- Solid top-line and normalising costs; Q2 EBITA +15% vs. ABGSCe - We raise '25e-'27e EBITA by 4-2% on higher sales - Telia's bid currently in the limelight; we expect it to pass
Solid top-line and normalising costs After markedly missing Q1 expectations due to elevated costs (with EBITA -13% y-o-y), Bredband2's costs normalised in Q2. Together with solid sales growth of 8% y-o-y, driven by recent customer additions and price increases, Q2 EBITA increased by 1% y-o-y, surpassing our forecast of -12%. The recent acquisition of Folke AB contributed ~6k of the 10k new customers added in Q2, implying a solid organic growth figure and that recent growth initiatives have been fruitful. However, going into Q3, we expect churn to be elevated due to further price hikes, so we estimate a net customer intake of -500. Simultaneously, however, both sales and gross margins will benefit from the price hikes. Together with operating leverage on opex, we therefore forecast accelerated earnings growth in Q3e and beyond (Q3e EBITA +15% y-o-y).
Positive estimate revisions We make small revisions to our estimates, raising '25e-'27e EBITA by 4-2%, based on higher sales assumptions (mainly ARPU-driven). Although earnings momentum has been poor in the first half of the year, we expect better momentum in the second half of the year and into 2026, with EBITA increasing by 5% y-o-y in 2025e and 19% in 2026e.
Cash offer from Telia makes perfect sense In our view, Telia's cash offer of SEK 3.25/share makes perfect strategic sense. Similarly to how Bredband2 has been able to reap significant cost synergies through recent M&A – including the acquisitions of A3, Bredbandsson, etc. – we argue that the synergy potential with Telia is immense. In addition, there should also be some sales synergies. To conclude, we believe that the bid is highly likely to pass through.