The Aussie Broadband Ltd (ASX: ABB) share price is an investment opportunity, according to a fund manager.
Readers may know Aussie Broadband as a growing telecommunications business that aims to offer better customer service.
While it has built up its market share of NBN household customers, there are other areas that the company is focusing on. It offers solutions for business, enterprise and government customers. It also provides wholesale access to other telcos and managed service providers.
The ASX telco share provides broadband services nationally through a wholesale agreement with NBN Co, its own fibre network, and some leased backhaul infrastructure from third parties.
Aussie Broadband claims to be the fifth largest provider of broadband services in Australia and is one of only six tier 1 voice providers in Australia.
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Why this expert likes the Aussie Broadband share price
Ben Rundle from Hayborough Investment Partners rated the telco a buy on Livewire's 'buy hold sell' segment.
Starting off his case for the company, Rundle said:
I feel like I'm sticking my neck out a little bit with this company because it's trading like it's faced a monster downgrade.
Rundle said he liked businesses with higher customer satisfaction levels, which he thinks Aussie Broadband has achieved in its residential broadband division. It has built a "huge amount of market share".
In its FY22 results, the ASX telco share revealed that its residential broadband connections had increased by another 28% to 464,979. It also revealed that revenue went up 57% to $546.9 million and it achieved $39.4 million of earnings before interest, tax, depreciation and amortisation (EBITDA) – up 107%.
Rundle also noted that the business was in a transition phase and "nobody's really seeing the fruits of that yet".
On the Aussie Broadband share price — down around 60% over the past six months — Rundle said:
It's quite cheap for what I think it is. It's a founder-led business that has a fantastic management team. So, I think that it's offering a pretty good opportunity to buy it here.
In FY23 the company expects the underlying EBTIDA margin to grow to between 10% to 10.5%, up from 7.2% in FY22.
Snapshot
The Aussie Broadband share price is up 7.8% trading at $2.21 at the time of writing. Shares in the telco have lifted 13% since the close of trade on Wednesday, 12 October.
