iiNet plugs capex into IT, network upgrades

Summary:iiNet is investing over AU$15 million in the first half of this year in IT upgrades and improving network capacity.

iiNet will spend AU$24.3 million in the first half of 2014 on IT upgrades, maintenance, network capacity, and integration as the company today reported an underlying net profit after tax of AU$31.4 million for the last six months of 2013.

iiNet announced to shareholders today that 64 percent of its capex would be invested in network capacity upgrades, IT capacity upgrades, business customer growth for the TransACT business, and work on TransACT's fibre-to-the-premises network in Canberra, which will be passed onto NBN Co when construction is completed.

The IT upgrade will cost iiNet AU$4.1 million, while network capacity upgrades will cost AU$5 million. AU$1.8 million will be spent on a TransACT datacentre expansion, with AU$1.1 million required for the fibre-to-the-premises build.

A total of 14 percent of capital expenditure, or AU$3.4 million, will go toward integrating the networks and IT systems for Internode, Adam, and TransACT into the rest of iiNet Group. The company will also spend AU$5.2 million in the half on maintenance.

The company's reported net profit was AU$29.1 million, due to AU$2.3 million incurred in merger and acquisition costs. Revenue for the half was up 4 percent to AU$493 million, with the company adding 16,000 new broadband customers in that time.

iiNet now has 926,000 broadband customers across ADSL and fibre. The company has 48,000 customers on fibre, with over 30,000 connected to the National Broadband Network (NBN). iiNet said it has 25 percent of the total NBN market share.

Acting iiNet CEO David Buckingham said iiNet is growing in eastern parts of Australia, where the company has pushed hard with new advertising.

"We have done a great job of lifting iiNet's brand awareness and sales in the eastern states through several highly effective marketing campaigns. We plan to continue that throughout 2014," he said in a statement.

"The half also saw four months of Adam Internet revenues included, while our business segment continued to grow. Achieving this level of revenue growth is pleasing, given that we still face the sector-wide issue of PSTN phone revenue decline."

Buckingham said iiNet's business division now represents 20 percent of the company's total revenue.

"While a core focus continues to be the [home office] and SME segments, we are increasing our presence in the government and corporate segment as we continue to leverage our product, network, and datacentre assets," he said.

Topics: Telcos, Australia, NBN

About

Armed with a degree in Computer Science and a Masters in Journalism, Josh keeps a close eye on the telecommunications industry, the National Broadband Network, and all the goings on in government IT.

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