Hosting success boosts Macquarie Telecom guidance

Stuart Corner
Monday, 31 January 2011 13:20

IT Industry - Listed Tech

Macquarie Telecom (ASX: MAQ) has upgraded its half year and full year FY11 guidance, largely because of the performance of its hosting business.

Guidance for the half year to 31 December 2010 is now for EBITDA of $20.0m, including $1.5m from settlement of a prior year dispute. This is an increase of 46 percent on the actual EBITDA of the previous corresponding period and up from the earlier guidance of $15.9m to $17.0m. EBITDA for the full year to 30 June 2011 is now put at $37m to $39m, an increase of up to 30 percent on FY10.

CEO David Tudehope, said the improved result for the first half of the 2011 financial year reflected "the company's market-leading position in the higher-margin hosting business." He said the company was experiencing increased demand for its hosting services due to the growing trend of selective outsourcing of internal IT.

It is now clear that Macquarie Telecom's fortunes are very much riding on its hosting business. For the full year to 30 June 2010 the company reported hosting revenue of $44.5m, 19 percent of total and 31.3 percent up on the prior year. 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.

Tudehope said today: "We believe this trend of outsourcing is accelerating due to higher speed Internet connectivity, driving new web technology and the associated demand for managed hosting. In addition, we believe the emergence of cloud computing, which is a natural extension of managed hosting, will increase this trend and provide new market opportunities for Macquarie Telecom."

Last week Macquarie Telecom launched its Infrastructure as a Service offering, http://www.itwire.com/it-industry-news/strategy/44656 emphasising personalised services and on-shore location of all customer data as key differentiators from the one-size-fits-all, 'click-wrap' contract offerings from global providers like Amazon Web Services.