Bigblu revenue slips as it moves customers to higher-value packages

Bigblu Broadband reported a decline in first-half revenue on Friday, to £11.2m from £13m in the same period last year, reflecting a strategic decision to migrate customers onto higher-value packages.

The AIM-traded firm said the move was part of its ongoing effort to focus on more profitable customer segments, even as overall revenue decreased 8% compared to the prior year.

Adjusted EBITDA for the period was £1.1m, down from £1.5m in the first half of 2023, although on a constant currency basis, EBITDA remained stable due to cost realignments following the customer migrations.

The company said its cash flow was impacted by significant investments, resulting in an adjusted free cash outflow of £4.5m.

That was largely due to planned stock investment in a new contract with low-earth orbit satellite broadband giant Starlink, as well as additional working capital requirements associated with the transition to a new systems platform.

As a result, Bigblu’s net debt increased to £4.9m, compared to £0.3m in the first half of 2023.

In its Australian operations, Bigblu continued to strengthen its market position through Skymesh, which remained the leading satellite broadband provider in the country.

The introduction of 5G and LEO satellite technologies, particularly through the company’s partnership with Starlink, was expected to accelerate the uptake of non-fibre broadband services in Australia.

Skymesh saw a modest increase in its customer base, growing by 0.7k to 52.3k unique customers, as the company successfully integrated a new cloud-based system, Pathfinder, which consolidated multiple customer accounts into single billable services.

Bigblu retained a 2.8% stake in Quickline Communications, a UK-based broadband provider that had secured significant new business under the UK government's £5bn Project Gigabit programme.

Quickline successfully won all four contracts it tendered for, which would subsidise the rollout of a full fibre network to over 170,000 rural homes and businesses.

That initiative, supported by a £250m debt facility and additional private investment, would extend Quickline’s reach to about 400,000 premises, further enhancing its market position.

As part of its strategic refocus, Bigblu completed the disposal of its Norwegian operations in May 2023 through a management buy out (MBO).

That move allowed the company to concentrate on its core Australian business, while also reducing annualised central costs by around £0.4m.

Following the disposal, Andrew Walwyn resigned as executive CEO, with Frank Waters assuming the role of CEO of the public company.

Ray Vaughan joined as chief financial officer for the Australian operations, focusing on the financial management of Skymesh.

“The overall performance of the group is in line with the board's expectations for the first half as we focus exclusively on the Australian business,” said chief executive officer Frank Waters.

“Skymesh is a leading regional brand champion; the business has undergone significant change with new systems, new branding, new products and importantly new local leadership.

“Having incurred this investment, the group will look to capitalise on Skymesh's already strong reputation in remote and regional areas by executing our brand strategy, and with a relentless focus on reliability and excellence in customer service and support.”

Waters said the company would also continue to broaden the Skymesh product offering and solutions as appropriate with its network partners to its existing and new Australian customers, adding that its agreement with Starlink was an “excellent step” in that direction.

“The board believes that its strategy of organic growth complemented by further product launches should accelerate the company's presence across Australia with the potential to achieve 80,000 customers over the next three years.

“Furthermore, the board continues to assess all options to realise value and returns for shareholders, including a private equity transaction, an MBO, trade sale or an ASX listing of SkyMesh, as previously announced.”

At 0946 BST, shares in Bigblu Broadband were up 1.82% at 28p.

Reporting by Josh White for Sharecast.com.