TAG | Fixed wireless focus boosts BigAir |
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| by Stuart Corner | |
| Friday, 29 August 2008 | |
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BigAir announced its maiden EBITDA profit of $0.70m, an improvement of 172 percent on the previous year. Overall revenue was down nine percent ot $8.3m. Net profit after tax, but before write downs was $18,929 up from a $1.63m loss the previous year. The company ended the year with cash reserves of $1.66m, down from $2.77m last year. This result follows it announcing its first quarter of positive cashflow for the three months to 31 March 2008. BigAir said that, for the first time in its history, the gross profit margin contribution from the on-net fixed wireless business unit was greater than the 'off-net' and contributed 77 percent for the full year. As a result of this growth, the overall gross profit margin for the year increased to 45 percent from 35 percent in FY2007. "During the past year the company has undertaken a significant realignment of its sales and marketing activities in order to focus on selling its own high margin, business-grade fixed broadband services. These services contribute much higher average revenue per business customer (approx $900 per customer per month) versus its mobile wireless customers (approx $53 per customer per month) and they utilise BigAir’s own fixed WiMAX wireless networks covering the major metropolitan areas of Sydney, Melbourne and Brisbane," BigAir said. It added: "This realignment of sales efforts and other cost saving measures helped deliver a 49 percent reduction in sales and marketing expenses along with a five percent reduction in employee expenses and 37 percent reduction in general administration expenses compared to [FY2007] resulting in an overall 28 reduction in operating expenses." The BigAir network was expanded to Melbourne and Brisbane during FY08 and upgraded to the 802.16d fixed WiMAX standard. BigAir claims that coverage across Sydney, Melbourne and Brisbane is now close to a total of 10,000 square kilometres. (Coverage throughout SEQ and Adelaide is offered through its wireless partnerships). It says that this wireless coverage in all major capital cities has enabled it to pursue multi-site corporate and business customer opportunities and that the Government’s NBN tender is creating uncertainty in the DSL wholesale markets, creating further opportunities. It estimates that its existing networks can support at least a tenfold increase in customers and revenues. The Fixed Wireless division revenues increased by 69 percent to approx $3.7m in the year ending 30 June 2008 and its gross profit contribution increased by 89 percent. "Due to strong customer growth and its network ownership which provides a fixed cost structure the margins generated in this division continue to increase reaching 78 percent versus 70 percent in[FY2007]. Most of the network costs of service for fixed wireless broadband services are fixed and as this product line continues to expand we expect the cost of sales to grow at lower levels, thus continuing to drive margin growth."
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