M2 Telecommunications delivers a good result, forecasts a better one in 2010

Stuart Corner
Thursday, 27 August 2009 08:56

IT Industry - Strategy

M2 Telecommunications (ASX: MTU) managed to almost double revenues during FY09 and to lift EBITDA and NPAT by 45 percent and having absorbed People Telecom and Commander's telecoms business towards the end of the year it is forecasting an even better performance in FY10.

Revenue was $202.7m, up 86 percent on FY2008. EBITDA was up 46 percent to $13.3m and NPAT up 45 percent to $7.5m. The company is forecasting revenue in the range $370m-$400m, EBITDA in the range $29m-$31m and NPAT of $7.5m for FY2010, representing increases of, respectively 90, 126 and 100 percent on FY2009. The company now claims to be the seventh largest telco in Australia by revenue.

M2 completed the acquisition of People Telecom on 24 April 2009 and the telecoms business assets of Commander Communications on 15 June 2009. It said that People Telecom had added a large base of small & medium business (SMB) customers, an established sales dealership network, solid earnings and a strong NSW presence, and Commander "a large base of SMB customers...and exclusive national dealership network, 'OneStream' business grade data network and strong earnings."

People Telecom and the Commander assets combined have increased M2's annualised revenues by nearly $200m and added over 200 staff taking total numbers to over 400. Both are forecast to contribute substantially to earnings and earnings per share in the 2009/10 year.

M2 provides retail fixed and mobile voice and data services to the SMB market through a network of dealers and wholesale to other telcos.. During the year its revenue balance shifted from predominantly wholesale to mostly resale. Wholesale revenue in 2008 was $57.4m and retail $51.9m. In 2009 wholesale was $90.3m and retail $112.4m.

CEO Vaughan Bowen told iTWire that the company's focus was very much on the SMB market, "companies with five to 100 employees, but the sweet spot for us is really those with five to 50 employees." He said that uptake of mobile data had been a significant growth market during the year, describing it as the biggest thing since the transition from dial up to ADSL.