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Third party research

Bredband2: Price hikes and cost synergies on the cards - ABG

Bredband2

This is a third party research report and does not necessarily reflect our views or values

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Solid Q3 report, adj. EBITA +9% y-o-y
Price hikes in Q4 to benefit margins
'25e-'26e EBITA +1%, 12x-10x '24e-'25e EV/EBITA


Slightly soft GMs, but solid report overall

As expected, Bredband2's gross margin suffered from increased marketing activity and higher prices from network owners, coming in at 32.2% (vs. 33.0% in Q2). Nevertheless, the company reported solid organic subscriber growth of 2,000 q-o-q (ABGSCe +3,500), although this was probably partly affected by Bredband2's decision to raise prices in Q4, where churn tends to occur some time before (i.e. when the customer is informed). The price increase bodes well for a sequential gross margin improvements in the coming quarters, which usually also means operating margin improvements. In addition, costs were lower than we had expected, driving adj. EBITA up 9% y-o-y. Finally, FCF (lease-adj. and excl. M&A) was strong at SEK 55m, resulting in lease-adj. net cash of SEK 75m at the end of Q3.