PowerTel announces first profit

Stuart Corner
Friday, 01 September 2006 03:47

IT Industry - Strategy

PowerTel has reported net profit of $0.6m for the six months to 30 June 2006, compared to a loss of $9.4m in the first half of 2005. Revenue was up 3.9 percent to $98.6m.
Operating cash flow was $19.4m, a 331 percent increase over the first half of 2005 and EBITDA $18.3m, a 52.5 percent increase over the first half of 2005 and exceeding first half guidance.

A significant contributor to the profit was a reduction in operating expenses of 14.2 percent compared to the same period in 2005. The company said this was the result of "an organisation restructure conducted in 2005 and continued cost management focus." Gross margin from communications services improved from 47.8 percent to 48.2 percent as the result of "strict cost control and network optimisation initiatives."

CEO Paul Broad, was cautiously optimistic. "While we are pleased with today's results, confirming the difficult decisions we made in 2005, we are mindful we are still operating in a tough regulatory environment and very competitive telecommunications market...The next 12 months will further consolidate our position as we grow our network of wholesale business partners and channel clients."

PowerTel expects to deliver revenue of between $196m and $200m n and EBITDA of between $37m and $39m for the full year to December 2006.

During the half year, PowerTel took a 14.9 percent stake in iiNet  with the intent to exploit its complimentary DSLAM network. "The strategic alliance with iiNet provides PowerTel with significant coverage in regional centres and all major metropolitan capital cities around the country, making us the second largest access network in Australia," Broad said.