Aussie Broadband Limited (ABB) Earnings Call Transcript

Thank you for standing by, and welcome to the Aussie Broadband Limited FY '24 Results Call. [Operator Instructions] I would now like to hand the conference over to Mr. Phillip Britt, Group Managing Director. Please go ahead.

Good morning, all, and welcome to the Aussie Broadband earnings call for our FY '24 full year results. My name is Phillip Britt, and I'm the Group Managing Director of Aussie Broadband. With me on the call today is Aussie Broadband's CEO, Brian Maher; Aussie Broadband, Group Chief Financial Officer, Andy Giles Knopp; and Symbio CEO, Michael Omeros, known to many as MO. A lot has happened in the last 12 months, and we're pleased to report a solid growth across our core segments and some excellent momentum that we're carrying into FY '25. It's been an exciting year, and there's a lot to cover, so let's get started. Before we get into the results, I'd like to acknowledge the Aboriginal and Torres Strait Islanders as the First Australians for their role as the original communicators, connectors, scientists and carers of the land and waters across Australia. We pay our respects to elders past and present. We commit to working respectfully to honor the ongoing cultural and spiritual connections between the traditional owners of this country and to building an inclusive Australia together. Before we dive into that, we wanted to provide a broader level view of the group and our ambitions over the coming years. On Page 4 of our results presentation, you'll see that Aussie has forged an incredibly strong reputation in the residential broadband space, and that was strengthened throughout FY '24. I particularly want to extend a thanks to all the incredibly hardworking staff in our customer service teams who helped ensure Aussie Broadband was once again named the Most Trusted Telco in the Roy Morgan rankings, which was an incredibly prestigious award to win multiple years in a row. Residential remains a high performing cornerstone of the group but we have successfully established multiple revenue streams beyond this base. Our year-on-year revenue has grown by 27% on a statutory basis while our gross margin percentage has improved. This is a great result considering the headwinds facing the telco industry in FY '24. You'll hear about some of the superb wins in our enterprise and government segment where we've signed some Australian household names from the Big 4 incumbents. The group recorded revenue growth and gross margin growth across all segments to record a strong group financial performance. The early signs from the launch of Buddy Telco are also looking very positive, but we'll provide you a deeper update on the brand later in this call. Our voice and fibre networks continued to grow in scope and scale throughout FY '24, with our footprint now standing at over 1,700 kilometers. Our fibre network now covers not only all the major metropolitan hubs across Adelaide, Brisbane, Melbourne, Sydney and Perth, but it also reaches into the major growth corridors. That strategic infrastructure and our ongoing investment into our nationwide assets is a key part of Aussie's success in FY '24 and will help power the business for even more as we grow in the years to come. Finally, our balance sheet is in fantastic shape. This has enabled Aussie to declare a fully franked dividend this year, the first time Aussie has been able to do so. We're incredibly excited about the growth of the business, and it means that Aussie is one of the few growth companies within the sector that can also provide a yield. You'll hear more about our approach to capital management later on in the call. Moving to Page 5. Here's a broader look across the segments that the group currently plays in. This page really showcases just how diverse the Aussie Broadband Group has become. Our fibre and voice assets are really starting to unlock the powerful advantage for our businesses, whether its margin improvement thanks to our Aussie Fibre assets, the scale and flexibility provided by our tier 1 voice networks, or through the agility and customer service that is helping us score major enterprise and government customers off other incumbent telcos. We've broken out the gross margin and percentage of revenue for each segment here, but we'll dive deeper into detail of those segments later in the presentation. Moving to page 6. When we look at Aussie's evolution over the past 5 years, it's quite staggering. We listed on the ASX in October 2020 and have seen consistent and sustained growth year-on-year across all key metrics. We have met or exceeded EBITDA guidance every year since listing and exceeded our prospectus forecasts. Turning to page 8. FY '24 has been a good year for Aussie, with the business recording solid growth and results across all our core segments despite some notable challenges and industry headwinds. Our EBITDA in FY '24 delivered at the top end of guidance on a statutory basis at $120 million, with a better-than-expected contribution from Symbio since the acquisition was completed in February. The group continued to execute its diversification strategy across multiple segments, and our investments in our homegrown Aussie Fibre and tier 1 voice networks have continued to unlock additional scale, margin and competitive advantage. Symbio contributed $12 million in EBITDA in FY '24, representing the 4 months of post-acquisition trading. The result included a modest $600,000 of synergies but we have now formulated a clearer view on longer term synergies, and I am happy to advise that we have now identified synergies in the range of $8 million to $12 million by the end of FY '26. We believe there's a great story to tell within the existing and planned platforms of Symbio and the positive contribution we expect from Symbio in FY '25, but we will cover more of that later in the call. Lastly, I am proud to announce that on the strength of the group's balance sheet, this has allowed us to declare a fully franked dividend of $0.04. This is the first time Aussie has been able to provide a yield to shareholders. With our strategic assets, growth and multiple segments, Symbio's strengths and the flexibility of our balance sheet, we believe the business is well positioned with the necessary resilience and infrastructure to continue growing in the years to come. Turning to page 9, you'll see the Aussie Broadband Group at a glance. Aussie is still growing its share in the NBN residential broadband market, with 7.4% market share, excluding satellite and Origin. Our total broadband connection across the group now totals more than 700,000, which excludes Origin. You can also see the strength of our voice networks, with 7.5 million numbers hosted on our Symbio and NetSIP platforms and 8.6 million call minutes carried across both networks. Our fibre network now has over 500 buildings connected, with another 2,000 ready to connect across the metropolitan cities and some of the cities' biggest growth corridors. Our mobile services continue grew too, with almost 187,000 mobile services across the group. Finally, we just wanted to call out that we have retained the title of Australia's Most Trusted Telco, as rated by Roy Morgan. Roy Morgan also evaluated Aussie Broadband to be the 34th most trusted brand in Australia, ranking us alongside some of the true household names and titans of Australian business. It's a symbol of just how far the business has come, and a validation of our ability and belief to continue disrupting the telco space. I'm going to hand over to Andy now to cover off the group's financial results.

Thanks, Phil and thanks everyone for joining the call today. I am proud to have joined Aussie Broadband as the Group CFO and I am excited to talk through the financial performance for the group for the first time. So turning to Page 11. FY '24 has been another strong year for the Aussie Broadband Group, across all the key financial metrics. Our revenue, on a statutory basis grew by 27% to almost $1 billion. That's an incredible achievement for the group, considering our humble beginnings, and it demonstrates the group's ability to successfully deliver on its strategy to diversify, particularly over the last couple of years. Our gross margin grew by 0.7 percentage points to 36.1%, and as highlighted on Page 5, we have strong gross margin percentages across all our customer segments. Our underlying EBITDA, which includes share-based payments, came in at $120.5 million, which was at the top end of our guidance range; another strong result, highlighting positive operating performances for both Aussie Broadband and Symbio. The EBITDA grew by 34.5 percent from FY '23. Our cash flow and balance sheet net debt position are highlighted on Page 12. Our operating cash flow before interest and tax, was $128.2 million, up 54.1% from '23, when you normalize FY '23 for the change in NBN billing that took place. The group delivered an ongoing, consistent, and strong cash conversion at 106.5%, up on FY '23. Our net debt position of $138 million was up 7.1%. The net debt position includes borrowings of $298 million plus total lease liabilities of $54 million offset by a healthy cash and cash equivalents balance of $213 million. The strong balance sheet position provides the group the financial flexibility to continue to invest in our operational CapEx, including in our strategic Aussie Fibre network, and to deploy on our organic and M&A opportunities that maximize our shareholders returns, as they arise. As in previous years, I wanted to highlight our business-as-usual capital expenditure, which is set out on Page 13. Excluding the $6.7 million of CapEx for Symbio, the total CapEx for FY '24 was $40.7 million, at the lower end of the reduced guidance range of between $40 million and $45 million. The group has a disciplined approach to CapEx investment in core platforms, lifecycle replacement and growth opportunities. For FY '24, the CapEx was deployed in building out our strategic Aussie Fibre network, investments to support the core and customer growth as well as in uplifting capability across both Aussie Broadband and Symbio. We are reaffirming our CapEx guidance for FY '25 at between $55 million and $60 million, inclusive of Symbio for the full year. This range is $8 million lower than a comparable FY '24, as we manage our excess network capacity during FY '25 as a result of the Origin customers migrating off the network. Having such a strong balance sheet, we felt it was important to set out our capital management approach, to provide clarity through FY '25 and beyond, which is outlined on Page 14. Our overall objectives are to maximize shareholder value, maintain financial flexibility and to support and enable business growth. To deliver on those objectives, we set out 5 main principles. First, we are committed to maintaining a balance sheet setting consistent with a leverage ratio between 1.75x and 2.5x. Second, we will use capital to fund our business-as-usual CapEx. Third, we will look to use capital to grow the business both organically and through M&A opportunities, as they arise. Fourth, we will then consider a return to shareholders through a dividend. And fifth, after these options, and where we forecast the group will have excess capacity for between 12 and 18 months ahead, we will also consider further opportunities to return the excess capital to shareholders. Overall, the group delivered strong results in FY '24. To understand how this performance was delivered through our segments, let us start with Symbio, and I'm going to hand you over to MO.

Thanks Andy, and thanks everyone for joining the call today. Symbio had a solid FY '24, with growth across the network. The business only became part of the Aussie Broadband Group at the end of February, and it has already surpassed expectations over that short period, contributing $12 million in EBITDA for the 4 months. Some key metrics can be found on Page 17. Numbers on the Symbio network grew by 10% year-on-year. Mobile services in operation grew to 110,000 by June 30. Gross margin increased by 4% year-on-year as well. Since Symbio is relatively new to the Aussie Broadband Group investors, I wanted to briefly take everyone through what Symbio offers and some of the markets where we have a competitive advantage. The details are on Page 18. Trusted by the world's largest cloud communication providers, our strength is in disrupting legacy telecom networks. We offer a true cloud-ready alternative that empowers customers with accessible APIs and no-to-low code alternatives for local hosting, calling, porting, provisioning and service management. Our worldwide network has more than 220 partners across the globe, and we have all the necessary in-house expertise to help manage clients' international traffic and needs. Symbio is Australia's largest Mobile Virtual Network Enabler and our telco as a service offering provides a marketplace delivering a best-in-class telecommunications product catalogue, to support the growing Australian challenger service provider market. Growth is a major focus for Symbio in financial year '25, starting with the expansion of our telecommunications as a service platform and our domestic networks. We'll be looking to grow numbers, minutes, SIOs and partners across both, and expect a lot of momentum in market with the launch of our new age enablement platform in the latter part of FY '25. We'll also be further investing in automation and self-service functionalities for our customers and will continue to invest wisely in Singapore and Malaysia, two key regional markets for our business. Symbio will also look to explore other inorganic voice opportunities for growth. We will also deliver positive cash flow returns for the business. Symbio will deliver earnings growth to the group in FY '25. As can be seen from the bridge, Symbio is expected to deliver approximately 30% greater EBITDA in FY '25 when compared to the pro forma FY '24 EBITDA. Even when we normalize out the synergy benefits in each year, the business is delivering approximately 20% EBITDA growth year-on-year. This is very satisfying given we are also investing in business development capability for future year's growth. On Page 19 we've outlined expected synergies such as the removal of board and ASX listing costs. We have already executed on some other synergies ahead of schedule. In FY '24, we completed the realignment of our senior leadership team to better fit our future go-to-market strategy, and FY '25 will see the rest of the teams being aligned under our new approach. We'll also work towards executing additional synergies by consolidating some of Symbio's operational and network systems. To date, we're expecting total synergies will be within the region of $8 million to $12 million by the end of financial year '26, and we will continue to update you all in future calls as to how that's going. I'll now hand over to Brian to take you through the Aussie Broadband segments.

Thanks, Mo. I'm delighted to talk to you for the first time as CEO of Aussie Broadband and I'll kick-off a walk-through of our segments with residential. As you can see from the charts on Page 21, the group recorded growth across revenue, total connections and gross margin. Revenue grew by 14%, while connections grew by 13% despite the increasingly competitive industry environment. Our residential growth is particularly impressive in an era of structural change in the wholesale pricing regime following the finalization of the prolonged NBN SAU consultation process. The new SAU saw price changes across the spectrum of speeds and resulted in higher costs for consumers in the slower speed tiers where CVC charges remain in place until 2026. However, the elimination of CVC on 100 speed products and above enabled price reductions for higher speed broadband plans, a traditional strength for Aussie Broadband. The impact of the changes was a net positive for Aussie as can be seen in the improved gross margin percentage in the second half of the financial year. Our NBN customer churn rates remained within our expectations. Anticipated higher churn rates were experienced following the November and June price increase announcements but the equally anticipated return to norm following the increases was also experienced. We have also retained our pre-eminent position in the industry with respect to satisfaction and we are the most trusted telco in Australia. Growing our presence in the mobile space as an MVNO provider will be one of our continued focuses for FY '25, both as a direct offering and via multi-product offers. We will also continue to invest heavily in high-speed tiers, particularly targeting fibre enabled customers who highly value speed, quality and the customer experience. We expect NBN's most recent consultation period to introduce even more high-speed broadband tiers to the residential market, and we believe Aussie is very well positioned to capture a high proportion of these new high-speed users. We have further enhanced our high-speed offering with our new semi-symmetrical PRO product range. In addition, we be looking to accelerate growth in FY '25 through Buddy Telco, which will help us increase our market share in those areas that Aussie Broadband has traditionally underperformed in. I'll delve a little deeper into Buddy Telco and refer you to Page 22, our new sub-brand in the fixed broadband space. The creation of Buddy was something we've thought about internally for a couple of years, but it wasn't until now that we had developed our talent, skills and automation to the point where we could completely execute this in-house. So far, the numbers have looked very promising. Almost 2,200 customers have active services with Buddy within the first 6 weeks of operation. But what's been impressive is the customer satisfaction levels around the digital-only experience with our Buddy Bot and the Perth-based Live Chat team. Out of the thousands of interactions to date, the satisfaction rating with our Live Chat team has been a stellar 95%, and the satisfaction rating with our automated Buddy Bot is just under 90%. On top of that, just over half of all customer interactions have been resolved successfully without requiring human input, which is testament to our ability to design and scale out a digital-only service model successfully without sacrificing on quality. We believe we can improve this further with our observe and learn approach to evolving the Buddy experience. We are enormously excited by what Buddy brings to Aussie and we have already developed a deep affection for the Buddy character. Turning now to our business segment on Page 23. The segment grew by 9% in FY '24, thanks to a 19% year-on-year growth in connection numbers. Gross margins for business also grew by 5% year-on-year. The impact of the NBN SAU wholesale agreement was somewhat negative for business due to 2 aspects. Firstly, business services over indexed to higher speed plans which saw price reductions and secondly the removal of CVC pooling was detrimental to business, which previously benefited from the residential peak time usage. The new agreement has also enshrined more changes that will come into force in FY '25, which we anticipate will continue to be beneficial for Aussie Broadband and business customers. For FY '25, along with the smooth implementation of the next round of SAU changes, a major focus will be on improving the customer experience for business users. A lot of work has already been done identifying the different needs of business customers and their customer journey, and we will continue to build upon that research and insights into FY '25. Moving to Page 24, our enterprise and government team maintained good momentum in the year, securing new logos, retaining some strategic partnerships and focusing on re-signing existing clients. That work has delivered over $1 million in monthly recurring revenue in FY '24. Some of the excellent wins from the division include signing a deal with Bunnings warehouse, a contract previously held by an incumbent big 4 telco. ABB will supply connectivity to over 350 Bunnings sites across Australia, which demonstrates our increasing ability to win in the sector. We expect the first connection to be active in the next fortnight. Some other key clients for the team include wins with Mercy Health and Austin Health, where Aussie is delivering communications systems, as well as streamlining the network operations for Hitachi Construction. A key part of some of these contracts was the automation offered through our proprietary Carbon platform, and the backbone supplied through our home-grown Aussie Fibre. Our agility and superior customer service was also a key factor in us winning or retaining some of these key contracts, and that's something we will continue to utilize in E&G as one of our competitive strengths. Despite the great work by our growth teams, the E&G market is tough as has been commented on by other market players, so we have experienced some pressure on pricing and margins as we re-contract. We think we are through the worst of this and look forward to further growth. The team was also recognized by Fortinet and NetApp recently, with both companies awarding Aussie Broadband major partner awards for our successes in FY '24. Looking ahead to FY '25, the team will further leverage the benefits and margins provided by our growing Aussie Fibre infrastructure. We'll also be looking to drive further brand awareness, as well as investing further in digital platforms to extend our automation across the E&G segment. On Page 25, you can see a collection of just some of the 400 new clients our E&G team has signed throughout FY '24. We've spoken about Bunnings but there are also some major brands with a presence across the country. We're supplying 379 of United Petroleum's sites with NBN services, 4G backup and Fortinet products, and United was impressed with Aussie for the ease of use of our automated Carbon portal, the mix of technology we could offer, and our Actual Aussie Way approach to doing business. We're now providing a range of services to companies like Burbank, Campbell Page, Decjuba, Jetts, Knight Frank, Lorna Jane, and many, many more. The team also re-signed major clients including Eagers Automotive and National Storage. Another area where our strategic investments have paid off is in wholesale, and on Page 26 you can see a 59 % increase in revenue compared to FY '23. Some of that growth in revenue and gross margin was thanks to the contribution of Aussie Broadband's tier 1 voice network. We've already covered Symbio's numbers and performance earlier in this call, so just note that the figures you're seeing here are only reflective of Aussie Broadband's wholesale division. NetSIP's excellent automation and customer experience has continued to gain favor in the market, with the near doubling of minutes on the NetSIP network from FY '22 to FY '24. The team onboarded another 171 managed service providers including Pennytel, OriginNet, Devoli, iSeek, and Smile IT. This brings the total number of partners in our MSP program to 1,118. The figures you're seeing on this page also include revenue from the Origin contract. Offboarding of those customers only began in FY '25 and we expect that process to conclude in October. As for FY '25 more broadly, our wholesale team will continue to focus on growing the MSP program, expanding the capabilities of our Carbon and NetSIP platforms in line with the needs of our partners, and improving operational efficiencies. We continue to progress new white label and reseller opportunities. I thought it would be helpful to give some insights as to the scale of our fibre network. We continued investing in the size, scale and redundancy of Aussie Fibre. We grew its footprint into some of the highest growth corridors of the major metropolitan cities. On Page 28 you'll see our fibre coverage across Melbourne and Sydney, and more of that footprint is showcased on the following page. The network grew by 288 kilometers this year including the deep-water Middle Harbour cable in Sydney which was no small feat. The extent and scale of the network has reached a level that will allow us to better compete with incumbents in the space. We also wanted to call out just how significant an advantage our fibre ownership is. If we didn't own our own fibre, we would have to rent it or buy it on the open market. Owning that fibre adds an estimated $20 million in margins to our operations, and we continue to highlight the value of that infrastructure in a more direct way. I would like to give a massive shout out to all of the staff of Aussie. I never get bored of the feedback we get on the quality of the service we provide to customers and that it's down to the 1,300 or so Aussies that spend each and every day with the mission of delighting our customers. Thanks for your time and I'll hand back over to Phil.

Thanks very much, Brian. And moving you all to Page 31. We have 5 main pillars for FY '25, and the first part of that will be the continued investment in our key infrastructure assets including Aussie Fibre, our tier 1 voice networks and software platforms. Our approach with fibre will be a land and expand strategy, and we'll also be explore more ways to exploit the advantage we have from owning our own fibre network. Mo's already mentioned that Symbio is building out a new age enablement platform that we think will be really appealing to the white label and wholesale markets, and this new platform will help us further increase the margins on these products. Our multi-brand strategy will accelerate into FY '25, with Aussie, Symbio, NetSip and Buddy focusing on increased market share. All of our segments will benefit from our deepened focus on automation, AI and innovation, with Buddy Telco especially providing a great proving ground for technologies and ideas that could be leveraged across the rest of the group. We'll also be launching new residential products under the Aussie Broadband label in FY '25, including the recently launched Pro offering which went live in market only a fortnight ago. We'll continue to invest in our people and the award-winning customer service they provide to our customers every day. As Brian said, our people are the reason that Aussie Broadband has been able to grow to the company it is today, and part of our mission in FY '25 is to continue to maintain the culture that helps us attract and retain talent that helps deliver exceptional experiences for our customers. We'll continue to find efficiencies across the business throughout FY '25. We're also expecting the industry to consolidate more rapidly throughout FY '25. Thanks to our strong financials and sound management, the company is well positioned to take advantage of the strategic opportunities that may arise. Page 32 provides quick update on our M&A activity, and some clarity around our shareholding in SLC. Whilst we remain focused on organic growth, we continue to evaluate accretive M&A opportunities as they arise. As some of you will remember, earlier this year we sold 37 million shares in SLC at $1.31 a share and realized a profit on that sale of $13.5 million before tax and transaction fees. We still hold a 11.99% today in the company, a shareholding that as at 23rd August was valued at $108.2 million. Our gain on the remaining stake is $46.0 million. We continue to monitor the SLC opportunity. I'll now hand back to Andy, and he'll take you through our FY '25 guidance.

Thanks, Phil. As you can see on Page 33, our underlying EBITDA guidance for FY '25 is in the range of $135 million to $145 million. After our $10 million investment in Buddy Telco is factored in, the EBITDA guidance for FY '25 is in the range of $125 million to $135 million. As mentioned before, our CapEx guidance is between $55 million and $60 million. With a positive momentum across all our segments, and the net broadband additions across Aussie Broadband and Buddy Telco at over 13,000 for the first 8 weeks of the year, the business is in a strong and healthy position. Having highlighted the EBITDA guidance, I want to talk through the bridge between FY '24 and FY '25 EBITDA guidance as shown on Page 34. Mo spoke a little earlier on the Symbio FY '24 pro forma EBITDA, so starting at the group FY '24 pro forma EBITDA of $137 million, there are really 3 key messages. The first message, the impact of Origin. In FY '25 the contribution, being the gross margin less direct customer service costs is $6 million which covers the migration period through to October 2024. This is a reduction of $21 million year-on-year. Also, in FY '24, there were approximately $12 million of additional costs allocated to the Origin customer base, across the group. In FY '25 we have plans to remove $4 million of the $12 million. We have begun the work of making our organizational structure more efficient to meet the times and have commenced a consultation process with our teams on what that new structure looks like. This still leaves $8 million of costs remaining within the business and through the year we will develop plans to further remove these costs from FY '26. The second message is our growth. Our growth across Aussie Broadband and Symbio segments, continues to be strong. Growth will be between 13% and 21% to achieve the underlying guidance range of between $135 million and $145 million. This growth does include the synergies delivered by Symbio and it represents strong underlying growth across all of customer segments. The third message is Buddy Telco. With the exciting launch of Buddy in July, we are reconfirming the planned investment and impact to EBITDA, which is in the range of $10 million for FY '25. This investment will set the foundations to deliver on our goal of 100,000 connections over the next 3 years. I'll just pass you back to Phil who can cover off the key takeaways.

Thanks very much, Andy, and team. We're just about to head into our Q&A. But before we do, I wanted to leave you with these 5 key points. Aussie's core business is strong, with a solid pathway for growth and profitability into FY '25 through our core brands and Symbio's offerings and the initial success of Buddy Telco. We are well positioned to leverage our diversified product offering to drive further growth. Our balance sheet and cash flow are very strong. With a focus on maximizing return to shareholders, maintaining financial strength and flexibility, we look to deploy cash for continued growth and diversification. The business is well positioned to monetize its fibre and voice infrastructure, and we will continue to invest in both. Lastly, Aussie is continues to be the country's most trusted telco. That concludes our investor presentation. We'll now open up to questions.

[Operator Instructions] First question today comes from Jonathon Higgins at Unified Capital Partners.

So just a couple from me. Firstly, maybe one, I think, for Mo, just on the Symbio margins, like we've sort of started to see them grow half-on-half, we've got the upgraded synergies target as well. I was wondering if you could just give us some thoughts on where you see margins in that business starting to move and potentially just weave in the Over The Wire ABB voice business with that as well, please?

Thanks, Jono. So just with regard to the margins, as you said, you can sort of see that half-on-half growth in '24, when we look out to '25, we do sort of see that steadily increasing a little bit to 2 main areas. One is sort of mix on where we're sort of seeing our growth coming from. And then secondly, just sort of some of the efficiencies we're building both within the organization on the margin side, but then our ability to buy in terms of some of those [ COG ] components. With regard to the weaving in of the Aussie NetSIP piece, as we've sort of said, we are keeping the businesses separate at the moment. So there's no specific weaving in. Although what we are doing, of course, is both organizations have their own buying power, and we are looking at how we bring those together to sort of get the larger benefit overall.

Just on Buddy, whoever's best to answer this today, given an ambition that within 6 months you're sort of looking towards that 100,000 run rate, just wondering if you can just expand on what's happening there -- and my map sort of says that [ circa ] sort of 8,000 quarter type thing, but also just if you are seeing just your expectations on cannibalization and stuff, [indiscernible] something I think people are focused on.

Thanks, Jono, I'll pick that one up. So we're very encouraged by the start. It's been really pleasing to see how the market's taken to the Buddy brand. We still think we've got a way to go there. Obviously, it's a relatively unknown brand in the market, so we think there's still traction we can get down the track in building the brand, getting it out there and having a greater presence in the market. Yes, we've got a target of 36 months for 100k. The run rate we've got at the moment is encouraging and we think we can grow that over time. And so, our goal remains in place at 100k for 36 months and we definitely pursue that. In terms of the cannibalization risk, Buddy serves a couple of purposes, one is to be a new brand in the market that can go out there and attract customers looking for value in a digital first space, but also as a safety net for those customers who are leaving Aussie anyway, seeking value, particularly in the time of customer [ leaving ] crisis. So initially there was what we call it a spike in movements between Aussie and Buddy and what should expect on launch, where you've got those people who -- tech people, particularly, tech savvy people who love the Aussie broadband network, but largely self-serve, and so it made sense for them to move across to Buddy. So, there's a little spike at the start. Beyond that, what we're finding is that it's acting as we hoped, which is -- is acting as a safety net for those customers who would otherwise go to the other value players in the market, and we're picking up a fair degree of those. But we're 6 weeks in, we monitor data every day and we'll see how that goes. But so far, we're very, very positive about the outlook for Buddy.

And last one, just the [indiscernible] I think for the first time, sort of publicly called out in the presentation, just the $20 million of [ circa ] sort of savings or earnings there. You know, there's been a lot of fibre getting laid. I was wondering if you could just sort of talk towards your ambitions in this business maybe a couple of years out?

Yes, we're not specifically providing any guidance on what numbers we might attest that, but we are looking at being a little bit more aggressive in our build there. So we've been doing some research lightly on all the service requests we've had over the last year in areas where we, say, we don't currently have fibre close enough to service, and we're mapping all that and looking at where we can be a bit more proactive in building our fibre to where we're seeing that historic demand. And so a little bit more build and they will come. We're not going to take ridiculous risks, but we'll take a little bit more risk in that regard in building where we see those future demands. So we've been pretty excited about the opportunities that we see when we certainly were looking at historical data, opportunities we may have been able to pick up on had we had a little bit more fibre in the ground. So that's sort of the way we're going to look at that.

Your next question comes from Entcho Raykovski from E&P.

So, my first question is just around the churn impact post the price increases in July. I think Brian in his presentation mentioned that there has been some greater churn base price increases. So, I'm interested, has there been greater churn this time around than what you saw in November last year when the NBN SAU first came into place?

Entcho, yes, but within the margin of error, not significantly higher. Definitely a little bit more, but nothing that overly concerned us. And we're seeing that return to normal, as I said, pretty much in parallel to what we saw earlier in the year. I mean, I think the question goes to naturally, 2 increases in such a short space of time you think would have a compounding impact, and I think we did see a little bit of that, but it's bounced back reasonably quickly. And it's probably important to say that we did lobby quite heavily during the SAU process for that July increase to be waived because of that very reason we thought that was particularly unfair on consumers to have 2 price increases in the short space of time.

And in the context of that, do you expect the 13,000 net broadband connections that you've seen so far in the first quarter to be indicative of the run rate for the rest of the year? Or do you think you can actually see an acceleration given that spike in churn post the July price increase?

Yes, we no longer provide guidance on connection numbers, but [indiscernible] to say we're pretty happy with how we've started the year, and we're always looking to accelerate.

And then a question on the Origin overhead costs, which, obviously, you've given us greater detail now, so that's quite useful. But of that $8 million of overhead costs remaining at the end of FY '25, is there an opportunity to allocate some of those costs to Buddy? I'm just trying to reconcile the need to remove those overheads with the Buddy investment. Presumably, you can redeploy some staff into the Buddy launch or is that -- are they quite different functions and it's not so easy to do?

Yes. So, I think the answer is we see Buddy really being an automated and not really requiring labor. So in that sense, it's not about allocation of overheads to Buddy. What it really looks to -- and there are a couple of parts to this. One is, as we think about the opportunities for new business through FY '25 and into '26, it was really making sure we understood all those opportunities before we took definitive action on the overhead allocation in the business. And then the second part will be planning to remove some of the overheads. Largely, the OpEx that is still remaining in the business is labor related. So we're just going to look through and plan for that from '26 onwards. So those are the key messages. But certainly, we're not looking to allocate labor to Buddy because that's not the core platform for Buddy telco.

And if I can maybe sneak in a final one. Just around the competitive environment in enterprise and government. You've talked about the Bunnings contract when in April. Can you give us maybe some more color on what delivered that win, as pricing, service other factors? And are you seeing any moderation in competition? Or does it remain pretty intense?

I wanted to -- I wish we saw moderation in competition. We did not. It's pretty fierce. Particularly our larger competitors aggressively defend those contracts, so there's margin pressure in there. We recently had both Bunnings and Lorna Jane present to our teams at the annual sales kick up where we asked them that very question, why was Aussie successful? And whilst commercials were important, they very much told us it was around ease of doing business, flexibility, innovation of thinking, and more broadly, just being very no [ bulls*** ] to deal with. And whilst commercials will always be preeminent, we believe that the Aussie approach to doing business is carrying a lot of sway with these [ EMG ] style customers, particularly multi-site retail businesses where we seem to be doing very well.

Your next question comes from Eric Choi at Barrenjoey.