The Government has offered Australia's three mobile operators, and vividwireless, renewal of their existing spectrum allocated on 15 year licences in the late 90s and early 2000s at set prices, while the Government expects to rake in $3 billion.
NPAT from continuing activities was up 70.8 percent to $10.4m (On 31 July 2009 Macquarie sold its Singapore operation to CITIC 1616 Holdings Limited for $A9.4m, taking overall net profit of $17.9m).
Hosting revenue grew 31.3 percent to $44.5m, 19 percent of total Hosting EBITDA grew 55 percent to $15.2m and accounted for 43 percent of total. In contrast telco - voice, mobile and data - revenue declined 7.8 percent, dragging total revenue down by 2.0 percent to $238m. Despite accounting for 81 percent of total revenue ($191.5m), telco contributed only 57 percent of EBITDA.
The company said the revenue decline was due primarily to "reduction in voice [revenue] as price competition and fixed to mobile and data substitution continues." However thanks to "Strict margin management and successful supplier negotiations…[and] strong growth in mobile data." Macquarie was able to lift telco EBITDA from $19.3m to $20.3m.
It said that "Continued investment in automation, systems & processes to improve efficiency & costs to [service customers and] continued management tool development and focus on driving utilisation in installed base," would help it maintain telco profitability and that its recently opened in-house contact centre, the MacquarieHUB, would "improve customer service leading to increased customer loyalty and retention."
Hosting will however be the company's prime focus going forward. It announced that it would invest some $15m capex in the hosting business in FY11 to support growth. This is almost as much as its total FY10 capex and is in addition to a planned capex of $17m - $18m in FY11 on "customer equipment, network and facility maintenance and support…driven by strong hosting sales."
The company should have no trouble funding this. It managed to stash away an addition $28.9m during the year taking its cash and cash equivalents to $56.3m, and it is debt free.
Macquarie said: " The hosting business is a key growth platform and Macquarie Telecom will continue to pursue its strategy of increasing market share in the high growth industry of mission critical hosting…The trend to selective outsourcing of internal IT presents a massive opportunity for hosting [and] virtualisation opportunities make the existing hosting market opportunity larger."
However it said the telco business "remains an important part of the company's overall offering." Macquarie will give an update on H1 FY11 performance at its AGM in late November.
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