How much IT in Australia's second $1B ICT player?

Stan Beer
Monday, 19 February 2007 12:13

Opinion and Analysis

Commander Communications Limited (ASX:CDR)  has announced half year revenues of $506 million, up 59% on the $319 million of the previous corresponding half and predicts $1.1 - $1.2 billion in revenue for the full year. If the company achieves that result, Commander will have achieved a major milestone for an Australian based ICT company.

Only Computershare (ASX:CPU), which last announced year announced revenues of $1.6 billion and is a specialist niche software and services player in the securities industry, has the distinction of being an Australian based ICT player to have gone beyond the $1 billion revenue barrier - a sad reflection on the state of our industry.

According to Commander its latest results demonstrate that it has executed on its vision for a 360° solutions suite following the acquisition of IT hardware and services provider Volante in April last year. The hostile take-over was a drawn out affair opposed bitterly by the Volante Board and generally viewed as a significant coup for Commander.

However, Commander has not broken out the IT component - the Volante part - of its results. Thus, it is difficult to compare the performance of Commander's new business with the previous standalone Ipex-Volante organisation.

In his statement to the ASX Coote said: “FY07 is a year of transformation for Commander. In the first half we have seen significant growth in uptake of our managed and professional services made possible following the integration of Volante.”

According to Commander its owner operated Commander Centre franchises have already demonstrated business line efficiencies, selling voice equipment and network services as well as ICT hardware and services to the SMB market.

Commander's announcement also stated that the expansion of the managed services team and the combined Commander and Volante offering has manifested in a number of new customers, including a three-year, multi-million dollar IT managed services deal with Mitsubishi Motors Australia Ltd as well as significant growth within Commander’s existing customer base. How much is multi-million - $2 million? $20 million? Where in the existing customer base is this "significant" growth?

Not to put too fine a line on it, Commander the ICT services provider and hardware reseller is in a very crowded market. The true test of whether the company has made a successful transition to a full service ICT player will not be whether it achieves its stated target for Fy2007. What the market should really be interested in is the growth achieved in the first half of 2008. That should say something about how successful the integration of the Volante IT business has been and how much IT there is in Commander's ICT business.