Among the top news on Australian stocks, Aussie Broadband Ltd. (AU:ABB) crashed by 14% after the company released its earnings guidance update and launched a new AI-powered digital brand, Buddy Telco. The market is evidently dissatisfied with the company’s move to launch a new brand instead of solely concentrating on its core telecom offerings. Nonetheless, the company mentioned that it will maintain its main brand marketing activities and remain committed to all its businesses.
Aussie Broadband is an Australian telecommunications company providing a range of telecom and internet services to customers.
ABB’s New AI-Powered Brand
Aussie Broadband’s digital-first brand, Buddy Telco, is driven by automation and AI (artificial intelligence). Buddy aims to deliver a streamlined self-service experience via its app and live chat, leveraging the company’s reliable network infrastructure. The company is targeting acquiring 100,000 customers in three years.
The company has kept Buddy’s pricing plans highly competitive and sees its EBITDA contribution margin as similar to Aussie’s premium retail offerings. Additionally, it plans to invest around AU$10 million in FY25 to support the Buddy launch and expects it to start contributing positively to EBITDA from FY27 onwards.
Guidance Update
The company also provided an update on its FY24 and FY25 guidance. It expects its FY24 EBITDA to be at the upper end of its guidance range of $116 million to $121 million, as provided in February 2024.
For FY25, the company forecasts an EBITDA range of AU$135 million and AU$145 million, excluding the impact of Buddy Telco. This reflects an increase of 12% to 20% from the top end of the FY24 guidance range. Meanwhile, with the inclusion of Buddy Telco’s impact, EBITDA guidance is down to AU$125 million and AU$135 million.
Aussie Broadband is set to release its full-year audited results for FY24 on August 26, 2024.
Are Aussie Broadband Shares a Good Buy?
The brand launch news came as another blow to the company’s shares in 2024. In March, ABB experienced an 18% single-day decline following Origin Energy’s (AU:ORG) termination of its white-label wholesale agreement with the company. The termination will result in the loss of 130,000 internet customers in FY25 for Aussie Broadband.
Additionally, year-to-date, ABB stock has lost 21% in trading.
Overall, analysts remain moderately bullish on the stock. According to TipRanks consensus, ABB stock has received two Buy and one Hold recommendations. The Aussie Broadband share price forecast is AU$4.02, which is 31% above the current price level.
