Superloop (ASX:SLC) Surges 18% on $165M Lightning Broadband Deal- But Is the Easy Money Already Made?

Superloop’s fibre expansion looks strong, but wholesale churn is the key risk

Superloop (ASX: SLC) surged as much as 18 per cent to A$2.86 on Wednesday before settling at A$2.73 after delivering a blockbuster first half that combined two catalysts: a swing back to half-year profitability and a A$165 million deal to acquire Lightning Broadband. Revenue jumped 23 per cent to A$317.6 million, underlying EBITDA soared 46 per cent to A$55.8 million, and management upgraded full-year guidance.

For investors, Superloop is starting to look like a genuine third force in Australian broadband. But with 218,000 wholesale customers set to leave, the question is whether the recent price already reflects the good news.

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Superloop’s $165M Fibre Bet Could Be a Game-Changer for Margins

The Lightning Broadband acquisition is the headline move, and we believe it could meaningfully reshape Superloop’s earnings profile. The deal brings in roughly 54,000 secured lots, split between 24,000 already built and 30,000 contracted for delivery, lifting the company’s total Smart Communities footprint to around 170,000 lots nationally.

What makes this significant is the margin story. Smart Communities’ revenue comes from fibre infrastructure Superloop owns outright, meaning higher margins and more predictable income than reselling NBN services. Management expects A$5 million in synergies within three years, and at 15 times Lightning’s estimated 2027 earnings, the price looks reasonable. This signals Superloop is building a business that could reduce its dependence on the NBN wholesale model, which is a smart long-term bet.

Revenue Surges 23%, But the Real Win Is the Margin Story

The half-year results show a business that is finding its rhythm. Revenue rose 23 per cent to A$317.6 million, but the key highlight was a 46 per cent rise in underlying EBITDA to A$55.8 million, which points to stronger efficiency as the business grows.

Superloop added a record 49,000 new consumer customers, pushing its NBN market share up to 7 per cent. It produced A$53.5 million in gross operating cash flow, giving it enough funding to complete the Lightning deal without issuing shares.

Management increased full-year EBITDA guidance to between A$112 million and A$120 million, showing confidence that momentum will continue in the second half. Swinging from an A$7.8 million loss in the prior corresponding period to an A$5.1 million net profit marks a clear turning point, confirming that Superloop’s growth is no longer coming at the expense of the bottom line.

The Investor’s Takeaway

The positive case is solid. Most analysts have buy ratings on the stock, with an average price target between A$3.17 and A$3.57. J.P. Morgan recently lifted its target to A$3.50, while Citi, UBS, and Macquarie all rate it as a buy. Ongoing market share gains and growth in Smart Communities create a clear path for further upside.

That said, the risks should not be ignored. Goldman Sachs stands out with a sell rating, and a real challenge is on the horizon. Aussie Broadband’s purchase of AGL’s telco arm means about 218,000 customers currently using Superloop’s wholesale network will leave in the first half of FY27.

Superloop expects the impact on gross margin to be up to A$4 million per year. While this is manageable compared to its earnings growth, it will weigh on wholesale expansion. The Lightning acquisition also lifts leverage to around 1.4 times EBITDA, and integration risk is always a factor.

In our view, Superloop still appeals to growth investors with a 12-month outlook. However, after an 18 per cent jump in one day, patient buyers might see better entry points in the weeks ahead. The business fundamentals are solid, but the easy gains from the turnaround phase may now be mostly done.