Bredband2: GM pressure, but we are more optimistic for '23 - ABG

Disappointing GM, but 4% EBITDA beat on lower opex
We lower '23e-'24e EBITDA by 2%
Org. growth to improve in '23e on price hikes


Soft gross margin was offset by lower opex (-6% y-o-y)

After having successfully integrated A3 with Bredband2 in 2021, the company's focus in H1'22 was to improve the customer intake, which usually impacts the gross margin. For H2, and more particularly Q4, we saw a setup for the reversed trend, meaning a lower customer intake but with an improved gross margin, driven by price hikes. The Q4 gross margin, however, did not impress at 34.4% (ABGSCe 35.1%, down from 34.8% in Q3), which we believe stemmed from: 1) price hikes were implemented in the latter part of Q4, entailing low revenue contribution but still with increased churn, and 2) unfavourable sales mix, due to declining corporate sales (margin-accretive). That said, the gross profit shortfall of -3% vs. ABGSCe was offset by lower opex than expected (-6% y-o-y), resulting in EBITDA of SEK 59m (-4% y-o-y) coming in 4% above ABGSCe.

Länk till analysen i sin helhet: https://cr.abgsc.com/foretag/bredband2/Equity-research/2023/2/bredband2---gm-pressure-but-we-are-more-optimistic-for-23/