I sold half of my ABB shares after the announcement of the proposed takeover as it raised the risk of the business for me and I was sitting on a tidy profit after only 18 months of investment. Plus with the fall in revenue in the enterprise and gov segment announced in their results taking profit seemed like the right thing to do but part of me wishes I sold out completely now. The question now is what do ABB do? I can't see them proceeding with the takeover as I don't believe this is a fantastic deal for Superloop especially with the heavy dilution so see the business even less appealing to takover which leaves Aussie with a 20% holding although on current prices sitting on a tidy profit. If they just sell up and walk away, with the cash injection I'd likely buy back in for the half I sold around these prices. Bit of thinking for me to do and will be fascinated to see how it plays out next.

I'm trying to work out at what point in the transition ABB's holdings in Superloop get diluted. The way the announcements read the dilution happens on siginng and then futher at the end of the transition (but there is also a big number of Options granted which are tied to some milestones.

https://cdn-api.markitdigital.com/apiman-gateway/ASX/asx-research/1.0/file/2924-02784616-2A1511641

I find it interesting that the statement also mentions Origin wants to get to 600,000 broadband subscribers by FY26 ... when their starting position is 130K and their current organic growth on the ABB network was 28K in the last half year (half way through FY24). We effectively only have 5 more halves until End of FY26 and at the current run rate that would be about 150K adds bringing the total to 280K. Either they are going to very aggressively target this market (driving down margins for everyone) or there is going to have to be some other sort of inorganic acquisition which presumably could include them buying out Superloop (with 304K customers) entirely. Looks like Origin has its sights set on consolidating the smaller broadband players. Look out Southern Phone Company Ltd (143K subscribers and 100% owned by AGL) and other access seekers (356K subscribers).

Also interestingly, Superloop currently has 491m shares. This deal sees Origin getting 9,847K x 2 + 30m worth at today's price that would be 22m share + 55.6m options. About 105m shares of the diluted entity which back of the envelope could represent about 18%. In addition with ABB's current 19.9% SuperLoop holding that could potentially be sold, Origin could get to nearly 40% ownership.

It almost reads that Superloop have done a deal to stymie any chance of Aussie taking them over or maybe I'm overthinking. The numbers released on potential customers do confuse me and seem almost fanciful and I am also surprised at the 24% jump in Superloop's share price on this news. I know it is a significant deal but seems overdone.

I know it shouldn’t be linear but Superloop will grow from 304K SIOs to 434K SIOs (that’s nearly 40% bigger) with the transition.

If you also factor in the projection of net adds (with Origin stating it wants to get to 600K SIOs by FY26 and current 28K per half of new adds) then you could extrapolate that to Superloop becoming 3x the size it is before the deal (Superloop’s 304K customers + 600K new Origin Customers)

However, that doesn’t take into account the Superloop dilution from “buying the business” or that fact that Origin’s 600K could come from completely swallowing Superloop (like Southern Phone Company Ltd being a wholly owned subsidiary of AGL).

Also doesn’t take into account the difference in thinner margins for a Wholesale L3 service vs a full service (as indicated by ABB’s discussion).

If you calculated the incremental EBIDTA claimed by Superloop then the bump might be feasible, but interestingly that number of 19m is quite a bit smaller than the ABB estimate of 10m.

Bottom line, Superloop lost >40m last year so even $19m of incremental EBITDA isn’t going to make them a profitable entity.

Perhaps the Origin deal is an exit strategy for SLC’s directors and management. Given the company and its stock price have been stagnant for years, this deal could provide a bit more bang and an easy exit if Origin are wanting greater control and market share.  I don’t follow SLC, just an observation.

I just did a few quick sums, if ABB decide, and I am expecting they will, walk away from trying to buy SLC then they will have made a quick $35m. They bought 19.5% of SLC for costs of $0.95/share. SLC is on a bit of a run since then and with the origin deal the market is valuing them at $1.30-1.40.

puts the annual loss of $14m EBITDA from FY25 in context or at least gives it a silver lining.

Presumably if I'm ABB, I know where every one of those 130,000 customers live, how much data they use, what sort of data they use, how many times they call the service desk etc. (because according to the announcement they have been delivering a full white label service).

Not sure what the terms of the arrangement are, but presumably as customers are transitioned, they are fair game for a competitive win-back. A "3 month free" offer or some other bundle in the mail would seem logical. The plans are roughly the same price as purchasing direct from ABB with Origin offering $10/mth if bundled with energy, $5/mth for first 6 months for new customers, 5000 Everyday rewards points (=$25) and paramount+ $10/mth (i.e. "$295 p.a. of bundled value")

If ABB's service is one of its key differentiators then that will be a strong value proposition for them (given under the new L3 wholesle arrangement it sounds like Origin will be doing the majority of customer service itself).

@Slideup with your take on calculations not lining up ... Referring to latest NBN wholesale market indicators https://www.accc.gov.au/system/files/NBN%20SIO%20RKR%20-%20Disclosure%20Tables%20-%2031%20December%202023.xlsx?ref=0&download=y

With 130,000 customers up for grabs that should mean ABB drops from 723K to 593K (a decrease of 18% in their install base) and Superloop grows from 304K to 434K. Something is amiss with Superloop's numbers in their announcement which claim that they will grow to 560K.

According to ABB's half year results, they added 130K connections in the first half of this FY. The Superloop announcement claims that Origin accounted for 28,000 of those (that's 21.5% of their net new adds)

With the discussion on ABB selling its SLC holding ... presumably after capital gains tax they would keep 70% of that and the remaining 30% tax paid would be able to be franking credits. Not really sure how that works. I wonder if that would come back as a special dividend or they would reinvest it in the business. $35m could go quite a long way towards customer acquisition costs (using the $295 number above / 3 months free assumgint 35m x 70@ / 295 = 83,000 customers).

Big question here is what would be the driver for them selling? Why wouldn't they just keep their holdings and continue to receive their share of the revenue from the migrated customers (as well as presumably qualify for a board seat and significant insights into the SLC business).

Second big question is if they do sell, what would they do with the capital? Return it to shareholders as a Buyback, issue special dividend, reinvest it in the business?

DISC: hold ABB IRL and Strawman, like @mikebrisy wouldn't touch the others with a barge pole