Pinned straw:
Wholesale NBN services as of 31 March 2023
More good news for Aussie, with net additions increasing by almost 25,000.
That said, it wasn’t just ABB that continued to increase net additions – Superloop increased theirs by an impressive 56k, while Vocus recorded an increase of 32k. The three telco leaders continue to haemorrhage customers – particularly TPG, losing more than 40,000 services over the reporting period. Collectively, the heavyweights dropped 58,000 services.
Despite Superloop performing well, I still have real questions around their sustainability as a company. This is where Aussie’s moat is starting to shine. Trancer touched on this earlier – poor old Superloop have had to drop costs to keep customers. This looks good in terms of net additions but they chew through capital like there is no tomorrow. Aussie have refused to offer cheap deals to keep customers, preferring that these services churn elsewhere – it is not where the attractive margins are after all.
Superloop burnt 21m in H1, while ABB made an 8.5m profit. Let’s hope we see more of the same in H2 (for Aussie that is; I have nothing against Superloop).
Perhaps not surprisingly with inflation, the 25mbps tier increased since the last report (by around 125,000 services, around 16% of the total wholesale market). Most of these services appear to have downgraded from 50mbps (which lost 99,000 services), although some have upgraded from 12mbps.
That said, 250, 500, ultrafast and 1000mbps tiers all recorded increases in services. This is great news for Aussie, they dominate this end of the market as demonstrated below:
- 250mbps: Aussie has 3rd most services
- 500mbps: most services
- ultrafast: most services, with almost double the services of the next closest ISP
- 1000mbps: most services, more than double the services of the next closest ISP
So while slower NBN plans have grown in popularity over the last three months, so to have the high speed tiers – and this is only good news for Aussie noting their dominance at this end of the market.
RhinoInvestor
In terms of your question about what ABB could do with the acquired Satellite customers ... I'm wondering if there is the possibility of ABB becoming a Starlink reseller. I've noticed that Telstra and Optus seem to have already done deals:
https://www.afr.com/companies/telecommunications/optus-inks-deal-with-starlink-circumventing-nbn-in-regions-20230712-p5dnoy
https://www.whistleout.com.au/Broadband/News/Telstra-Starlink-plans
I wonder if that would also be an angle for ABB given their propensity to serve the premium customer segment.
DISC: ABB Held IRL and Strawman
RhinoInvestor
@Rocket6 "That said, it wasn’t just ABB that continued to increase net additions – Superloop increased theirs by an impressive 56k, while Vocus recorded an increase of 32k. The three telco leaders continue to haemorrhage customers – particularly TPG, losing more than 40,000 services over the reporting period. Collectively, the heavyweights dropped 58,000 services. "
I think the TPG strategy is quite clearly to churn customers from lower speed NBN plans onto their 5G network as you can see from their broadband plans. (lower prices and higher speeds for 5G than NBN). This may account for some of the churn in the majors.
This strategy allows them to recoup more revenue from their already sunk costs of Spectrum and 5G network buildout at much higher margins than reselling an NBNCo product as they aren't paying >$30 a month AVC and other wholesale charges to NBNCo (https://www.nbnco.com.au/content/dam/nbn/documents/sell/wba/2023/sfaa-nbn-smart-places-price-list-20230307.pdf.coredownload.pdf). This strategy is especially relevant in Metro areas and from an ABB perspective, I think will put pricing/margin pressure on lower speed plans (or cause churn away)
While i agree that ABB has carved a pretty good niche in the Ultrafast market, I'm still a bit worried about a company who has built the majority of their business model on the NBN. As an example, the prices for those services from NBN are planned to increase: https://www.nbnco.com.au/content/dam/nbn/documents/media-centre/media-statements/2023/nbn-co-publishes-indicative-pricing-roadmap-for-fy24-fy26-190523.pdf
DISC: Hold ABB IRL and Strawman, Hold TPG IRL
Rocket6
Some further clarity around the increase in services on the 25mbps tier -- Telstra ended a promo where they boosted 25mbps users up to 50mbps for a year -- so this might also explain the increase in services on the lower tier.