Acquisitions bring big boost to BigAir's revenues

Stuart Corner
Sunday, 02 April 2006 10:41

IT Industry - Strategy

Soon to list broadband wireless operator, BigAir Group has reported an increase in sales revenues of 1321 percent to $2.9 million and an increase in gross profit of 799 percent from $93,398 to $839,701 for the half YEAR ended December 31 2005 following its acquisition of iBurst services provider, Veritel Wireless and also of OzEmail's iBurst customer base.

EBITDA loss for the half year was $363,344, which included $218,318 in costs incurred during the period relating to the acquisition of new customers.

The company said these costs would typically be capitalised and amortised over the expected duration of the customer's contract, but it had instead "adopted a more conservative approach based on the Urgent Issues Group (UIG) recent guidelines and has expensed these costs each month rather than deferring or capitalising them."

The EBITDA loss reduced by 59 percent compared to the previous corresponding period for the combined BigAir and Veritel businesses. The company said that if the customer acquisition costs had been capitalised the result would have been an 84 percent EBITDA improvement.

BigAir lodged a prospectus in December to raise up to $10 million through a sale of 40 million 25 cent shares, 42.5 percent of the company's shares. Managing director, Jason Ashton, told iTWire that the company had raised $7.5 million, more than the minimum subscription required and was expecting shares to start trading on the ASX on Friday April 7.

Ashton said, "We are happy with both our customer revenue growth and our improving profitability given all the strategic activities undertaken during the period. We not only expanded our Sydney wireless network by more than 50 percent, we also made two acquisitions and lodged our prospectus with the ASX."

BigAir's own network operates in the 2.4GHz and 5.8GHz class licensed bands and provides very high bandwidth (up to 100Mbps) links for business customers and to apartment blocks.