Thursday, 29 August 2019 02:10

Macquarie Telecom revenue growth up 6% to $246.6m for 2019, offset by profit drop to $16.5m Featured

By
David Tudehope, Macquarie Telecom David Tudehope, Macquarie Telecom

Telecommunications and data centre provider Macquarie Telecom Group is trumpeting the delivery of five successive years of profitable growth as it reports a 6% jump in 2019 full year revenue to $246.6 million from $233.6 million the previous year - but dampened by a 3% decrease in after tax net profit of $16.5 million compared to $17.0 million in 2018, due to depreciation.

The ASX-listed Macquarie (ASX:MAQ) for the full year ended 30 June 2019 reports earnings before interest, tax, depreciation, and amortisation (EBITDA) of $52.1 million - an increase of $4.3 million, or 9% on the prior year, and in line with guidance.

Cash flow for the year from operating activities was $38.7 million, there is a closing cash balance of $17.1 million and an undrawn debt facility from a syndicate of banks of $100 million.

Chief Executive David Tudehope said, “Macquarie’s profitable growth has enabled us to invest across our four business units. The success of our private cloud and cyber security services underpins our Hosting revenue and profit growth.”

And Tudehope said the company’s focus in fiscal year 2020 is to:

  • Focusing on customer experience to ensure a leading Net Promoter Score.
  • The Government team will be focused on growing revenue in both cyber security and secure Cloud computing. Our Cloud computing offering is certified by the Australian Signals Directorate.
  • Telecom will continue to migrate thousands of customer’s services to the NBN under the Company’s six-year wholesale supply agreement with NBN Co. and leverage new data networking technology (SD WAN) for growth.

Outlook

  • The Company’s EBITDA will continue to grow in FY20, however the 1H FY20 will be flat compared to 2H FY19 due to one-offs received in June 2019 and further investment in sales growth in our Hosting business.
  • The company will look to add public cloud capability to our current hybrid offering
  • Continued demand from our Federal Government Agencies for secure Cloud, including from Tier 1 Agencies like ATO, gives great confidence for future growth in the Government Business. Accordingly, there will be further investment in expansion in Canberra and our Cloud platform.
  • A delay in planning and approval will see practical completion of IC3 East (part of the Macquarie Park Data Centre Campus) move out from 1H to 2H CY20. This delay will not affect the Company’s ability to support our customers’ current and future growth plans.
  • Upon completion, the Macquarie Park Data Centre Campus will provide 43MW in total load, a significant increase on the current 10MW facility. The Company anticipates being able to provide a more detailed update as part of its commentary at the annual general meeting.
  • The Telecom business migrated thousands of customer’s services to the nbn in FY19 and this is expected to continue across FY20.
  • The Company plans to make a significant investment in growth and customer growth capex (excluding IC3) during FY20. Total capex, excluding IC3 East, is expected to be between $51-$54m consisting of:

              o Growth Capex - $12 to $13 million
              o Customer Growth Capex - $24 to $25 million
              o Maintenance Capex - $15 to $16 million

  • Depreciation for the year is expected to be $32 to $34 million. Telecom depreciation will increase from $11m in FY19 to $12-13 million in FY20.
  • Telecom Capex will increase from $15.8m in FY19 to $25-26m in FY20. The increase in capex can be attributed to both growth and customer capex projects in FY20 including the Telecom core network upgrade and a continued investment in new data networking technology SD WAN.
  • As previously announced, during this significant capital-intensive growth investment phase, the Company has ceased paying dividends.
  • An update on the Group’s first half performance in fiscal year 2020 will be given at the Company's Annual General Meeting in late November.

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Peter Dinham

Peter Dinham - retired in 2020. He is a veteran journalist and corporate communications consultant. He has worked as a journalist in all forms of media – newspapers/magazines, radio, television, press agency and now, online – including with the Canberra Times, The Examiner (Tasmania), the ABC and AAP-Reuters. As a freelance journalist he also had articles published in Australian and overseas magazines. He worked in the corporate communications/public relations sector, in-house with an airline, and as a senior executive in Australia of the world’s largest communications consultancy, Burson-Marsteller. He also ran his own communications consultancy and was a co-founder in Australia of the global photographic agency, the Image Bank (now Getty Images).

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