Telco Sector Surges in April 2026 as Megaport and Codan Deliver Major Contract and Guidance Upgrades

Microsoft shares rose 10.2% during the month of April 2026. Microsoft secured a significant renewal of its Australian public sector footprint through the Digital Transformation Agency (DTA). On March 30, 2026, the DTA signed a new five-year Microsoft Volume Sourcing Arrangement (VSA6) to facilitate the provision of Microsoft products and services to the Commonwealth of Australia. This whole-of-government agreement is supported by a newly established panel of support services providers, including the incumbent Licensing Solution Provider (LSP) Data#3. The appointment for the support panel is confirmed for an initial five-year term with a one-year extension option. This arrangement ensures continuity for the Australian Government's procurement of Microsoft software and cloud services through 2031. Furthermore, Microsoft's ecosystem dominance in the region was reinforced by the selection of the 2025 Microsoft Country Partner of the Year for Australia to manage core services and floating seat migrations. This contract renewal maintains Microsoft's position as the primary technology vendor for Australian government agencies during a period of significant digital transition.

Megaport's share price increased 23.6% during the month of April 2026. Megaport Limited (ASX: MP1) announced a significant expansion of its compute and storage business via its subsidiary, Latitude.sh, securing a 36-month contract with a US-based technology company. The agreement carries a total contract value of AUD$35.4 million (USD$25.1 million), contributing approximately AUD$11.8 million in Annualised Recurring Revenue (ARR). This strategic deal follows a period of rapid growth for the Latitude.sh platform, where compute ARR for on-demand products increased 31% to USD$58.7 million as of April 25, 2026, up from USD$45.0 million on December 31, 2025. To support this contract, Megaport has committed USD$12.2 million in incremental capital expenditure for CPU servers, targeting a 24-month payback period. This investment aligns with the company's USD$86.0 million Capex undertaking for CY26 and CY27. The broader Megaport Network also demonstrated momentum, reporting an ARR of AUD$272.0 million at March 31, 2026, representing a 23% increase on a constant currency basis compared to the prior year. Management reaffirmed FY26 revenue and EBITDA guidance, while noting that FY26 Group Capex could increase by up to AUD$17.2 million depending on the timing of hardware delivery for the new compute contract.

Latitude.sh, a wholly owned subsidiary of Megaport Limited (ASX: MP1), secured a major 36-month compute and storage contract valued at AUD$35.4 million (USD$25.1 million) in April 2026. The new strategic agreement represents approximately AUD$11.8 million in Annualised Recurring Revenue (ARR) and is expected to commence in H1 FY27. To support this contract, the company has committed approximately AUD$17.2 million in incremental capital expenditure for CPU servers, targeting a payback period of approximately 24 months. This investment is part of a broader USD$86.0 million Capex undertaking agreed for CY26 and CY27 following the Latitude.sh acquisition. Excluding this specific deal, the platform's on-demand compute ARR grew 31% to USD$58.7 million (AUD$82.7 million) as of 25 April 2026, up from USD$45.0 million on 31 December 2025. Management noted a significant shift toward contracted revenue over historical month-to-month business, driven by AI-related demand for CPU, GPU, and storage. The customer is identified as a US-based, unlisted high-growth technology firm in the developer tooling sector. Hardware delivery is expected in FY26 with phased deployment starting in H1 FY27. Assets will remain in the Latitude.sh compute pool following the 36-month term to generate further revenue through renewals or on-demand usage.

Codan (CDA) shares rose 28.0% during the month following a significant upward revision to full-year earnings guidance. Codan issued a positive FY26 trading update on 29 April 2026, reporting that the Group is trading above expectations in 2H FY2026. Management now expects full-year Earnings Before Interest and Tax (EBIT) to reach approximately $235 million and Net Profit After Tax (NPAT) to reach approximately $170 million. These figures represent an increase of over 60% for both measures compared to FY25. The Communications business is driving this outperformance, with revenue growth now expected at the top end of the 15% to 20% target range for the full year. In 1H FY26, the segment achieved 19% revenue growth over the prior corresponding period. Operating leverage has accelerated the margin profile, with the Communications segment profit margin now expected to reach 30% in FY26, outperforming the original FY27 timeline and improving upon the 26% margin recorded in FY25. Growth is supported by strong demand for software-defined radios in the DTC business and favorable gold prices benefiting Minelab revenue, which is tracking ahead of its first-half performance.

Zetron's parent company, Codan Limited, reported that the Command-and-Control business is expected to deliver second-half revenue for FY26 broadly in line with the first half of the fiscal year. Zetron, the Command-and-Control portion of Codan’s Communications business, maintains a stable revenue outlook for the remainder of FY26. Parent company Codan Limited (ASX:CDA) confirmed on April 29, 2026, that Zetron's 2H FY26 revenue performance is projected to match 1H FY26 levels. This stability contributes to a broader outperformance within the Communications segment, which is now expected to achieve revenue growth at the top end of the 15% to 20% target range for the full year. Furthermore, the Communications segment, including Zetron, has accelerated its margin expansion. Management now expects to achieve a 30% segment profit margin in FY26, outperforming the original FY27 timeline. This represents a 400-basis point improvement over the 26% segment profit margin recorded in FY25. The overall Communications division achieved 19% revenue growth over the previous corresponding period in 1H FY26, driven by strong demand for software-defined radios and unmanned systems. While Zetron's revenue remains steady half-on-half, the combined group EBIT is now forecasted at approximately $235 million, with NPAT expected at $170 million, marking an increase of over 60% versus FY25.

DTC experienced significant operational momentum in April 2026 following strong demand from defense customers for unmanned systems. DTC, a division of Codan Limited (ASX:CDA), is driving outperformance within the Communications segment as of April 2026. Ongoing geopolitical tensions have accelerated demand for DTC's software-defined radios (SDRs), specifically for unmanned systems applications. This demand profile has contributed to the Communications business targeting the top end of its 15% to 20% revenue growth guidance for FY26. Management now expects to achieve a 30% segment profit margin in FY26, a significant acceleration from the previous target of FY27. This represents a 400-basis point improvement over the 26% segment profit margin recorded in FY25. The operational leverage provided by DTC's revenue growth is a primary driver for the group's revised earnings outlook. Codan now forecasts approximately $235 million in EBIT and $170 million in NPAT for FY26, representing an increase of over 60% for both measures compared to FY25. DTC's performance in the second half of FY26 is characterized by strong defense sector procurement, offsetting flatter revenue trends in the Zetron command-and-control portion of the business.

Minelab's parent company, Codan Limited (ASX:CDA), reported that 2H FY26 revenue for the division is currently tracking ahead of its strong first-half performance. Minelab, a subsidiary of Codan Limited, demonstrated continued growth momentum in April 2026. Management confirmed that 2H FY26 revenue to date is exceeding the performance levels recorded in the first half of the fiscal year. This growth is primarily attributed to favorable global gold prices and the successful market reception of recent product releases. Based on current trading conditions, the Group expects Minelab's second-half performance to exceed the first half. This divisional strength contributes to the broader Group's upgraded guidance, with Codan now forecasting approximately $235 million in EBIT and $170 million in NPAT for FY26. These figures represent an increase of over 60% for both measures compared to FY25. While specific revenue figures for the Minelab segment were not disclosed in the April 29 update, the division remains a core driver of the Group's ability to trade above expectations in the second half of the fiscal year.