How Aussie Broadband’s AGL Telco Acquisition Could Reshape Australia’s NBN Market
Aussie Broadband has agreed to acquire AGL Telco’s telecommunications assets, adding 350,000 broadband and mobile connections and forming a long-term exclusive partnership with AGL. This deal positions Aussie Broadband as Australia’s third largest NBN provider.
- Acquisition of AGL Telco assets including 350,000 broadband and mobile connections
- Long-term exclusive partnership with AGL to promote telecom services under AGL brand
- Deal valued at $115 million paid in Aussie Broadband shares, making AGL a substantial shareholder
- Expected $235 million revenue and $21 million underlying EBITDA in first year post-migration
- Aussie Broadband to become third largest NBN provider with over 1.25 million broadband connections
Strategic Acquisition Expands Aussie Broadband’s Footprint
Aussie Broadband (ASX – ABB) has taken a significant leap forward in the Australian telecommunications market by agreeing to acquire the telecommunications business of AGL Energy Limited (ASX – AGL), known as AGL Telco. This acquisition includes approximately 350,000 broadband and mobile connections, along with 46,000 voice services, marking a substantial expansion of Aussie Broadband’s customer base.
The deal is set to complete in June 2026, with the migration of customers expected to finish in the first half of fiscal year 2027. The acquisition will be settled primarily through the issuance of $115 million worth of ABB shares to AGL, making AGL a substantial shareholder with approximately 7.5% ownership post-transaction. Additional shares of up to $10 million may be issued contingent on meeting growth targets.
A Partnership Built for Growth
Beyond the acquisition, Aussie Broadband and AGL have forged a long-term exclusive partnership. Under this agreement, AGL will continue to market telecommunications services under its well-known brand, while Aussie Broadband will manage the network infrastructure and customer service. This collaboration leverages Aussie Broadband’s technical expertise and AGL’s strong brand equity and large energy customer base, particularly through bundled energy and telecom offers.
The partnership includes exclusivity obligations on both sides and termination rights tied to performance and reputational factors, underscoring the strategic importance and mutual commitment of the alliance.
Market Impact and Financial Outlook
Financially, the acquisition is expected to be earnings per share accretive in the first year following migration completion. Aussie Broadband forecasts approximately $235 million in revenue and $21 million in underlying EBITDA from the acquired AGL Telco business in the first 12 months post-migration. The company also anticipates growing AGL Telco connections to over 500,000 within five years, driving further scale and efficiency benefits.
With this acquisition and the migration of More/Tangerine services, Aussie Broadband is poised to become the third largest National Broadband Network (NBN) provider in Australia, surpassing 1.25 million broadband connections and servicing nearly 400,000 mobile connections. This elevates Aussie Broadband’s competitive position significantly in a market dominated by a few large players.
Looking Ahead
Both Aussie Broadband’s CEO Brian Maher and AGL’s CEO Damien Nicks expressed optimism about the deal’s potential to deliver growth and enhanced customer experience. The migration process, set to begin in early fiscal 2027, will be a critical phase to watch, as successful integration will underpin the anticipated financial and strategic benefits.
Investors and market watchers will be keenly observing Aussie Broadband’s upcoming half-year results for updates on migration progress and financial performance, as well as any regulatory developments related to the acquisition.
Bottom Line?
Aussie Broadband’s acquisition of AGL Telco is a game-changer, but the real test lies in seamless migration and sustained growth.
Questions in the middle?
- How smoothly will the migration of AGL Telco customers to Aussie Broadband’s network proceed?
- What regulatory hurdles, if any, could impact the timing or terms of the acquisition?
- Can Aussie Broadband sustain the projected growth in connections and EBITDA beyond initial forecasts?
