It pays to be naked: iiNet lifts profit 50 percent

By Stuart Corner
Monday, 18 August 2008 12:13

Strategy

iiNet, Australia's third largest ISP, has announced an underlying profit after tax of $17.8 million for the year to 30 June 200 on the back of strong take up of its naked DSL service, an increase of 50 percent and exceeding earlier market guidance.

Underlying EBITDA was $47.4 million, an increase of 21 percent,  revenue grew nine percent to $251.2 million and the company achieved free cash flow of $24.7 million. It will pay a fully franked final dividend of 7.0 cents per share, up 1.0 cent on FY07

The company ended the year with more than 30,000 naked DSL subscribers and on-net growth in excess of 27 percent, with an ARPU of $50.40 per month. Managing Director, Michael Malone said: " The award-winning Naked service is...maximising our ‘on-net’ advantage by increasing the number of customers using our own network and attacking the telephony revenues of the traditional carriers...Coupled with our attractive new unmetered download content offerings, including the ABC's iView, Barclay's Premier League, golf Majors highlights, iTunes, NASA TV and more than 60 radio stations, we are bringing tangible benefits to our customers which is in turn, delivering the strong financial results."

He added that the acquisition of Westnet in May 2008 also contributed to the positive financial results for FY2008 and the outlook for 2009. He said Westnet would continue to run independently, with iiNet and Westnet targeting different segments and geographies, while developing opportunities to do better business together. Westnet will sell ADSL2+ services but not naked DSL. Westnet's satellite services will be offered to iiNet dial up customers who cannot get ADSL.

iiNet ended the year with 173,000 on-net customers up from 136,000 a year ago. VoIP subscribers numbered 80,000 up from 54,000. Off-net subscriber numbers remained fairly static, up from 195,000 to 201,000. This increase included the addition of Westnet customers as did the growth in fixed line phone user from 118,000 in June 07 to 133,000 in June 08.