Aussie Broadband Limited

Thank you for standing by and welcome to the Aussie Broadband Limited FY26 results call. All participants are in listen-only mode. There will be a presentation followed by a question and answer session. If you wish to ask a question via the phone, you will need to press the star key followed by the number one on your telephone keypad. If you wish to ask a question via webcast, please enter it into the ask a question box and click submit. I would now like to hand the conference over to Mr. Brian Ma, CEO. Please go ahead.

Thank you. Good morning everyone and welcome to Aussie Broadband's FY26 results briefing. My name is Brian Maher and I am the Group Chief Executive Officer of Aussie Broadband. I'd like to start off today by acknowledging the Aboriginal and Torres Strait Islanders as the first Australians and for their role as the original Communities, Connectors, Scientists and Carers of the land and waters across Australia. We pay our respects to Elders past and present and to all First Nations people around the world who have nurtured and sustained their lands, cultures, languages and communities for countless generations. We honour their big knowledge systems, resilience and ongoing contributions to the wellbeing of our planet. I'm joined on the call today by Darren Rowland, our Group Chief Financial Officer who joined us in February. Today is his first results and accidents for us and you will hear from him shortly. On page three of our deck you can see today's agenda. We'll start by going through a quick overview of the year before diving into the financials and the performance of our three segments. We will then have a look at our summary and outlook for FY27 before we head into Q&A. Before we go into the results in more detail, I just wanted to touch on some of the awards that we've won which are allowing us to validate how we're tracking towards our ambition to become the self-governing people of life. Let's turn to page four of the deck here. Aussie Broadband's reputation is underpinned by the trust that our customers and partners continue to have in us. We've never taken that trust for granted and our people continue to work hard to ensure we retain it every day. This shows in the recognition we've received from third parties. Among our many award wins that you can see, Roy Morgan once again named Aussie Broadband Australia's most trusted telco. This is the fifth year in a row we've held this honour and we're looking forward to the impending announcement for 2026. and hopefully retaining that title. The first-time award for us this year was NPIRS Best Broadband Performance Award, which evaluates factors such as download and upload speeds, latency and streaming experience. Other awards included Fortinet's Australian Partner of the Year and Telco Partner of the Year and a range of others. The next section on page 5 has a snapshot of the group. As I mentioned, customer trust and service quality continue to be the bedrock of our business across the entire group. Our customers know the value of our locally based residential service and the premium experience they receive. Owning and operating our own assets like our two tier 1 voice networks, our expansive Aussie Fibre network and wholesale platforms like Carbon and Nitrogen give us that added differentiator in the market. Something that you'll hear a lot about from Darren and I today are the benefits of a diversified go-to-market approach, enhanced by our strategic transactions over FY26. This means we can place a diverse customer cohort with a range of offerings to suit different customer needs and having growth opportunities across the Australian communications landscape. And importantly, as you can see at the bottom of the page, all of this is brought to life by our dedicated team of game changers. Finally, on the right, there are three key segments that have each played a role in delivering across these areas. We still maintain a challenging mindset in the residential space, combining our growing scale with the same customer focus that has always set Aussie apart. That spirit is also thriving in our business sector. Our reputation in the segment grows every year, with our teams winning more clients and expanding our relationship with our existing customers. Same is true for wholesale, where our platforms and product accessibility and other challenger grants. On page 6, we can see the progression of revenue, gross margin, EBITDA and EBITDA margin. Since 2021, revenue has grown by a compound growth rate of 30% and EBITDA at a rate of 54%. Gross margin has steadily improved over those years, most markedly in FY23, following our investments in our fibre infrastructure. has held gross margin reasonably well, but the competitive environment is fierce, and this margin is modestly in FY26. Over recent years, however, we have seen operating leverage emerge, and despite those gross margin pressures, we increased our EBITDA margin by 1.2 percentage points in the last financial year. This is the trend we are looking to continue. On the right of the page, you can see our revenue and gross profit by segments and products. Residential continues to be the engine room of the business, with 59% of total revenue and 50% of our total gross profit. Our ambition is to continue to grow our market share in residential, while growing up in the other areas to maintain our revenue diversification.

The relatively higher GP contribution of voice is also evident here. Let's dive into an overview of FY26 quality.

starting with the highlights for the year, on page 8. Aussie has had another strong organic year in FY26, while also executing major strategic transactions and laying solid foundations that will maturely benefit our future growth in FY27 and beyond. Our premium sales and offerings continue to attract customers and partners, delivering organic connections growth, strategic customer wins and strong financial performance despite a competitive market backdrop. We grew revenue while expanding operating leverage, resulting in EBITDA margin expansion and accelerated earnings growth. Importantly, we also completed a number of strategic transactions that materially strengthened our growth platform. The migration of more and more engineering connections and the acquisitions of AGL Telco and NextGen have increased our scale, broadened our customer base and enhanced our ability to meet the evolving needs of customers across all segments. We are part way through a step change in scale which, when completed, will have increased our on-net connections by over 60% in less than 12 months. We have completed a significant transaction in each of our three segments, providing them with impetus to drive future organic growth. When I spoke to you this time last year, Aussie's NBN market share was at 8.4%, extremely solid. At 3rd June, our combined residential, business, enterprise and government and wholesale connections makes up 12.1% of the NBN market, and is still growing, with most of its share now passing 13% in the last month. This growth has been supplemented by increasing momentum in our mobile services. The completion of the largest NBN migration to date adds significant scale and earnings uplift from FY27, with approximately 269,000 more in Tangerine services added to our network by 30 June. I would like to acknowledge Andy Branson and the team at Moore who have been amazing collaborators in achieving this outcome. The combination of these achievements meant that we reimagined the future for the group and upgraded our Look to 28 ambitions only 8 months into the strategic horizon and our ambition will not stop there as we focus on how we deliver more profitable long-term growth beyond FY28. Turning to page 9 for the last year's operational metrics. Looking at our operational metrics, as I mentioned, our market share of on-net NBN connections has climbed by 3.7 points to 12.1%, with group broadband connections growing by 323,000 to see us reach over 1.1 million total broadband connections at the 30th of June. We've had a strong organic start to the new financial year, with 11,000 new broadband connections added, excluding connections from AGL, Moore and Tangerine. The ongoing migration of Agile services which commenced on schedule in July have supplemented these volumes and we also see Aussie Broadband become the third largest NBN provider. This is a milestone we originally expected to reach by the end of FY28 and I'm extremely proud that we've achieved it well ahead of schedule. It is important that I call out our teams for their tireless work in helping us reach this milestone and I want to thank them all for helping to grow Aussie Broadband from a regional provider to one of Australia's most trusted telecommunications providers. Mobile has had a strong year for Aussie, with mobile services across the group growing by 48,000 to 263,000, top 22%. We successfully launched international mobile roaming and eSIMs recently to our residential and business and enterprise and government customers, and both have seen great take-up from customers in the last few months. These new features speak to the maturation of our mobile offering as an MV&A, and we expect this momentum to carry forward into FY27. At the end of June, we've hosted 8.3 million members across our Symbio and Netsys Tier 1 voice networks, with 8.8 billion call minutes across domestic networks for the year. Our Z-Fiber network spans 2,058 kilometres and has 1.31 connections per building. As we advised in February, our focus has switched to winning customers within buildings who are already served by our network, allowing us to allocate capital through higher return initiatives. Next we'll look a little deeper at our strategic growth and initiatives launched during the year. Aussie Broadband announced three key growth opportunities in FY26. The acquisition of AGL's telco business, the wholesale services agreement with Moore and the acquisition of NextGen. Our AGL migration kicked off at the start of FY27 when the portfolio had 350,000 services across broadband and mobile. This acquisition, when combined with our long-term partnership with ADL, provides us with the growth potential of access to ADL's 4.2 million energy customers. We see earnings upside through net service growth and operating leverage over time, and have a five-year target of 500,000 services. I've already discussed completion of the Moore & Tangerine customer migration under our exclusive wholesale services agreement, which added approximately 269,000 services. The partnership provides us with indirect access to the banking sector through the Moore brand as well as the growth potential for Tangerine. Finally, our next-gen acquisition was completed in the second half of FY26. The combination of the businesses has already started to bear fruit, with next-gen offering new telephonic capability to our kit bag and enabling improved lead conversion in an encouraging start to FY27. We also expect to deliver cost synergies over time and earnings growth and margin expansion. These initiatives are also a core part of realising our lots of 20-day ambitions, and they will play a crucial role in creating further opportunities for adding scale and continuing to expand our operating leverage. Together, these three initiatives will create value through a diversified growth model, which broadens our customer reach and product offering, and deepens customer exposure across our segments. On that, here's Rover Darren, who will take you through the key financial figures for the year.

Thank you, Brian.

I just wanted to start by thanking you and the team for the very warm welcome into the business. I also wanted to give a special shout out to the teams involved in pulling together the reporting suite for today, many of whom I know are listening in on the call. It's a significant effort to pull together the results and I think they've done an amazing job. If we turn to page 12, you can see here that FY26 was another fantastic year for the business. which you can see from the highlights on this page, with strong organic momentum across all key financial metrics. While the execution of a number of these strategic transactions kept us very busy operationally, their contribution to the FY26 earnings was minimal. We will see those financial impacts flow through into FY27. FY26 demonstrates the quality of the growth that we are delivering. Organic growth across all three operating segments translated into 25.8% growth in both underlying MPAT-A and ETF-A, materially outpacing the revenue growth. Importantly, those earnings are converting into cash. Operating cash flow increased 42.5% to $167 million, strengthening our financial flexibility and supporting investment in growth, shareholder returns and future strategic opportunities. We'll turn now to the group's underlying P&L on page 13. So the underlying P&L removed some of the noise caused by the strategic transactions and the associated one-off P&L impacts. But as you can see, the underlying business performed extremely well with organic revenue growth translating into a 42% uplift in underlying profit after tax and a 26% increase in earnings per share. As Brian mentioned, The competitive environment and significant promotional activity in the residential and business markets have had an impact on our gross margin percentage year-on-year, but this has been more than offset by cost control and the emerging operating leverage, which has resulted in a 1.2% increase in our EBITDA margin to 12.8%. On page 14, we'll take a look at what's driving the underlying EBITDA growth. As you can see on the bridge on the right, The earnings uplift for FY26 was largely an organic story, with 9% increase in broadband connections and a 22% increase in mobile services, contributing to a 19.6% increase in underlying EBITDA. As I mentioned earlier, there was minimal net earnings contributions from our strategic transactions in FY26, with positive contributions from NextGen and more, offset by divestments of DigitalSense and Buddy Telco. There was also some one-off network costs to expand network capacity in advance of the Moore and AGL migrations. Overwhelmingly, though, FY26 was the story of organic growth, with a significant uplift in EBITDA attributable to revenue growth from new and existing customers and gains in productivity and operating leverage. If we just turn to page 15 now for a look at the CapEx investments. Capital expenditure for the year totaled $59 million, which was at the top end of our guidance range, consistent with the update we put out in June. Due to the timing of spending and some pricing pressures around network equipment, we finished at the upper end of the range. During the year, we announced a shift in our fibre strategy to focus on maximising on-net connections and winning customers in buildings that are already on our network. This shift was made to improve return on capital already invested in our fibre network, but also to allocate capital towards the modernisation and simplification of our core technology systems, which have been shaped by multiple acquisitions over many years. This includes the replacement of lifecycle legacy systems and hardware, as you can see in some of the capital allocation on the chart on the right. During FY26, we continue to invest in the enablement platforms that are supporting our scaled and multi-channel growth. These platforms are helping us expand existing customer volumes and onboarding new volumes across broadband and mobile services. We also invested in our people experience with new office spaces in regional Victoria and Perth reinforcing our commitment to our team so that they can continue to provide the high quality service that our customers have become accustomed to. We'll now move to our cash flow and balance sheet on the next page. As I mentioned earlier, the increase in operating cash flow is driven by organic growth and margin expansion. The increased EBITDA has translated into a strong improvement in our operating cash flow, which has increased 42.5% to $167 million. The strong cash generation underpins capital management flexibility and strategic optionality. Our debt facility was renegotiated during the year, maintaining the current facility size but with improving margins, tenor and terms. We'd like to thank our banking partners, BNAZ, CDA, ANZ and Westpac for their commitment to our business and support of our Look to 28 strategy. Our net leverage ratio of 0.9 times provides flexibility to execute with capacity for future growth. Let's go over the page and we'll to take a bit more of a look at capital management. The discipline approach to capital management continued in FY26 with no material changes to our capital management strategy. One small change we'd like to note is we've changed our leverage ratio tolerance to be up to 2.5x, dropping the bottom end of the range. This is just to provide clarity about where we expect to operate going forward. NPAT-A and operating cash flow enabled the acquisition of NextGen to be funded predominantly from operating cash flow. We were also able to increase our returns to shareholders with a 50% increase in our ordinary dividend, which is fully franked, as well as announcing today an on-market share buyback of up to $115 million, which reflects the confidence we have in Augie's outlook and balance sheet strength. I'll now hand back to Brian who's going to go into the performance of our segments in a little bit more detail.

Thanks Darren. We're now on page 19. Residential continues to be the volume and revenue driver for our business, and FY26 was another strong year of organic growth with a 12.4% increase in revenue to $760 million. Broadband connections were the primary driver of that result, which saw a 6% uptick in subscribers. We've also seen some revenue expansion as more customers begin to adopt the new high-speed plans that were introduced under NBN's Accelerator Product Program. The residential broadband business is ably supported by our mobile multi-product strategy which is starting to scale. We now have 95,800 total mobile services in operation in residential, up from 72,100 the prior year, a 33% increase. Our expanded partnership with Optus has really enabled us to start delivering a true premium type service, backed by our recent launches of international mobile roaming and eSIMs for residential and business users. Our gross margin grew by 10.2% to $234.7 million, although our gross margin percentage declined in part due to our July 2025 pricing strategy ahead of Accelerate Great, and as our residential customer mix has shifted more towards the highly competitive high-speed tiers. The low gross margin would make some productivity gains that contributed to the delivery of improved group either-time margins. Our customer retention over the year has also been strong. with our year-on-year relative churn rates remaining stable despite intense market competition. On the next page, we look at business, enterprise and government. Revenue in this segment grew by 12.4% to $237.8 million. That growth reflects the reputation it builds as a trusted telco partner for medium and large organisations across Australia, and the confidence customers are increasingly placing in Aussie broadband to support all complex and critical communication needs. We continue to win new customers while also growing with existing customers as their requirements expand across connectivity, networks, voice and managed network. At the same time, we're seeing continued demand from small businesses for high-speed broadband and bundle services. For us, the opportunity is clear. Earn the trust to win, deliver the experience to stay and build the capability to grow with our customers over time. On page 21, we look at our wholesale segment. This segment saw a 9.4% increase in revenue to $297.3 million backed by growth in data and mobile. A key milestone from the year was the migration of more of Tangerine customer connections, which we completed in June through our Nitrogen Enablement Platform. We expect to see a full year contribution from that migration in FY27. Mobile also had a strong year with 18,000 net additions through strong retention of our existing customers and some new wins. We also maintained our position in the voice market despite some intense market competition. On page 22, we'll talk about our summering outlook for the road ahead. And into 23. While I've covered most of what is on this slide previously, I think it's important to reiterate what we're working towards beyond FY26 now that we've executed our strategic transactions and upgraded our look to 23 ambitions. At a high level, our overarching ambition remains to change the game and being as helpful as people must. In February, just eight months into the strategic period, we upgraded our ambitions, as per the slide, as it became apparent that we would achieve our original ambitions early. We are focused on strengthening our market position, expanding scale, and delivering accelerating returns. As I've said, FY26 was a big year. We positioned ourselves strongly to grow to accelerate rates, continue our organic growth story, and concluded significant transactions to create growth platforms across all three segments. With the foundations from FY26 firmly in place, the focus for FY27 now shifts from executing transactions to realising their benefits as we leverage increasing scale, broaden customer acquisition channels and strengthen take-abilities to drive continued organic growth. The aim is to be delivering a fuller effect of all these early initiatives in FY28. with scale driving further efficiencies, the realisation of the opportunities presented by the recent transactions, seeing those improved margins from productivity initiatives and ultimately delivering on our ambition. As Aussie has grown, our technology has grown with us and we touch on this on page 24. In FY26 we started to lay the foundations for simplifying our technology stack for the years to come. This is a program that will span across the next few years. We've already laid the roadmap. defined our future state and established a government framework to get there. We've already begun modernising our operational support systems, or OSS, which will improve the operation of our networks, inventory management and network orchestration. By the end of FY27, we will have established that network orchestration and inventory capability. We will have completed a detailed design and architecture for our future business support systems, while our new OSS systems will have undergone testing and operational readiness. The spending for this body of work is already factored into our Forecast Guidance Rates. By FY38, we aim for delivering our new Business Support Systems, or BSS, which will modernise our customer, product, sales and support platforms. This will allow us to simplify our sales, support, product and customer journeys, giving us the ability to launch and manage products at an even greater scale and pace. By FY29, that foundational work will provide even greater returns. Our staff will have less manual work by removing some of the complexity from our legacy platforms. Having a simple product and support journeys will allow us to provide an even better customer experience while launching products faster than before. And the business will also have the flexibility to enable future growth and acquisitions because of the disciplined platform that we've built. We also want to stress that our margin ambitions for our Look to 28 strategy are not dependent on this modernisation program, with the true benefits of this work to be delivered from FY29 onwards. One piece of that platform will be AI. Let's turn to page 29 for what that looks like at Aussie. There is a lot of excitement and hype around AI and automation. At Aussie, we've used automation very successfully over a number of years across our networks and customer journeys. So we're excited to implement AI while managing the operational and brand risks. In the short term, our priorities are to organise our data and to grow our AI capabilities across the business through broad-based literacy and specialist experience. We will also continue to leverage existing pilot programs to firm up targeted use cases that have clear customer, operational and financial benefits. As we outlined in our investor day last year, our aim is to evolve our digital tools and the digital experience to be equal partners to our in-person customer experience. As part of that, we've embarked on some pilots across the business to find better ways in which we can empower people, systems and services through different applications of AI. In our customer call centre, We've been able to improve engagement with our customers by leveraging AI to improve the performance of our customer-facing service stack. It's early days, but we are excited about the opportunities. We've also embedded some AI capabilities into our observability stack, which allows us to better identify early warning signs for issues with network performance or consistency. In addition, our developers have been able to accelerate the delivery of core products for our ATL project through the use of AI-assisted development. We want to continue improving the quality and productivity of our service, the efficiency of our business, productivity, insights in our operations with AI, but only where it makes sense and where there is clear human oversight and accountability. This will be an ongoing body of work that will apply across our business. AI is part of our journey to delivering leverage which we consider further on page 26. In FY26 we surpassed our original Look28 ambitions of 12.5% fee per dar margin by achieving 12.8%. As this slide shows, initially the new AGL acquisition has a dilution effect on the dar margin, represented here on a full year pro forma basis for FY26. We see opportunities to improve the performance of the AGL portfolio itself through reduced churn and improved cross-sell, as well as business-wide productivity initiatives and a lower unit cost to serve on our network scale. Beyond AGL and following the execution of all of our strategic transactions, we've laid the foundations to go at operating leverage and achieve our upwards ambitions for FY28 of 13.5% EBITDA margin, with potential further gains beyond that timeframe. Let's now take a look at our guidance for the year ahead and the work we've already completed in FY27. Our underlying momentum across all our major metrics for FY27 is positive. The business is on track for an underlying EBITDA range of $205 to $215 million, representing growth of 24% to 30% on the prior year. You can see from the bridge on the right that next year's growth is a mix of continued organic growth and the impact of the strategic transactions completed in FY26, which include three years or more tangerine and next year, and a part-year impact for HL. and net of the impacts of the divestment of Buddy and the dual cents. We've already added around 11,000 net broadband connections since 1 July 2026, with more than 7,000 of those coming from our residential segment, excluding AGL Telco. We anticipate the AGL Telco migration will be fully complete in the second quarter of FY27. To date, we have 116,000 AGL broadband connections on our network, and the completion of that migration and our continued organic growth means we expect to have more than 1.3 million connections to our network in Q2 FY27. Our mobile product continues to evolve as well and we expect continued growth from mobile throughout 2027. On to page 28. In summary, FY26 was a year of portfolio reshaping with strategic transactions delivered that are core to realising our upgraded look to frontier ambitions and represent a significant step in the evolution of the group. Underlying momentum remains positive across all of our three segments, with continuing organic growth in residential and momentum building in mobile. AGL Celco, once migrated, will also provide a platform for future residential growth. The business, enterprise and government have had a strong year. Key enterprise wins have grown our customer base and existing customer relationships have been expanded. opportunity pipeline as we continue to build our reputation as a trusted connectivity partner. On the wholesale front, our enablement platforms like Nitrogen allow us to scale growth across products, enabling existing and new players in the space and further building on our portfolio diversification. FY27 will be underpinned by delivering continued organic growth, completing the migration of AGL Telco and realising the opportunities from our strategic transactions. It's an exciting year ahead and we've started very well. I'd like to close by once again thanking our amazing team. Completing four material transactions in six months while simultaneously executing the largest migration of connections on the NBN network to date is simply exceptional. The credit, as always, belongs entirely to our amazing people here at Aussie. Thank you for your time and thank you for our shout-outs for your continued support and we're now available to take your questions.

Thank you. If you wish to ask a question via the phone, you will need to press the star key followed by the number one on your telephone keypad. If you wish to ask a question via the webcast, please type your question into the ask a question box. In the interest of time, we do ask that you please limit your questions to two and raise your hand with you if you have any further questions. Your first telephone question comes from Jonathan Higgins with United Capital Partners.

Hey guys, thanks for taking the time today. Great set of results here by 26. My first one, just in regards to the year-to-date trading, just, I mean, it sort of looks like it's, you know, you started the year obviously well there on year-to-date trading. I'm wondering if you can just provide some context. I mean, is that something that you think you can continue to deliver? Has it been a bit patchy sort of around the price rises? It sort of looks like it's been pretty rational around that period. Just any overarching thoughts that you have there, firstly?

Thanks Jono. Yeah, so I think you'd be able to see from the numbers that the June quarter was pretty tough with the price rises going through and obviously intense market competition. When we compare our churn experience year-on-year, we've actually increased more prices this year than last year, but the churn rate has stayed consistent with last year, so that was encouraging. We've started the year well. We've had a look at the mix of our marketing spend, if you like. We've done well over the last few years in building our brand. We've got very, very high brand recognition now, so we're sort of reconfiguring some of our marketing spend to ease off on the brand spend a bit. It will be what we term performance marketing, which we're seeing good results in so far this year. will remain active in the market, keep monitoring the market and keep doing what we can to continue that growth.

I understand. I mean, the second question, it's around the FY28 target. So you presented, Ted, a consolidated earnings number with the acquisitions and movements you've done on the wholesale front and sort of various moving parts. You said there's a few things there. Sort of in price, you know, efficiencies or price or margins, what's the rush to get there? I mean, I'm certainly not of those targets here. I think most of the market isn't. Can you just sort of talk towards the leaders that you are looking to pull and maybe bounce your confidence on those 28 targets that they're earning from?

Yes. They're strategic ambitions by their own nurture. We're still very optimistic that we can get there. We can see avenues for organic growth. We can see opportunities in the wholesale and business space that potentially can add some revenue and margin. We think we've got a way to go on our leverage journey as well. We've got a number of projects in train to focus on productivity and efficiency in our business. and part of our journey will be with how ARO helps us along the way as well. So we see it's a combination of top line and cost management and continuing the journey we're already on. I think we've shown good progress and we remain optimistic about our ambitions.

Thanks for that.

Your next question comes from MJ Rakowski with E&P. Hi Brian, hi Darren.

Andrew.

So my first question is also sort of related to near-term trading but more specifically you've looked through price increases for the 100 and 500 plans whereas a lot of other operators haven't. So can you perhaps talk us through the rationale for that increase and where do you think this will impact your subs? or in fact in terms of stabilising, do you think that's something that the market can absorb quite easily? I've got another one, like our wife suggested this one. Sure, sure.

The trite answer is that the rationale for price increases, NBN put their prices up and there's a very significant cocktail pot there that the whole industry has to wear and we decided to pass some of that on through price increases. More broadly, in terms of the market itself, as I said, churn rate was pretty similar for the prior year, so yes, churn is always elevated during that period, but it was no more elevated than previous years, and we started the year strongly. Ultimately we've got to, well both of these things actually, we've either got to get our pricing right and or drive costs out of the business or become more productive over time and our aim is that we can grow revenues faster than we can grow our OPEX clients and even faster again than any scores on gross margin over time. So when you look at some of the pricing in the market, it's essentially our wholesale that makes life very, very difficult for everybody.

OK, got it. That's a good colour. And I've got a question around the rationale behind the playback announcement, whether we should read into it that there's less focus on acquisition activity and greater focus on capital returns. I wonder if it simply means... I think we would expect to update it to leverage... Comfort Range. And as part of that answer, I know in the past you said that you looked at 28 Ambitions. Don't factor in any further acquisitions if you can confirm that that's still the case. Thank you.

I enter it down here. I might jump in on this one. So I'll answer the last part first, which is yes, the upgraded Ambitions don't factor in any further acquisitions. But floating on from that, it's not to say that we won't look at further acquisitions. We will, but they would be incremental. The rationale for the buyback really is we have had obviously a very busy period on the transaction front. There's an element of work to do to integrate those transactions into the business and we don't have any particular additional transactions imminent at the moment. Adding to that the significant improvement in cash generation in the business gave us the opportunity to announce the buyback without increasing leverage too much. I mean because the buyback will be completed over the next 12 months, it will be largely funded from operating cash flow in FY27 so the leverage ratio won't really move too much. The tweak to the leverage ratio was really just to, I guess, send a signal that we don't intend to gear up just to get within the range. The top end of the range is exactly where it was before and we'll operate somewhere below that going forward.

Okay, got it. Thank you.

So our next question comes from Siraj on Redwood City.

Sorry. Morning, Brian and Jaren. This is a first question. This is a two-part question. Just on the full key performance, can you just touch on, because it's, like you said, churns being stable, but R2 has come down, and that was slower, right? Just to keep you on the sand, does that just mean the back book you had to give up pricing to keep those customers? Is that what you saw? And second part to that, in terms of the start to the year, 11k is down from 12k in in the last year but she's already is doing well so it's the other parts that's not doing as well and I can also and I can also see that home sales are down year to date can you just clarify that as well thanks okay I don't

No, there's two questions by the way, that's not too much. The second one first, I think your numbers are wrong. At the same time last year we said 12,000, not 20,000, but importantly that 12,000 included 2,000 from Buddy, which we don't like to have. So excluding Buddy, the equivalent number last year was 10,000 and this year is 11,000. With respect to wholesale going backwards. I think what we've talked about there is that Moore and Tangerine have faced some headwinds with migration challenges. During migration, you do get elevated churn. They also put prices up on $500 like us, so they face more churn. But there are also questions for Moore and Tangerine for them, not for us. But that's the impact in wholesale. I didn't quite understand your first question, so could you recap that, please?

Yeah, just trying to understand the slowdown and the ARPU decline. So ARPU or gross margin, sorry, gross margin decline in the second half, right? So are you sort of saying that markets are competitive when you do the higher speed TOS? So you sort of just do some discounting to keep your existing customers? Is that what you saw in the second half?

So the margin on the slower speeds is slightly higher than the margin on higher speeds. So we've got proportionally more people on higher speeds That impacts on the average margin, albeit it increases the dollar margin. And then, yes, and product activity in the front book also impacts on that margin as well.

So, to this category, so you just assume that similar trends continue to join this level?

That's a third question, but the market remains tough.

Okay. Thanks. Thank you.

Your next question comes from Leon Robertson with Jordan.

Oh, thanks. Morning, hi, guys.

Just one, firstly, on OPEX, really good results for the year, only up sort of 1%, you know, if I can say that. So... and I think that's a really good thing. I think that's a good thing. of their flat year-on-year, or roughly flat year-on-year, into 27. And then I guess I was just wondering, as part of the 28 Ambition, do you think you can actually see OPEC decline year-on-year into 28 without the benefits of tech modernisation? Thanks.

So, will you say OPEC's declining in dollar terms or in Spanish terms?

In absolute dollar terms. On an OPEC basis, obviously, yeah.

Yeah. So that feels stretchy to go back with absolute dollars. You know, we've got library creatures and those sorts of things. We do think we can get leverage out of it. that OpEx lines will increase at a slower rate than revenue. I don't have the numbers in front of me, but I'd be surprised if going back within absolute dollars is given the scale of the revenue we're adding. If you think about the connections we're adding, we've still got another 100,000 or so AGL connections to go that all require servicing from customer service and things like that. So I think that feels and we're going to be looking at how we're going to manage revenue down over time. Was there a first part of the question I missed there, I think?

No, no, that's all right. I guess my second part, just changing tasks slightly onto CBR, I noticed in your 27 bridge, you're still calling out the full 3 mil impact from the ACCC moist determination. Has there been anything you're able to do, I guess, to mitigate that? There is, I'm asking because I'm just conscious into 28 with how you previously announced you're expecting that impact to double to sort of 6 million. So can you just talk to some of the mitigants that you've been able to potentially pass through?

Yeah, I think if you go back to the announcement we made on that, that was after mitigants was the 3 million. So we're still holding that we have mitigated it to get to the 3 million. So there's no change to those numbers.

I know. Great. Thank you. Thanks, Liam.

Your next question comes from Annie Zhu with Baron Joey.

Good morning, Brian and Darren. My first question is, could you talk us through what sort of spread the gross margins you're assuming in the FY27 guidance? There's quite a few moving parts of your $15 per month drawing on at the moment, and price increases you've put through in July and then also continued scaled benefits. So can we assume broadly the same growth margins as in FY26 or have you conservatively assumed a little lower than that?

I'm not going to guide on individual line items or P&L. I'm just giving you a bit of a tagline. I'll just say what I'm going to say, which is market is tough. There's a trajectory there that you've seen over the rest of the years across the industry in terms of margins. We would hope that pricing rationality returns at some point, but there's no sign of it currently.

Okay, thank you. And my second question on Moore and Tangerine. So you seem pretty confident in a return to growth in the second quarter. Just wondering if this is purely based on migration disruption pricing or are there other specific initiatives or promos and does that include any of the marketing and customer acquisition that you've previously called out?

So, really the question for more should go to more, but the discussions I've had with them is that the recent experience has been sort of the perfect storm of migration, pricing increases, particularly in that 500 product, and a very competitive front book market as well. So that's what's impacted in the short term. They have, I think maybe last week, announced a new initiative with CBA around yellow points. And so I think there's a few things in there that's happening for them that they're encouraged by in terms of their future growth. But ultimately, I'm not here to talk on behalf of them. The questions for them should be addressed today.

Okay, thank you very much. Your next question comes from Evan Crassus with Jefferies.

Hi Moni, can I just take your, if I take your 2H EBITDA that you've delivered, the 90.6, and just annualise that, that's sort of 181 mil, we add in ABL, 10 mil, more tangerine, that's 12 mil, next-gen contributions, probably offset by HCC, digital spend, take off the 2 mil, the sort of one off costs. I guess that's a bit of a sort of starting point of 205 mil. You've given some targets on organic growth in 27, which look pretty healthy. I guess the question is, is there anything I've missed there in my maths or wrong in my maths that I need to be taking into account for that 527? Hopefully that all made sense there.

Darren here, mate. Broadly, that'll make sense. I'll probably have to pick up the individual masks offline and try and do that on the fly there, but, yeah, nothing really stood out there to cause us, you say?

OK, all right, so it sounds like a pretty good starting point as we get to 27. All right, and then just a second question. I may have missed this in the deck, but a metric you guys have been speaking to was the frontline staff to connections and the improvements you were doing there. I think it was up 14%. in the first half. Any sort of colour you can write on where that is now and just if you still see further opportunities over the next 12 to 24 months to continue to optimise and maintain the solid growth rate you've been delivering in that.

Not the best period for us to talk about that metric, particularly because we have the preparations for AGL. So we've got some staff on that we need to train ahead of AGL coming on. So the metric got a bit because of that, but the underlying trend is still positive.

Yeah. Okay. All right. Fair enough. Thanks.

Yeah.

Your next question comes from William Park with UPS.

Good morning, Brian and Darren, and thanks for taking my question.

Just a question on AGL 12 Pro. I mean, appreciate that you've provided some colour around, I guess, the UBITAR margin. for that business. With all these initiatives and operating leverage and improving cost and so forth, can you just give us a figure on the improvement trajectory that you're internally factoring in for that business? Do you expect that to mirror the group level. I just wanted to kind of get your thoughts on how you're thinking about that pathway, improvement pathway, please.

Yeah, I'm not going to go into any sub-part of our business in detail, but I think the half of which we maybe announced or we talked about was some of the, and this will be incremental over time, we're not going to turn it around overnight, but Some of the AGR pricing is very low in markets, and so we think the scope was over time to gradually increment up back to a more normal pricing level over time, so that allows some margin to it. We think we can probably get some improved churn metrics in that business as well that will help, and then over the overall operating model that we're running, we're not running a separate business or AGL. It's the same service model as being delivered across both. So whatever we do to help the whole business will help with the AGL business. But ultimately, AGL will become a brand within the residential segments and we'll deal with it as a whole segment, not just as a particular brand.

Thank you. And just across the industry,

clearly there's some headwinds with respect to some of the cost items that's coming through on a regulatory side and obviously credit card surcharges and so forth. Can you just step through how you're sort of thinking about that in the context of, excuse me, in the context of I guess the cost out or OPEX as a percentage of revenue kind of declining and how you're sort of thinking about absorbing those costs and how that sort of flows through to to Margin, just any ideas you could provide would be appreciated. Thank you.

One easy one I can cover off is the credit card surcharges. We've always absorbed those. That has no impact on us. In terms of regulation, yes, it's becoming more and more onerous. That's another benefit of our scale. It'll become harder for some of the small players, I think, in this space. But as we're getting bigger, we're better able to sort of absorb some of those costs. But it is difficult. There's no question. The industry as a whole, I think, is under pressure. We're relatively well placed in that regard, but I won't pretend it's going to be easy, but I'm not going to put numbers on it.

Thank you.

And my apologies in advance because I'm going to ask you a numbers-based question. But business enterprise and government, obviously, half and half margins, step back. You sort of talked to, I guess, the competition and some of the lower margin social business mix there. Just, you know, comment on how you're seeing sort of the margins trigger through from second half levels, basically. Is it fair to say that that should be a flaw that we should be thinking about and improvement from here on or are there additional headwinds that we should be factoring in?

Thank you. Yeah, it's a complicated market that one because it's so diverse and every year is obviously bespoke for each particular client. It is a little bit difficult to say exactly where margins are going to go going forward and certainly I'd be loathe to ever call a flaw. But in terms of the strategy itself, going in broadband led as, I guess, a way to open the door and then giving ourselves the opportunity to on-sell the additional services, that is the strategy and that may result in margins being different to what has been reported in the past. The shift, though, is really around a focus on return on capital in that business. So if the gross margin itself is slightly lower, but it adds incremental return on capital in a dollar's term, then certainly those are the sorts of deals that we'd be happy to look at.

Any other part of that segment? Thank you. I sort of, too, I like that segment. One is the EMG, which is, Darren referred to earlier, the small business side, which is sort of more akin to residential in some ways and faces the same pricing and margin prices of the residential fair. So it just depends on the mix. Ultimately, if we're growing new businesses faster than the growth in upsell, then the margin will be slightly diluted.

If and when that changes and we manage to grow upsell quicker than new business, then the margin should improve. Thanks very much.

Your next question comes from Aaron Munro with Ord Minutes.

Thanks, Brian and Darren, for taking my questions. Yeah, first one's just on that business enterprise segment. I just noted sort of momentum heading into FY27. That's just to elaborate a little bit around existing customers that are going to contribute for the full 12 months of 27. That's just trying to get a sense of and the back book of new customer growth that you're carrying to start July with. And you also noted the tender opportunities that are out there, just trying to get a sense of, you know, whether any of that can contribute to this financial year as well.

Thanks, Ian. I don't have any of the detail on how much, you know, how much sold revenue is out there that hasn't been provisioned yet. I don't have that data, but I know it's... is relatively healthy, although we've been doing a lot of work on actually speeding up the gap between sale and provisioning. We still have some ground to go there. The pipeline is comparatively healthy for new business. The deals we're working on, we haven't won yet, but they look healthy compared to previous years. But as you know, as we've talked about many times, sometimes these deals take quite a while to land. services on deals have already signed, so we've expanded all the services that we've provided to Bunnings for example. So some of those deals are yielding that result which is you're going broadband to go hard and then you try and sell voice and things like that. That is happening, but the rate of growth on the front book is faster, therefore we ended with this margin pressure.

Just a second question, I guess a little bit more broader, but as a management team, are you seeing the, I guess, diversity of revenue and earnings across the segments? There's kind of Resi, obviously, got AGL, more Tangerine. We've got Business with NextGen in it now. And then, yeah, Symbio. So, you know, no one sort of segment in isolation can sort of materially... you know, reducing, increase the able trajectory of your guidance, but just interested in how you're kind of seeing that diversity and also, you know, whether there's any kind of glaring gaps that you're focused on. Thank you.

Yeah, I mean, it's interesting when you're less diversified when everything's going really, really well, you're pretty happy. But when you've got the poor silo and swimming doesn't quite go so well and something else goes well, you get a bounce of it. So it's an interesting sort of environment to be in where, you know, to shoot one day everywhere would be rare. But what we've done in the last year, so we've given each of those segments, so Moore is actually in wholesale, so we've got Moore in there, we've got AGL in there and we've got NextGen in B&G. They've all got any very common shiny new tools to play with. but give them really good chances to grow further and diversify that revenue. So, obviously, there's a deliberate strategy, so we're pretty happy we've got this diversification. Now our aim is to try and get them all singing and dancing to the same length so we can really accelerate growth into the future.

Thanks, Mark.

Your next question comes from Benjamin Jones with J.P. Morgan.

Morning, guys. Thanks for taking the question. Just a question. We're seeing the declines post-migration in subs on Moore and Tangerine. Just curious what you're expecting to see from the AGL book when we go through that migration process in the next couple of quarters.

Yeah, I think you see that in every migration. So I think when Origin was migrated off, at the peak we had them, that was 150. I think it ended up being about 130 it migrated off. So We hope it wouldn't be as big a fall-off as that. There will be a fall-off. We're also, in this period, just because we've got a lot of new customers coming on board, there's a lot going on, we're not going, with AGL, not going super hard on sales in this period. So that makes it a little bit harder. But we're in the middle of discussions with them about what happens post-migration, what are the campaigns we're going to run to start to boost that growth into the future. So that's In many ways, the way I think about it is, yes, we'll try and minimise short-term pain as much as we can, but this is a forever relationship we have. It's a very long-term relationship, so what happens in the next few months isn't going to define the future of this business.

And so that would have been fractured in when you gave that initial guide on AGL?

Yeah, we've not changed. We've not indicated anything to the market about different financial expectations yet.

and just a broader question I mean as a function of the price changes we've seen versus what you did your price changes versus the market I mean are you expecting any change in the composition of growth ads in the book and it's like potentially fewer growth ads like that 500 tier maybe more growth elsewhere how do you expect that would play out um

Well, we're having stock ads at any speed. 500 is the main gain, though. In many instances, 50 is no longer on websites. So it's a big gap between 25 and 500. So I believe 500 will remain the principal driver of growth.

100 and above, should I say.

Very helpful. Thanks for the call.

Thanks.

And that is all the time we have for questions today. I'll now hand back to Mr. Mall for closing remarks.

Thank you. Thank you all very much for joining us today. We're very pleased and happy with our results for FY26 and very, very excited about FY27 and even more excited about our ambitions for FY28 and looking forward to delivering fantastic outcomes for our shareholders. Thank you.