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Investing.com - UBS raised its price target on Aussie Broadband (ASX:ABB) to AUD6.00 from AUD4.65 while maintaining a Buy rating following the company’s recent wholesale contract announcement.
The six-year agreement with MORE Telecom will see approximately 290,000 subscribers migrate to Aussie Broadband’s wholesale platform, expected to generate an incremental AUD12 million in EBITDA by fiscal year 2027.
As part of the transaction, Aussie Broadband provided 5.88 million shares valued at AUD24.6 million to MORE Telecom, with additional cash milestone payments anticipated every two years. The company will also sell its Buddy brand to MORE Telecom for approximately AUD8 million.
UBS estimates the deal is approximately 12% accretive to Aussie Broadband’s fiscal year 2025 earnings per share, despite the competitive pricing of around AUD3 per subscriber per month on an EBITDA basis.
The migration of all subscribers is expected to be completed by the end of fiscal year 2026, with UBS viewing the transaction as "overwhelmingly positive" for Aussie Broadband despite the competitive nature of the tender.
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