Hi @Bear77 have you been following Superloop lately. I see the latest info released by the ACCC shows…

Aussie Broadband Ltd (ASX: ABB) and Vocus gained almost 62,000 services in the June 2023 quarter, while the total number of residential broadband services on the NBN remained steady.

Vocus grew by over 33,000 services, taking its market share to 7.9%, whereas Aussie Broadband gained over 28,000 services to a 7.5% share.

Superloop Ltd (ASX: SLC) and Southern Phone increased their market shares to 3.1% and 1.4%, respectively.

Telstra and TPG Telecom Ltd (ASX: TPG) saw their collective services decline by almost 76,000 in total during the June quarter. This reduces their respective market shares to 41.5% and 21.7%. Optus' market share was steady at 13.1%.

ACCC Commissioner Anna Brakey 

This has burnt a lot of investors in the past but this does seem like it could be a takeover target at some point given the defensive nature of the assets.

Having sold the HK assets and some Singapore assets for $140M with proceeds to be recieved soon. Expected to be $50M net cash following completion equating to an EV of about $400M. Guidance for $25M Underlying EBITDA (6.25% cash yield) this year which is only a partial year contribution from Exetel acqusition and synergies not fully realised. Increased utilisaiton of other cable assets. As a result can see it being attractive to some purchaser.

Superloop has sold the underpeforming Hong Kong connection for a sizeable premium to book and signed a right of use and will recieve and ongoing management fee. All up this is positive and shows managment taking the right steps for capital allocation. 

I subscribe to Spaceship's emails as I like to keep track of their investment decisions (buy and sells) over a period of time. Last week they sold Superloop - who I like to keep an eye on due to Aussie Broadband being my largest holding and Superloop being competitors. 

Spaceship sold Superloop, noting the following: 

'Superloop is another company that has been on our watchlist, as we believe it continues to underperform in the industry. Given businesses have been forced to digitalise due to the working-from-home trend, we’ve been surprised Superloop has had trouble finding buyers.

To help solve this problem, Superloop acquired Exetel in August 2021, and this sealed the “sell” deal for us, as we believe buying a company to get customers and traction isn’t a positive sign for the business.'

END

When I looked at ABB initially, I looked at Superloop. The companies have similarities, but the issue with Superloop is that they have demonstrated an ability to destroy shareholder value over a 5-year period and are still no closer to profitability. I am unsure why Spaceship initially bought Superloop, but their reason to sell highlights my current thoughts on the business. I think their decision to acquire Exetel was a desperate one, driven by struggling membership numbers and issues with cash flow. 

These guys don't appear to have the goodwill of ABB, but with this aquisition and the fact that they've already developed their own fibre network (which ABB is just looking at now), I wonder if they might be a good idea.  I understand that a bunch of people left ABB for Superloop within the last 12 months due to the ABB price increases.

https://investors.superloop.com/DownloadFile.axd?file=/Report/ComNews/20210802/02402567.pdf

Superloop (ASX:SLC) is pleased to announce it has been awarded a major, multi-year contract with Symbio (MNF Group Limited) (ASX:MNF) to become its exclusive supplier of wholesale nbn aggregation services. The contract, signed today, has an expected value in excess of $25m and is Superloop’s largest single contract win to date. Under the contract, Symbio will migrate its existing and future supply arrangements from various providers of nbn aggregation services onto the Superloop Connect platform. The contract also anticipates Superloop expanding its existing use of Symbio’s range of voice offerings and including elements within its own portfolio of offerings.

Superloop’s nbn aggregation services are delivered on its recently launched, in-house developed Superloop Connect platform. Superloop Connect is a frictionless, API driven platform that allows customers of any size to access Superloop’s market leading nbn backhaul and virtual nni capabilities in a cost competitive way. These capabilities have been deployed nationwide, allowing Superloop’s customers a completely digital mechanism to order, provision and assure nbn business and consumer services anywhere on nbn’s fixed line and wireless footprint, with delivery of those services to any of the mainstream data centres in Australia. The Superloop Connect platform will continue to be developed in the future enabling further products and services from its APAC and Global offerings to be available via the platform.

Disc: I hold MNF & have previously held SLC

01-Jul-19.  While FY20 got off to a reasonable start today - for most ASX-listed companies, there were exceptions, and two of those were Adacel Technologies (ADA) who dropped a bee's whisker below 32% on an FY19 guidance downgrade that left us in no doubt that they have very sub-par management there (their guidance is now for a FY19 loss) - and Superloop (SLC) who had an interesting FY19 Earnings Guidance "Update" of their own:

Superloop Announces Updated FY2019 Earnings Guidance

Superloop Limited (ASX: SLC) (Company) refers to its “H1FY19 Investor Presentation” (Presentation) which was released to the market on 25 February 2019 and included guidance for the 2019 financial year of statutory EBITDA of between $13 million and $18 million. This guidance was predicated on a number of factors, including that certain transactions were expected to complete and be recognised this financial year.

Despite its expectations to do so, the Company has not completed negotiations before 30 June 2019 to secure a significant commercial agreement which would have contributed the anticipated EBITDA to achieve its guidance for this financial year. Accordingly, the expected EBITDA for FY2019 is now likely to be lower than that set out in the Presentation, and subject to the finalisation of June’s trading figures and completion of its audited full year results, in the range of approximately $7 million to $8 million (including approximately $1 million of restructuring costs from February 2019).

Negotiations with parties will continue and if successfully concluded will be reflected in future earnings.

The Company notes that throughout the financial year it has continued, and expects to continue, to monetise its extensive Asia Pacific assets in a number of ways including long term indefeasible rights of use agreements, whereby the cash is often received upfront, but revenue recognised over the life of the contract.  In addition, the Company has also reduced a minority equity stake it held in a non-core asset which further strengthens its balance sheet.
 
With respect to the Company’s secured debt facility, the Company advises that it has actively engaged with its lenders to ensure that its revised guidance is within the terms of the debt agreements.

The Company anticipates releasing its full year results for FY2019 in the week commencing 26 August 2019 and will continue to keep the market informed with any further developments in accordance with its continuous disclosure obligations.

--- ends ---

Disclosure:  I don't hold SLC shares - as explained in my 3 "Bear Case" straws and also in my "Risks" straw.  Too many red flags, including a number of key personnel leaving the company throughout 2018, the founder (Bevan Slattery) stepping back from the controls, and the new CEO/MD, Drew Kelton, being a bit of a prick. 

They also increased their debt profile last year (took on 50% more debt), and without the expected profits to service and reduce that debt, they now have to worry about the possibility of breaching lending covenants (which would be included in those "debt agreements" that SLC refer to in this "update").  They may not have breached any yet, but it does highlight how easily you can lose control of your own destiny when you're a relatively small company and have significant debt.

In closing, does this ring true to you?  They were unable to close the deal on one significant commercial agreement before June 30th, and as a result of that, they have gone from guidance of statutory EBITDA of between $13 million and $18 million to now being $7 million to $8 million (including approximately $1 million of restructuring costs from February 2019).  Really??  That must have been a VERY significant agreement, because that profit guidance has just halved!

I would suggest that what ADA and SLC currently have in common is management that you just can't trust.  I'm not saying they're incompetent, although that is probably a strong possibility.  What I'm saying is that when they promise something, or provide guidance, you just can't trust them.  And it's often best to avoid companies that are in a downgrade cycle.  There are often at least three consecutive downgrades before the tide turns positive, and that's IF the tide does turn.  It sometimes doesn't.

Additional:  That's why I tend to sell out immediately when a management team does anything that makes me think I can't trust them any more.  It happened with Dacian Gold (DCN) last month, a massive production guidance downgrade for both the June quarter & for FY20;  I sold out immediately - at $1, where they opened when they resumed trading after the downgrade.  They finished that day down 67% at 51.5 cents.  In a further omen, and an ominous one, DCN fell 66.6% in June on the back of that downgrade.

Today (Tues 2nd July 2019) we have another big earnings guidance downgrade - this time from SDA - Speedcast International (see here) and they finished at $2.06 - down -40.8% from their $3.48 close yesterday.