iiNet boosts net profit 44 percent to $25.6m

Stuart Corner
Monday, 17 August 2009 08:31

IT Industry - Strategy

Australia's third largest Internet service provider, iiNet (ASX: IIN) has reported revenue for the year to 30 June of $418.3 million, an increase of 67 percent, EBITDA up 42 percent to $67.2 million and net profit after tax up 44 percent to $25.6 million.

The company attributed its increase in profitability in part to "Increased productivity from the new call centre in Cape Town [that] has improved service levels that directly impact customer churn and increase customer tenure; and continued focus on cost management and the efficiency of core activities."

The company's key performance indicator of 'Net Promoter Score' increased to 44 percent from 28 percent in 2008 and churn declined from 2.08 percent of customers per month to 1.83 percent.

Naked DSL subscribers grew 123 percent to 67,000 and small business unit revenues were up 43 percent to $24.3 million. The company finished the year with 215,600 on-net customers and 205,400 off-net, up from 172,900 and 200,600 a year ago. It claims an eight percent share of the Australian broadband market.

However this year's results include a full year's contribution from Westnet, as opposed to only one month in the prior year's result. Customer numbers for the prior year included Westnet's. Managing director, Michael Malone, told iTWire that the revenue of the two companies combined had been about $370 million in the last financial year.

He added: "We don't intend to do any segment reporting. We have kept the [Westnet and iiNet] contact centres separate but everything else is integrated."

He said that the bulk of the 205,600 off-net customers were Westnet's and those on-net iiNet's and that off-net customers would be progressively migrated onto the company's own network. "A year from now we expect to have about 30,000-40,000 migrated."

iiNet claims about half a million discrete customers: in addition to on-net and off-net broadband customers it has over 66,000 dial up customers (down 34 percent on a year ago). However it also measures its business by services - broadband Internet access, telephony and dial-up - and claims a total of $750,000.

IPTV launch unlikely before 2010
It is planning an IPTV service, and has indicated this could be launched before the end of 2009. However Malone said this was unlikely. "It will probably be in the first half of next year. We are still playing around with our own set-top box and looking at a couple of others. The market is changing very fast. You can now get TVs with integrated 500gig hard drives.

"We want to get a box at the right price point that does the basic functions like recording and time shifting and that does integrated IPTV as well, and I think that is about six months away.