iiNet result boosted by iHug sale & on-net ADSL

Stuart Corner
Monday, 19 February 2007 16:01

IT Industry - Deals

iiNet has posted a record after tax profit for the six months to 31 December of $7.1 million, thanks largely to the sale of its New Zealand business, iHug.

The company said that this sale, for $NZ41 million, had generated a book profit of $A5 million. EBITDA was $14.8 million, up 80 percent on the previous half. The company will pay a fully franked interim dividend of 1c per share.

iiNet identified another strong contributor to its results as being the 24 percent increase to 124,000 in broadband customers served on its own DSLAMs. Also, in December the ACCC issued an interim decision reducing the price of Telstra's line sharing service, which iiNet uses to serve these customers, from $9 per month to $3.20 per month.

iiNet said this would save it around $700,000 per month "We expect the rate to be confirmed and backdated to the start of this [access] dispute, which will deliver a once off cash benefit of at least $9.0 million which relates to operating costs of $7.2 million and capital costs of $1.8 million," said iiNet CEO, Michael Malone.

"The December half still reflects the higher charges imposed by Telstra, and the new, lower rate will flow through in our second half figures," he added.

iiNet has extended its self-reliance strategy over the past year through the roll out of 'dark fibre' to 150 exchanges in Sydney, Melbourne and Brisbane. "This dark fibre network delivers immediate savings and higher capacity to deal with expected richer content offerings, particularly the advent of video on demand," the company said.