Swoop Raises $10M to Power Melbourne Fibre Expansion—What’s Next?

Capital Raising to Fuel Infrastructure Ambitions

Swoop Holdings Limited (ASX, SWP) has unveiled a partially underwritten accelerated non-renounceable entitlement offer aiming to raise up to AUD 10 million at an offer price of $0.10 per share. This price represents a 25.4% discount to the theoretical ex-rights price, reflecting a strategic move to secure funding for the company’s ambitious Melbourne Fibre Project. The capital raising proceeds will primarily support capital expenditure on this fibre network, alongside working capital and transaction costs.

Strong FY25 Financial Performance Underpins Growth

The announcement follows a robust FY25 financial year, where Swoop reported revenue growth of 20% to $106.5 million and delivered positive free cash flow of $5.1 million, a significant turnaround from the prior year’s negative cash flow. Underlying EBITDA rose 14% year-on-year, driven by organic growth in internet, data, and mobile services. The company’s subscriber base expanded by 14% to approximately 205,000 services in operation, underscoring its growing footprint in the Australian telecommunications market.

Refined Strategic Focus and Board Evolution

Swoop is sharpening its strategic focus on three core products, its award-winning mobile virtual network operator (MVNO) offering, rapidly scaling nbn services, and the construction of a high-security, ~300km fibre network in Melbourne targeting hyperscale data centre operators and enterprise customers. This 'Focus. Divest. Grow' strategy also includes divesting non-core assets such as data centres and fixed wireless networks to streamline operations and enhance margins.

In governance, the company announced the stepping down of James Spenceley as Chair, who will remain as an independent non-executive director. A new Board nomination committee is tasked with appointing two additional independent directors, including a new Chair and Audit & Risk Committee Chair, by March 2026, bringing telecommunications and governance expertise to the leadership team.

Melbourne Fibre Project, A Key Growth Driver

The Melbourne Fibre Project is central to Swoop’s growth ambitions, with approximately 25% of the network completed and foundation customers already contracted. The project targets hyperscale data centres in Melbourne, a market experiencing rapid expansion due to increased demand for connectivity driven by cloud and AI technologies. The fibre network is being constructed with high security and new trenching, avoiding reliance on existing Telstra duct space, and is expected to be completed by mid-FY27.

Risks and Market Context

While the company’s outlook is positive, it faces typical infrastructure risks such as construction delays and cost overruns, regulatory changes, and competitive pressures from larger telecommunications providers. The entitlement offer is partially underwritten by MA Moelis Australia Advisory Pty Ltd, with sub-underwriting commitments from key directors, reflecting confidence in the company’s prospects. However, investors should remain mindful of execution risks inherent in large-scale infrastructure projects and evolving regulatory environments.