iiNet aims to double market share in five years

Stuart Corner
Thursday, 26 February 2009 04:46

IT Industry - Market

iiNet (ASX: IIN), Australia's third largest ISP, has reported revenue growth of 75 percent to $205m in its 2009 half year results and says it aims to double its share of the Australian Internet market to 15 percent within five years.

"Our aspiration is to be the leading challenger in the Australian telecommunications market," CEO Michael Malone told an investor briefing, saying this was the percentage currently held by Optus, with Telstra at around 50 percent.
For the six months to 31 December, EBITDA was up 35 percent to $31.1m and NPAT was up 50 percent to $11.4m On-net subscriber numbers were up 13 percent to more than 196,000 due, the company said, to the continued success of its naked ADSL service. VoIP subscribers number were up 25 percent to more than 100,000.

CFO David Buckingham said that synergies achieved following the integration of Westnet had been greater than expected thanks to the staff of both companies who had help to identify opportunities for efficiency gains. He added that the company expected to achieve its year two synergy targets by migrating 40,000 off-net Westnet customers onto its own DSLAM network.

The company presently has a network of 320 DSLAMs giving it coverage of 90 percent of households in Perth and Sydney and about 75 percent in Brisbane and Melbourne, Malone said. He expected to add no more than about 30 in 2009, saying that the company needed about 200 customers on an exchange before it would install its own DSLAM

Melbourne the next target market
Westnet has progressively extended its marketing focus from its base in WA and now claims 70 percent unprompted brand awareness in Perth, 30 percent in Sydney and about 25 percent in Brisbane. The next target for its marketing efforts is Melbourne, "sometime in the next six months" according to Malone.
Asked if the company was concerned that much of its growth has come from a growing broadband market that is now approaching saturation, Malone said. "That is what keeps me awake most at nights." However he added "We still have another two to three years of growth driven by market growth, and north of 70 percent of iiNet's growth has come from other ISPs, predominantly BigPond. We expect to continue to grow even as the market approaches saturation."