Bredband2: Soft Q2e, but improved growth rates in H2e - ABG

Q2 report due 9 August
We expect GM pressure and churn to stay high...
...but this should reverse in H2e on recent price hikes


Q2 expectations

Similarly to Q1, we expect Bredband2's Q2 results to show headwinds on gross margins due to recent price hikes from network owners, as Bredband2 has not previously compensated the increased input costs with price increases. That said, our price tracker notes that Bredband2 has now made significant price increases, which we expect to bear fruit for sales and margins in H2e (albeit lend a limited tailwind to Q2 financials due to lead times). On the flip side, price increases usually entail elevated churn rates (with short lead times), so we forecast churn to stay high in Q2, with a sequential customer decline of -2,500. We expect Q2 sales of SEK 384m, flat y-o-y due to recent churn, coupled with gross profit of SEK 129m (33.5% margin, -4% y-o-y) and an EBITA margin of SEK 30m (7.8% margin, 4% y-o-y).

Länk till analysen i sin helhet: https://cr.abgsc.com/foretag/bredband2/Equity-research/2023/7/bredband2---soft-q2e-but-improved-growth-rates-in-h2e/