Aussie Broadband (ASX: ABB) has entered into a binding agreement to acquire 100% of Nexgen Investment Group for $44.1 million upfront cash consideration, plus an earn-out of up to $5.9 million tied to FY26 and FY27 EBITDA targets. The Aussie Broadband Nexgen acquisition strengthens the telecommunications provider’s position in the small and medium enterprise (SME) market through complementary unified communications capabilities and an Agentic AI product suite.
Aussie Broadband secures $44.1 million deal to acquire Nexgen
The transaction represents an EPS-accretive opportunity for Aussie Broadband, combining upfront consideration of $44.1 million with performance-based payments that could push total consideration to $50 million. Completion is expected at the end of March 2026, subject to customary conditions including third-party consents, completion of agreed restructure steps, and compliance with the Security of Critical Infrastructure (SOCI) Act.
Aussie Broadband will fund the Aussie Broadband Nexgen acquisition through cash on hand and existing undrawn debt facilities, avoiding equity dilution for shareholders. The structured earn-out mechanism protects against overpayment by linking $5.9 million of the total consideration to Nexgen meeting specific EBITDA targets over the next two financial years. This approach demonstrates capital deployment discipline whilst securing a growth platform in the expanding SME technology services market.
The acquisition brings Nexgen, a provider of advanced business communication solutions founded in 2009, into the Aussie Broadband group. Nexgen will continue to operate as a standalone entity with limited integration, preserving its established operational model whilst leveraging synergies with the broader group.
What the numbers mean for shareholders
The financial metrics underlying the Aussie Broadband Nexgen acquisition position the deal as a compelling value proposition with clear paths to enhanced returns through operational synergies.
| Metric | Value | Context |
|---|---|---|
| FY26 EBITDA forecast | $8.1 million | Nexgen standalone projection |
| Expected FY26 contribution to ABB | $2.7 million | Based on end-March completion |
| Acquisition multiple | 6.2x | Based on FY26 EBITDA forecast |
| Multiple with synergies | 4.1x | After full synergy realisation |
| Annual cost synergies | $2-4 million | Expected within two years |
| FY25 underlying EBITDA | $7.7 million | Up 16.9% year-on-year |
| FY25 EBITDA margin | 17.2% | Demonstrates profitability |
The acquisition multiple of 6.2x FY26 EBITDA represents an attractive entry point for a profitable, growing business with demonstrated track record. When factoring in anticipated cost synergies of $2-4 million annually within two years, the effective multiple compresses to 4.1x, excluding any targeted growth initiatives. This sub-5x multiple with synergies represents compelling value, particularly given Nexgen’s 16.9% year-on-year EBITDA growth in FY25 and healthy 17.2% margin profile.
The expected $2.7 million EBITDA contribution to Aussie Broadband in FY26 reflects a partial-year impact based on the end-March completion timeline. Full-year contribution in FY27, combined with realised synergies and growth initiatives, positions the transaction to deliver material earnings enhancement.
What is unified communications and why SMEs need it
Unified communications refers to the integration of multiple communication tools into a single platform, combining voice calling, video conferencing, instant messaging, and collaboration software. Rather than managing separate systems for phone calls, emails, video meetings, and team messaging, businesses access all these capabilities through one unified interface.
For SMEs, unified communications addresses critical operational challenges in the modern business environment. Remote and hybrid work arrangements require seamless communication tools that function regardless of employee location. Professional client interactions demand reliable, high-quality voice and video capabilities that present a polished business image. Team collaboration benefits from integrated platforms that reduce switching between applications and streamline workflows.
Nexgen’s partnership with CISCO, one of the world’s leading technology brands and a principal strategic partner, validates the technical capability and enterprise-grade quality of its unified communications offering. CISCO’s market position in business networking and communications infrastructure provides Nexgen customers with access to proven, scalable technology platforms backed by extensive research and development investment.
This combination positions Aussie Broadband to capture recurring revenue from SME digital transformation spending, a structural growth trend driven by ongoing workplace evolution and increasing technology adoption among small and medium businesses.
Agentic AI capabilities expand product offering
Beyond traditional unified communications, the Aussie Broadband Nexgen acquisition brings an Agentic AI product set specifically designed for the SME market. These AI-enabled capabilities represent differentiated functionality that extends beyond basic communication tools to deliver intelligent automation and enhanced productivity features.
Agentic AI systems can handle tasks autonomously, such as intelligent call routing, automated meeting scheduling, real-time transcription and summarisation, and predictive analytics for communication patterns. For SMEs with limited administrative resources, these capabilities deliver disproportionate value by automating routine tasks and enhancing operational efficiency.
The integration of emerging AI technology into the product portfolio creates multiple commercial advantages. It generates natural upsell opportunities within the existing customer base as businesses seek more sophisticated capabilities. It establishes a competitive moat in the SME segment by offering features that smaller competitors may struggle to develop or integrate. Most importantly, it positions Aussie Broadband at the forefront of workplace technology trends, ensuring relevance as AI adoption accelerates across business segments.
Strategic fit strengthens SME growth ambitions
The Aussie Broadband Nexgen acquisition delivers strategic complementarity by combining distinct but synergistic product capabilities. Aussie Broadband’s established strengths in broadband connectivity and mobile services mesh naturally with Nexgen’s unified communications and office technology solutions, creating a more comprehensive value proposition for SME customers.
The combination addresses the full spectrum of SME technology requirements. Customers can source connectivity infrastructure, communication platforms, and office technology solutions from a single provider rather than managing relationships with multiple vendors. This bundled approach increases customer stickiness whilst creating cross-selling opportunities across both companies’ customer bases.
Key strategic benefits include:
- Addition of approximately 6,000 SME NBN customers to Aussie Broadband’s base
- Average contract length of 4-5 years, providing revenue visibility and stability
- Nexgen founded in 2009, demonstrating 15+ years of operational history and market resilience
- Nexgen will operate as standalone entity with limited integration, minimising execution risk
- Expanded national sales footprint to accelerate SME market penetration
The long-term contract structure with typical 4-5 year tenure represents a significant departure from shorter-term consumer broadband arrangements. These extended commitments provide predictable revenue streams and reduce customer acquisition costs over the relationship lifetime. For investors, the combination of contracted revenue and Nexgen’s 15+ year operational track record reduces integration uncertainty.
The decision to maintain Nexgen as a standalone entity acknowledges the distinct nature of its business model and customer relationships. Limited integration preserves the operational capabilities and customer service approach that drove Nexgen’s success, whilst still capturing cost synergies through shared corporate functions and purchasing scale.
Founder commitment secures execution continuity
Nexgen co-founders Elie Ayoub and James Harb have committed to remaining with the business through FY27 to deliver performance targets tied to the earn-out structure. This retention arrangement aligns founder incentives with Aussie Broadband’s acquisition objectives whilst ensuring operational continuity during the transition period.
Brian Maher, Chief Executive Officer
“For over 15 years, Nexgen’s founders Elie and James have been focused on providing exceptional customer service and they have been innovators of product offerings to small and mid-size businesses.”
The founder retention significantly reduces key-person risk, a common concern in acquisitions of founder-led businesses where departing leadership can disrupt customer relationships and operational performance. By structuring the earn-out around FY26 and FY27 EBITDA targets, Aussie Broadband ensures founders remain motivated to drive business performance whilst protecting shareholders through performance-based consideration.
Maher’s comments emphasise the customer service focus and product innovation that characterised Nexgen’s 15+ year history. These cultural attributes align with Aussie Broadband’s own customer-centric positioning, suggesting strong potential for cultural integration even whilst maintaining operational separation.
What comes next for Aussie Broadband
The path to completing the Aussie Broadband Nexgen acquisition follows a clearly defined timeline with standard conditions precedent:
- Completion expected: End of March 2026
- Conditions: Receipt of certain third-party consents, completion of agreed restructure steps, and no material adverse impact to Aussie Broadband’s compliance with the SOCI Act
- Funding: Existing cash on hand and currently undrawn debt facilities
The funding approach demonstrates Aussie Broadband’s balance sheet strength, with sufficient liquidity to complete a $44.1 million acquisition (plus potential $5.9 million earn-out) without requiring equity capital raises or stretching financial capacity. The use of existing cash and undrawn facilities preserves financial flexibility for ongoing operations and additional growth opportunities.
The SOCI Act compliance condition reflects regulatory requirements for critical infrastructure assets in the telecommunications sector. This standard consideration ensures the transaction structure maintains Aussie Broadband’s regulatory standing without triggering additional oversight or restrictions.
As Australia’s fifth-largest broadband provider, Aussie Broadband now supplies more than 1 million services across its residential, business, enterprise, and government customer segments. The Nexgen acquisition accelerates the company’s strategic expansion in the SME market, leveraging unified communications and AI-enabled products to capture share in a segment undergoing significant digital transformation.
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