The analyst team at Jarden has reviewed the junior telcos listed on the ASX before they deliver their first-half results and has come up with a recommendation for which one they prefer in an increasingly competitive market.
Both Aussie Broadband Ltd (ASX: ABB) and Superloop Ltd (ASX: SLC) will face increasing competitive pressure from Telstra Group Ltd (ASX: TLS), the Jarden team says, with Telstra "unbundling modems and collapsing visible price premiums, though we see asymmetric risk/reward profiles between the two challengers''.
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Tough market conditions
The Jarden team said in their research note to clients this week that there has been a contraction in the telco market since the end of FY25, and this "reflects implicit negative earnings expectations that we believe create potential for significant volatility on result day''.
They went on to say:
We expect Superloop is better positioned to beat these lowered market expectations. Reflecting this view, we are downgrading Aussie Broadband to neutral from overweight with a reduced target price of $5.25 (from $5.80), while maintaining our buy rating on Superloop with an adjusted target price of $3.25 (from $3.40).
Should Superloop achieve that price target, it would be a 33.2% return from current levels.
Jarden has reduced its earnings per share expectations for Superloop by 10% for FY26, but says "this reflects the law of small numbers rather than fundamental deterioration''.
They went on to say:
We expect consumer gross margins to outperform expectations despite competitive intensity, with pricing discipline remaining intact.
In Superloop's wholesale business, Jarden said Origin Energy Ltd (ASX: ORG), which on-sells Superloop products under its own brand, materially increased promotional activity late in the first half, "positioning the company for stronger second half 2026 subscriber growth as marketing spend is deployed''.
The Jarden team said Superloop's Smart Communities business also remained underappreciated by the market.
Challenges ahead for Aussie
Should the Aussie Broadband share price hit the Jarden price target, it would constitute an 8.3% return from current levels.
The Jarden team said their main concern for this business going forward was residential growth challenges.
More broadly, we see mounting structural headwinds as larger base management effects combine with direct exposure to Telstra's entry into the BYO segment, likely limiting Aussie Broadband's growth runway. Additionally (now confirmed by Aussie broadband), Symbio faces significant margin pressure from ACCC mandated voice interconnection rate cuts that will see a 70% reduction from 86c/min to 26c/min, creating approximately $9m in EBITDA headwinds by FY29.
Symbio is a division of Aussie Broadband that specialises in hosting phone services for large businesses.
