iiNet booms on back of acquisitions
National broadband provider iiNet's latest set of financial results released yesterday showed the company was still expanding rapidly, with the acquisitions of Netspace and the consumer division of AAPT over the past 12 months fuelling both revenue and gross profit growth, although net profit remained even for the company.
iiNet pulled in revenues of $329.7 million over the last six months of 2010, a figure up 49 per cent on the same period 12 months before. Gross profit was also up — $125.1 million compared with $93.5 million 12 months before. However, with employee expenses, depreciation, amortisation and other costs taking their toll, iiNet's net profit for the period only grew minimally to $12.2 million.
In a statement, the company attributed the expansion to the "continued organic growth" of the iiNet and Westnet brands, as well as the acquisitions of Netspace and the consumer division of AAPT, which took place in April and September 2010 respectively.
iiNet managing director Michael Malone said the results reflected what he described as iiNet's "strong underlying fundamentals", highlighting the fact that the company had experienced continued growth in broadband subscribers — even during what he said was "a period of increased competition".
"In a highly competitive environment, it's very important that we're able to retain customers and maintain our low churn levels," he said.
iiNet's acquisitions were broadly on the way to being integrated with the rest of the company's business, with Netspace's back-office integration (HR and finance systems, for example) completed and the billing systems migration having commenced this year. In addition, Netspace's product set will be aligned with iiNet's this year.
Similarly, AAPT's products will also be aligned with iiNet's in the first half of 2011, and iiNet has also integrated the telco's back-office systems. A capability review of AAPT's billing platform has been completed, and iiNet has placed some of its own staff in AAPT's Manila-based call centre to train up staff to iiNet's customer service standards.
With some 650,000 ADSL customers, iiNet now sees itself as the clear number two challenger brand in the ADSL broadband market, behind Telstra — which has about $2.4 million ADSL customers. iiNet places Optus at about 564,000 customers, and TPG at 507,000.
The company did not break out all of the statistics regarding its business that it has at several stages in the past; keeping private the numbers of BoB broadband modems sold in the period, as well as how its fledgling FetchTV internet television service is performing. However, Malone noted that it continued to innovate, launching the second version of its BoB product recently as well as a new terabyte broadband plan and mobile voice access.
Ultimately, iiNet sees itself as being ready for the onset of the new telecommunications future which the National Broadband Network will bring — as it has the "scale" to deal with the new platform. "The NBN will increase the market opportunities for iiNet, providing us with nationwide customer access, the potential for lower churn due to relocations and a larger serviceable market," Malone said.
"iiNet is NBN-ready, and ideally positioned for the change, given its track record for innovation, customer migration capabilities and comprehensive content and product offering."