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Aussie Broadband Victim Of NBN’s Surge Charging

Aussie Broadband has posted a less-than-stellar first-half EBITDA, expecting it to be approximating $9.1 million, not including the hefty transaction costs for its acquisition of Over The Wire.

Although broadband connections increased 11 per cent in the December quarter, increased promotional costs, and the high CVC expenses charged by NBN Co. made for a bad half-year.

Aussie Broadband has given full year EBITDA guidance of $27m to $30m.

The connectivity virtual circuit fees are a controversial issue with service providers. All five major RSPs have lobbied to pay a flat wholesale price per NBN service, however NBN Co. has enacted a surge charge whenever demand for the internet rises. This CVC was a big cost during the lockdown, when most people were glued to the net.

“We expect to see the benefits of operating leverage in H2 FY22 with employee, marketing and administration expenses expected to be lower as a percentage of revenue,” Aussie Broadband managing director Phillip Britt says.

“The second half will also benefit from the organic connection growth achieved in the first half, additional white label migrations, and operating leverage to produce a full year EBITDA in the range $27m to $30m.”

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