iiNet results shine through AFACT storm clouds

Peter Dinham
Monday, 15 August 2011 15:56

IT Industry - Listed Tech

Despite its copyright infringement battles and pending high court appeals by 34 aggrieved film and television sector companies, Australian-listed ISP, iiNet, has delivered strong revenue and earnings growth for the 2011 financial year, with its subscriber services up 36 percent to over 1.3 million.

iiNet's results released today reveal a healthy balance sheet, with the company reporting revenue is up 48 per cent to $699 million, underlying EBITDA up 30 per cent to $105 million, and subscriber services up 36 percent to over 1.3 million.

As reported by iTWire enterprise editor, Beverley Head, the High Court has granted 34 film and TV sector companies special right to appeal a February decision from the Federal Court which will see the companies again take on WA-based iiNet over alleged copyright infringement.

CEO Michael Malone said the 2011 financial year was another 'exceptional period of financial performance,' with the company producing its best ever set of financial results.

'iiNet continued doing what we do best, delivering on our focused strategy and growing the business across all key metrics. 2011 was a landmark year in which we realised our ambitious goal of becoming the leading challenger brand in the Australian residential telecommunications market, the new No. 2, with 641,000 broadband DSL subscribers.'

According to Malone, even with increased competition in the sector, iiNet was able to lower churn, maintain ARPU, retain profitable customers and grow its customer base. 'Our strategy of providing awesome service, releasing cool new products, and building scale is paying off.'

Malone said that the FY11 results reflected iiNet's organic growth initiatives, recent acquisitions, and the strong underlying fundamentals of the company's business.  'Over the past 12 months, iiNet has experienced continued growth in its subscribers, even during a period of significantly increased competition. iiNet's core DSL churn is down, and the company was also able to grow its subscriber base by an additional 7700 customers.'

Malone also said that, having achieved its goal of becoming the 'leading challenger brand in the Australian residential telecommunications market,' iiNet's new vision was to become 'your trusted partner in the digital world.'

Commenting on the changing needs of customers, Malone said their needs have evolved and Australians no longer simply want Internet access. 'They desire a variety of broadband services whenever they want and wherever they are. iiNet is already at the forefront of industry product development, and we are building stronger relationships with our customers through innovative products and excellent service.'

And, according to Malone, scale has become increasingly critical, and the company's acquisition of AAPT's consumer division in September 2010 allowed iiNet to achieve its strategic goal of becoming the leading challenger brand in Australia with the second largest number of broadband DSL subscribers.

'We have now substantially completed the integration of Netspace into iiNet, achieving significant synergies through on-net migrations and IP bandwidth savings. The integration of AAPT's consumer division is tracking as planned, with service improvements resulting in lower churn numbers than first thought.'

On the on-going development of the National Broadband Network (NBN), Malone said that following the release of the Federal Government's NBNCo business plan early this year, the company now had a much better picture of what the NBN environment will look like for iiNet.

Malone said iiNet was genuinely excited by the increased market opportunities the NBN will bring, and the doubling of the available market for the company's services.

'iiNet's scale, broad product suite, focus on customer service, and successful experience in migrating large numbers of customers, uniquely positions iiNet to benefit from the NBN and grow shareholder value,' Malone said.

Malone also announced that iiNet intends to undertake an on-market share buy-back of up to five percent of its issued capital to be funded from surplus cash and existing debt facilities.

He said the share buy-back program reflected the strong financial position of the company and demonstrated ability of the business to generate earnings.

The buy-back is expected to commence on 29 August and continue for up to 12 months, with all shares acquired under the buy-back to be cancelled.

iiNet key results include:

'¢         Revenue up 48% to $699 million (FY10: $474 million)

'¢         Underlying EBITDA up 30% to $105 million (FY10: $81 million)

'¢         Underlying NPAT up 12% to $39 million (FY10: $35 million)

'¢         Underlying EPS up 12% to 25.7 cents per share (FY10: 23.0 cents per share)

'¢         Net cash inflows from operating activities up 54% to $96 million (FY10: $62 million)

'¢      Total broadband customers up 19% to 641,000 due to continued organic growth and the   acquisition of AAPT's Consumer Division

'¢         Continued focus on network migrations with 64% now on-net (excluding AAPT Consumer Division)

'¢         New products launched including fetchtv, mobile voice plans, the Terabyte plan, BoB LiteTM, BoB2TM, Online Vault and new small business    solutions

'¢         Integration of Netspace substantially completed and AAPT Consumer Division on track

'¢         Strong balance sheet, with comfortable gearing at 40% net debt / equity

'¢         Increased final dividend of 7.0 cents per share fully franked, with total dividend for FY11 up 33% to 12.0 cents per share fully franked (FY10: 9.0       cents per share fully franked)