Pipe Networks pushing towards $100m revenues in FY2010

Stuart Corner
Thursday, 25 June 2009 15:56

Business IT - Technology

Pipe Networks (ASX: PWK) is forecasting consolidated revenue for FY2010 of $92m-$96m, with EBITDA of approximately $50m-$51m and NPAT of approximately $20.5m-$21.5m from a combination of its existing business and its submarine cable arm, expected to start generating revenues later this year.

The cable is on schedule for completion in the first half of FY2010 at which time Pipe says it will realise significant one-off revenue from indefeasible right-to-use (IRU) contracts with cornerstone customers. It says that "This one-off revenue will be complemented by long-term recurring revenue contracts signed with tier one and two internet service providers in the Australian market."

Based on existing capacity sales, Pipe expect the cable business to produce revenue of approximately $34m with EBITDA of $24m and a NPAT contribution of approximately $6.5m for FY2010.

The company says sales prospects for IRUs and capacity leases remain strong with a current potential pipeline of $US50m. For the following year (FY2011) and on the basis of normalised expected monthly recurring revenue only, excluding the contribution of any further capacity sales on PPC-1, it is forecasting the international business to have revenue of approximately $24m, and NPAT of $3m. EBITDA is expected to be approximately $13m and "is indicative of the strong cash flows expected from the international business in future years."

The company has confirmed previous earnings guidance for the year to 30 June 2009 - NPAT of $11m, revenues of $48m and EBITDA of $19.5m - and is forecasting FY2010 revenues (exclusive of the cable business) in the range $58m-$62m with EBITDA and NPAT in the range of $26m-$27m and $14m-$15m respectively.

Pipe has also announced a dividend reinvestment plan that will enable Australian and New Zealand shareholders to take shares at a 7.5 percent discount to market price, in respect to any dividend declared for the 2009 financial year. "The DRP has been introduced due to shareholder demand and will allow Pipe Networks to pursue its core business and maintain the strength and flexibility of its balance sheet," the company said.