In top news on Australian stocks, shares of Aussie Broadband Ltd. (AU:ABB) plunged 18% on Thursday after Origin Energy Ltd. (AU:ORG) ended its white-label wholesale deal with the company. The termination is effective April 12, 2024, and will result in the loss of 130,000 internet customers in FY25. While this may be unfavourable for ABB shareholders, it came as positive news for Superloop Limited (AU:SLC), which has secured the wholesale agreement with Origin. As part of the agreement, those 130,000 customers will be migrated to Superloop for the next six years.
Aussie Broadband and Superloop are Australian telecommunications companies that offer a variety of telecom and internet services to customers. Both companies made headlines last month when Aussie Broadband proposed an all-scrip merger transaction with Superloop.
Meanwhile, Origin Energy is an integrated energy company, providing electricity, and natural gas to residential and industrial customers.
Loss for One, Gain for Another
Aussie Broadband stated that it has been in talks with Origin for the renewal of its contract for over six months but was unable to reach any conclusion. The company further mentioned that the agreement will contribute $14 million in EBITDA in FY24 despite its termination before the closing of the financial year. The company recently upgraded its EBITDA guidance of $105 million to $110 million in its first-half results for FY24.
Meanwhile, Superloop stated that after its deal with Origin, its total customer base would reach approximately 560,000. Following the announcement, SLC stock jumped almost 25%.
What is the Outlook for Aussie Broadband Share?
On TipRanks, ABB stock has received a Hold rating based on two Buys, one Hold, and one Sell recommendation. The Aussie Broadband share price target is AU$4.69, which is 33% above the current price level.
