Today, Superloop Ltd (ASX: SLC) announced that AGL Energy Ltd (ASX: AGL) plans to sell its telecommunications business. Superloop currently provides wholesale network services to Southern Phone Company, a subsidiary of AGL, under an agreement expiring in June 2029. The company flagged a potential annual gross margin impact of up to $4 million from the expected subscriber migration.
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What did Superloop report?
- AGL Energy intends to divest its telecommunications business.
- Superloop's wholesale agreement with Southern Phone (AGL subsidiary) expires June 2029.
- Subscriber migration from AGL's network anticipated in first half of FY27.
- Estimated potential gross margin impact of up to $4 million per year if agreement usage drops fully.
What else do investors need to know?
Superloop supplies network and backhaul transit services to Southern Phone, which has contributed to its wholesale segment revenues. The agreement with Southern Phone runs until mid-2029, but changing circumstances could see a material reduction in usage and income should the migration occur as foreshadowed.
Management estimates the total annual gross margin impact could reach $4 million, depending on the extent of AGL's migration from Superloop's infrastructure. There is no mention of a change to guidance at this stage.
What's next for Superloop?
Investors will watch for further developments as AGL progresses the sale and refocuses its telecommunications operations. Superloop will be assessing the full impact on its future earnings as more details emerge around the subscriber migration.
Superloop remains committed to servicing its large portfolio of consumer, business, and wholesale customers and continues to invest in its fibre and wireless network infrastructure.
Superloop share price snapshot
Over the past 12 months, Superloop shares have risen 8%, outperforming the S&P/ASX 200 Index (ASX: XJO) which has risen 6% over the same period.
