will help Aussie Broadband build on last year's 14.7% growth in underlying EBITDA to $138.2 million, Mr Maher said.
FY26 is set to be another year of growth for Aussie Broadband and we anticipate growth of between 14 and 21% in underlying EBITDA to a range of $157 to $167 million.
Image source: Getty Images
NBN upgrades leading to growth
Mr Maher said the company had an initially soft start to the financial year in the lead-up to speed upgrades, which were implemented by the National Broadband Network (NBN).
However, once these were in place, business had picked up, with Aussie Broadband posting net growth in subscriber numbers of 22,600 to date.
The period up to the speed upgrades was relatively soft for Aussie Broadband as other retail service providers pre-launched the 500 products and the price change impacts. However since 14 September there has been a marked step change in activity with net growth accelerating significantly and our share of NBN orders for both residential and small business at their highest point in the last 12 months.
Mr Maher said the company remained positive about its growth prospects in the enterprise and government sectors, "with strong delivery and sales pipeline set to drive further growth in FY26 and beyond''.
As well as the Bakers Delight contract, Aussie Broadband also recently signed Accor Hotels as a customer.
The company, as previously announced, had also signed an exclusive six-year agreement to supply services to More Telecom and Tangerine Telecom, which was expected to contribute $12 million in EBITDA from FY27.
Mr Maher added:
In Wholesale we are very excited about our new partnership with More and Tangerine and believe we are well positioned for further growth within the segment across both Voice and Data.
Mr Maher said residential connections remained the "engine room" of the company, accounting for 57% of revenue and 50% of gross profit.
The company's share of the fixed NBN market grew 1.1% in FY25 to 8.4% and was now estimated to be 8.6%, up from 4% when the company listed on the ASX in 2020.
Aussie Broadband shares were 4.8% lower in early trade at $5.50.
Macquarie has an outperform rating on Aussie Broadband shares and a price target of $6.35 on the business, with this target set before Tuesday's market update.
