M2 posts bumper profits

Melbourne telecommunications provider M2 has "shaken the rust" off subsidiaries People Telecom and Commander SMB to announce $16 million in net profits, up 119 per cent over 12 months.

Earnings before interest, taxes, depreciation and amortisation (EBITDA) received a 136 per cent boost, reaching $31.41 million.

Chief operating officer Vaughan Bowen said the buying habits of business will shield the company's fixed-line revenue from profit falls that affect consumer telcos. Telstra has seen a significant decline in its fixed-line revenues.

"Businesses use fixed line for their staff at desks. I do not see an immediate significant decline," Bowen said.

"It is an effective wedge into new customers which we couple to drive other services like mobile."

Bowen said the formerly troubled People Telecom and Commander were made profitable within about six months of their respective acquisitions in 2008 and 2009.

M2 completed its $4 million acquisition of the business assets of Bell Networks Voice and Data on 4 August this year, three weeks ahead of schedule, following its $5 million buy-out of Clever Communications in May. Each company is expected to contribute $8 million and $13 million respectively over the next 12 months.

Bowen said the company is in high-level talks with telecommunications providers to continue its buying spree in the SMB space.

M2 raised $20 million to reduce debt after issuing more than 11 million ordinary shares at $1.80 in May this year.

Bowen said the earning growth expectations for the year ahead are around 40 per cent year on year based on its larger earnings base.