TIDMBBB
RNS Number : 2741J
Bigblu Broadband PLC
12 December 2022
This announcement contains inside information for the purposes
of Article 7 of the Market Abuse Regulation (EU) 596/2014 as it
forms part of UK domestic law by virtue of the European Union
(Withdrawal) Act 2018 ("MAR"), and is disclosed in accordance with
the company's obligations under Article 17 of MAR.
Bigblu Broadband plc
('BBB', the 'Group' or the 'Company')
Trading Update
Double digit like for like growth, and consideration of
potential ASX listing for SkyMesh
Bigblu Broadband plc (AIM: BBB.L), a leading provider of
alternative super-fast and ultra-fast broadband services, is
pleased to provide a trading update for the 12-month period ended
30 November 2022 (the "Period"). During the Period, BBB delivered
positive progress with double-digit like for like revenue growth
achieved with particularly strong growth in the Australasian
region. The Norwegian business was impacted by a cyber-attack to
its satellite provider and by delays in the 5G product launch,
which impacted on performance in the period. Quickline, which the
Group still have a retained interest in, has undergone significant
scaling with the support of Northleaf and has strategically
enhanced its platform for growth from an FWA business to a
distinguished hybrid GFWA and FTTP player with ambitious growth
plans. Whilst the Company operates in several different
geographies, the directors remain confident in the future growth
prospects of the business and the Board will continue its focus on
ensuring it can maximise the inherent value within the Company and
deliver further shareholder returns.
Financial Highlights
-- Total revenue increased 15.1% to GBP31.2m (FY21: GBP27.1m)
with like for like revenue growth(1) on a constant currency basis
of 13.3% (FY21: 15.3%).
-- Adjusted EBITDA(2) in the Period was GBP5.0m (FY21: GBP4.6m)
after investment in New Zealand and new product launches in
Norway.
-- Adjusted Free cash inflow(4) of GBP1.5m (FY21: inflow
GBP2.1m) after investment in stock In Norway of c. GBP1m following
chip shortages earlier in the year.
-- Net cash(5) at 30 November 2022 was GBP4.2m (FY21: GBP5.2m)
following the purchase of the customers and assets of Clear
Networks (Pty) Ltd ("Clear") for up to GBP1.6m.
Operational Highlights
-- The acquisition of c.2.2k satellite and fixed wireless
customers together with certain business assets of Clear Networks
(Pty) Ltd ("Clear") ISP, serving primarily customers in the greater
Melbourne area in Australia was completed post regulatory approval
in early 2022.
-- The distribution agreement the Norwegian business entered
into with Telenor is providing next generation ultrafast broadband
via Fixed Wireless Access using 5G technology ("5G FWA"),
delivering speeds up to 500 Mbps with unlimited data packages.
Although at the start of the year this was running six months
behind schedule, due to equipment shortages, it has now reached
c.1k customers with month-on-month growth and significantly lower
annualised churn rates, reflecting greater customer satisfaction
with the products.
-- On 21 December 2021 the Company signed a Distribution Partner
Agreement with OneWeb, to distribute low Earth Orbit ("LEO")
satellite based broadband services .
-- Total customers at the period end were 59.4k (FY21: 58.8k).
-- We are pleased with the progress made in the New Zealand
("NZ") market with our Asia Pacific broadband satellite partner,
Kacific Broadband Satellites Group and are delighted to report that
NZ has fully opened its borders after the long pandemic closure,
which will allow us to drive activity. We have also recruited a
local experienced sales executive, in country, and progress is
accelerating.
-- Post period end, we announced that BBB had conditionally
acquired the Satellite operations of Harbour ISP PTY LTD, a
subsidiary of Uniti Group LTD in Australia (the "Acquisition"), for
a total consideration of up to AUD$5.2m (GBP2.9m), to be satisfied
from existing cash resources. This acquisition, combined with the
Clear acquisition, will result in SkyMesh having an enlarged
national presence of 45% of the NBN Co satellite market across
Australia especially in the rural and suburban market segments.
1 Like for like (LFL) revenue treats acquired businesses as if
they were owned for the same period across both the current and
prior year and adjusts for constant currency and business disposed
of in the period are excluded from the calculation.
2 Adjusted EBITDA is stated before interest, taxation,
depreciation, amortization, share based payments and exceptional
items. It also excludes property lease costs which, under IFRS 16,
are replaced by depreciation and interest charges.
3 Adjusted Operating cash flow relates to the amount of cash
generated from the Group's operating activities and is calculated
as follows: Profit/(Loss) before Tax adjusted for Depreciation,
Amortisation, Share Based Payments and adjusting for changes in
Working Capital and non-cash items.
4 Adjusted Free cash flow being cash (used)/generated by the
Group after investment in capital expenditure, servicing of debt
and payment of taxes. Both excludes exceptional items.
5 Cash / Net debt excludes lease-related liabilities of GBP1.2m
of under IFRS 16 (FY21 GBP1.1m).
Andrew Walwyn, Chief Executive Officer of Bigblu Broadband plc,
commented:
"We started the year with a couple of initial setbacks,
including a cyber-attack to one of our satellite providers
affecting c.3k customers in Norway, as well as a delayed 5G launch
due to chip shortages. Despite this we are satisfied with the
continued progress shown by the Group in the Period. Extensive
effort has been made across the business units to switch customers
into more attractive packages at the expense of net adds, with c.9k
migrations in the period and net adds of 0.6k, of which net adds of
c.2.2k were associated with the Clear acquisition in Australia. We
ended the period with 59.4k customers. The recently announced Uniti
transaction, on completion, will result in a customer base of c.58k
(out of a total Company base of c66k post completion of the Uniti
acquisition) in Australasia and we remain focused on our strategy
in Australia of organic growth combined with targeting suitable
bolt-on acquisition opportunities. In addition, we remain focused
on creating and realising shareholder value for BBB Shareholders
and in this regards we are exploring all options for the
Australasian business including a potential ASX listing.
The necessary investment made to improve our offerings in
Norway, resulted in c1k new FWA 5G customers at the period end.
Work is still required to improve the performance of the Norwegian
business including product offerings, costs and systems.
Despite the global economic environment, the Group continues to
demonstrate strong year on year revenue growth underpinned with a
high percentage (c.90%) of recurring revenue. We remain confident
in our ability to deliver further attractive returns for
shareholders from our operations in Australasia and to realise a
return from the Norwegian business together with the remaining
equity stake in Quickline. As we enter the new financial year,
there are opportunities for each business unit to deliver
shareholder value as we continue to support customers unserved and
underserved in the digital divide, whilst at the same time
improving our product range thereby reducing churn. Whilst
operationally we remain focused, working with our network partners,
on increasing gross adds and reducing churn as well as ensuring our
customers are on the most suitable packages and receive the best
customer support, we will continue to consider all options in
respect of maximising shareholder value."
For further information:
Bigblu Broadband Group PLC www.bbb-plc.com
Andrew Walwyn, Chief Executive Officer Tel: +44 (0)20 7220
Frank Waters, Chief Financial Officer 0500
finnCap (Nomad and Broker) Tel: +44 (0)20 7220 0500
Marc Milmo / Simon Hicks / Charlie Beeson
(Corporate Finance)
Tim Redfern / Harriet Ward (ECM)
About Bigblu Broadband plc
Bigblu Broadband plc (AIM: BBB.L), is a leading provider of
alternative superfast and ultrafast broadband solutions throughout
Australasia and the Nordics. BBB delivers a portfolio of superfast
and ultrafast wireless broadband products for consumers and
businesses typically unserved or underserved by fibre.
High levels of recurring revenue, increasing economies of scale
and Government stimulation of the alternative broadband market in
many countries provide a solid foundation for significant organic
growth as demand for alternative ultrafast broadband services
increases around the world.
BBB's range of solutions includes satellite, next generation
fixed wireless and 4G/5G FWA delivering between 30 Mbps and 500Mbps
for consumers, and up to 1 Gbps for businesses. BBB provides
customers with a full range of services including hardware supply,
installation, pre-and post-sale support, billings and collections,
whilst offering appropriate tariffs depending on each end user's
requirements.
Importantly, as its core technologies evolve, and more
affordable capacity is made available, BBB continues to offer
ever-increasing speeds and higher data throughputs to satisfy
market demands for broadband and broadband services. BBB's
alternative broadband offerings present a customer experience that
is similar to that offered by wired broadband and the connection
can be shared in the normal way with PCs, tablets and smart phones
via a normal wired or wireless router.
Key Financials
We ended the year with a customer base of 59.4k (FY21: 58.8k)
despite having had to contend with a cyber-attack to our satellite
provider in the Nordics which impacted churn during the period, as
well as product shortages which delayed the 4G/5G FWA launch with a
combined impact of 1.6k in customers, GBP0.5m in lost revenue and
GBP0.3m in EBITDA. There was a focus on launching new products in
new territories, with Telenor 4G/5G FWA in Norway and Kacific
Satellite in NZ as well as significant marketing campaigns to
migrate c.9k customers in Australia to more suitable products which
the business believe should help to reduce churn in the future.
Total revenue including recurring airtime, equipment,
installation sales, network support and the Clear acquisition was
GBP31.2m, up 15.1% (FY21: GBP27.1m). This increase in revenue
reflected a higher number of customers, ARPU progression and
favorable FX rates in the period. Recurring airtime revenue,
defined as revenue generated from the Company's broadband airtime,
which is typically linked to contracts, was GBP29.6m representing
95% of total revenue (FY21: 95%). Total like-for-like (LFL) revenue
for the Continuing Group in the period was GBP30.7m representing
13.3% growth.
Gross profit margins reduced to 42.5% in FY22 (FY21: 45.0%), due
to planned product mix changes with the increase in 5G FWA
customers being at slightly lower margins than existing recurring
margins for fixed wireless but carrying a higher lifetime value due
to lower churn.
Overheads, before items identified as exceptional in nature,
increased to GBP10.8m (FY21: GBP9.2m) representing 34.6% of revenue
(FY21: 33.9%) mainly due to increased marketing costs of GBP0.4m
associated with new product and market launches as well as
communications to customers post the cyber-attack, Australasian
headcount costs GBP0.3m and amortisation of the Clear acquisition
of GBP0.5m in the period. Operationally we moved offices in each
geography to less expensive more flexible locations which will
impact positively in FY23. Significant effort was directed towards
pivoting customers and the businesses to a wider hybrid product
suite during the period.
Consequently, adjusted EBITDA for the period was GBP5.0m
representing an adjusted EBITDA margin of 16.0% compared to GBP4.6m
in FY21 and an adjusted EBITDA margin of 16.9%.
Australasia
Our Australian business SkyMesh, is the leading Australian
satellite broadband service provider having been named Best
Satellite NBN Provider for the fourth year in succession
(2019-2022). SkyMesh has continued to be the market leader in the
satellite broadband market with total market share pre the recent
Uniti transaction of c.38.5%, a growth of 2.6% year on year.
SkyMesh has consolidated its purchase of Clear Networks and
expanded into NZ during the year and the recently announced
conditional acquisition of the satellite customers of Uniti further
strengthens our position in the market.
Our Australasian business performed strongly during the year,
with customer numbers at 51.5k, an increase of 3.5% on prior year
(FY21: 49.7k), which includes the customers acquired from Clear
(2.2k). As a result of this growth plus ARPU improvements, SkyMesh
revenues increased to GBP26.5m (LFL: GBP21.8m), up 21.6% (LFL:
19.3%) on prior year, with adjusted EBITDA of GBP5.0m, up 25.1% on
prior year (FY21: GBP4.0m), supporting both a positive adjusted
operating cash inflow(3) of GBP5.6m and generating a positive
adjusted underlying free cash flow before group transfers of
GBP4.4m.
Post period end, we announced the conditional acquisition of the
Uniti satellite operations with c6k customers which the Board will
look to transfer to Skymesh post completion.
The emergence of 5G and LEO satellite technologies is expected
to lead to accelerated uptake of non-fibre broadband internet
services in Australasia. Further acquisitions and new product
opportunities are emerging as SkyMesh heads into 2023 with its
product offering likely to expand, leading to continued increases
in customer numbers.
The Board's focus will be on organic growth with our network
partners with suitable accretive bolt on acquisitions that could
accelerate the Company's presence into the wider Australasia region
and importantly accelerate the scaling of the Australasian
business. In addition, the Board continues to explore all options
to realise value for BBB shareholders from Skymesh, which could
include an ASX listing of Skymesh.
Norway
Reflecting the decrease in customer numbers associated with the
demounting program on non-profitable sites, as well as the impact
of the satellite cyber-attack on the satellite provider to our
Norwegian business, BB Norge (rebranded Brdy.no), ended FY22 with
customer numbers at 7.9k, down on the previous year (FY21: 9.1k).
Consequently, revenues for BB Norge were GBP4.0m, down 13.0% on the
prior year (FY21: GBP4.6m). After some initial delays, the 4G/5G
FWA revenue stream has grown in FY22 and is now contributing early
growth in new customers and revenue. Adjusted EBITDA for the region
was GBP1.0m, down 47.3% on prior year (FY21: GBP1.9m). Adjusted
operating cash was an outflow of GBP0.1m and adjusted underlying
free cash flow was an outflow of GBP1.0m following capital
expenditure of GBP0.9m and set up costs associated with the 5G FWA
of GBP0.2m.
During the Period the Group invested in refining and enhancing
the Company's service proposition in the Nordic market to support
the next generation ultrafast broadband via wireless 5G FWA,
delivering speeds up to 500 Mbps with unlimited data packages. As
reported previously this is beginning to show early momentum with
growing traction in the market (c.1k customers) and great customer
satisfaction being reported.
The Board continues to evaluate the opportunity to refine and
enhance the Group's service proposition in the Nordic market.
Initiatives include the launch of new satellite offerings across
the region offering speeds of 50Mbps and unlimited capacity. The
Directors consider that the Group's ability to offer a combination
of services including our own Fixed Wireless network, 5G FWA via
Telenor and satellite solutions in the Nordics provides the Group
with potentially scope to expand its presence and reach in this
region and create shareholder value. At the same time the Board are
examining all opportunities to create shareholder value and a
transaction with management is being considered as a potential
option amongst others.
Strategy
Across the regions in which we operate, we have worked hard with
our network partners to be able to offer our customers a selection
of products that best suits their needs. We continue to see the
demand for our products increasing with an element of home working
in the Nordics and Australasia now being the norm, and the
consequential need for faster broadband solutions to the home.
Whilst recognising the pressure on individuals and companies'
disposal income and profits, we firmly believe that the updated
solution set that the Group offers to its customers is becoming
more important and a very necessary utility cost. The opportunity
in the super-fast broadband market remains extremely exciting
across the businesses as it is changing significantly and
accelerating at pace. Where in the past a service of 30Mbps was
seen as an appropriate solution to a typical customer, nowadays
this is upward of 50Mbps and our satellite, fixed wireless and FWA
5G solutions will ensure that all unserved and underserved
customers can receive an appropriate solution.
The Directors consider that, given their respective strengths,
each of the remaining business units in Australasia and the Nordics
has potential opportunities to enhance shareholder value and
therefore the Board will be focused on ensuring that it can fully
capitalise on this opportunity.
Specifically post the recent acquisitions for the SkyMesh
business in Australia, the Board believes that its strategy of
organic growth complemented by further bolt-on acquisitions should
accelerate the Company's presence into the wider Australasia region
as it considers all options to realise value for shareholders
including a potential ASX listing. The Board believes the business
has the potential to achieve 100,000 customers in the region over
the next three years through organic and acquisitive growth.
In Norway, following the launch of new FWA 5G products and the
new Satellite offerings, whilst early days we are witnessing
increased customers and showing early signs of stabilizing,
although the business remains cash consumptive.
The Board will continue to look at all opportunities to maximise
shareholder value from its operations in Australasia Norway and its
retained stake in Quickline.
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END
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