Aussie Broadband Group (ASX: ABB) has struck a deal to acquire AGL Energy (ASX:AGK)'s telecommunications business, adding an estimated 350,000 broadband and mobile connections plus 46,000 voice services to its customer base.
The transaction, which includes AGL Telco customer assets, is expected to complete in June 2026, with customer migration slated for completion in H1 FY27.
At December 31, 2025, AGL Telco comprised about 218,000 NBN services, 144,000 mobile connections and 46,000 voice services, according to Aussie Broadband.
Alongside the acquisition, the companies have signed a long-term exclusive partnership under which AGL will continue to sell telco services under the AGL brand, while Aussie Broadband will provide the underlying telecommunications services and manage the customer experience.
Financials and consideration
Aussie Broadband said the arrangement is expected to deliver around $235 million in revenue and about $21 million in underlying EBITDA in the 12 months following migration (excluding one-off transaction and migration costs).
Upfront consideration is $115 million, to be paid in ABB shares, with about 22 million shares expected to be issued to AGL in June 2026.
A further up to $10 million in ABB shares may be issued in $2 million tranches, subject to specified net growth hurdles.
ABB said the acquisition is expected to be EPS accretive in the first year following completion of the migration.
Scale ambitions
Aussie Broadband expects to grow AGL Telco connections (excluding voice services) to more than 500,000 over five years.
It also flagged that, following migration of AGL Telco customers and the More/Tangerine services, it expects to become the third-largest NBN service provider, with broadband connections projected to exceed 1.25 million and mobile connections across segments to approach 400,000.
Partnership terms
The partnership has no fixed term and includes termination rights for events including insolvency, material breach and material reputational damage, with AGL also holding certain rights tied to repeated performance failures and change-of-control events.
AGL also has the right to buy back AGL-branded telecommunications customer contracts at commercial value if the collaboration is terminated.
Aussie Broadband CEO Brian Maher said the agreement would “provide a significant boost” to connections and EBITDA from 2H FY27.