Engin to launch ADSL2+ in October

Stuart Corner
Tuesday, 30 September 2008 06:33

IT Industry - Strategy

VoIP provider Engin (ASX: ENG) - which has struggled since its grand plan to become a leading triple play operator reselling the TiVo for its major shareholder, Seven Network, came unstuck - has moved to get that strategy partly back on track announcing that it wil launch its ADSL2+ service next month.

Engin revealed in June 2007   that it was aiming to become a leading provider of triple play services by signing up as a primary distributor of the TiVo - to be introduced to Australia early in 2008 by its then 33 percent shareholder, Seven Media Group - and as a reseller of Optus ADSL2+ services.

However in the face of a cash flow crisis it baulked at the investment needed for TiVo and delayed the introduction of its ADSL2+ service while it attempted to get its house in order. That involved shedding almost half its 160 staff and getting a $8.4m cash injection from Seven in April 2008 to keep it afloat.

It announced its results for the year to 30 June 2008 last month, boasting a 28 percent increase in VoIP revenues, but nearly all this was in the first half. Cash reserves fell from $12.3m in June 2007 to $6.6m, even after the $8.4m rights issue.

EBITDA loss for the year was down to $8.4m from $12.5m last year, but this years figure included a $3.7m profit from the sale of its shares in Unwired (now wholly owned by Seven). Following the rights issue Seven increased its shareholding in Engin from 34.27 percent to 58.36 percent. During the year the company managed to boost VoIP subscriber number by less than nine percent, from 58,000 to 63,000.

Engin chairman Ian Smith however was bullish about the company's prospects, saying: "I am pleased to report that the management team, under the leadership of our new CEO, Mark Zworestine, has delivered a successful outcome in regard to this restructure, as demonstrated by FY08 Q4 results, showing increased margin and a reduction in operating expenditure, which has lead not only to a significant decrease in the EBITDA loss in Q4. but has also strengthened our operational position in preparation for engin's next stage of development."

Revealing the planned October launch for ADSL2+ services in its annual report this week, Engin said it would "enable customers to experience a very high quality voice and broadband services...[and is] expected to be margin accretive in the 2009 financial year.