Macquarie Telecom invests AU$15m in datacentres

Following the signing of a 'Fortune 100 customer', Macquarie Telecom will invest AU$15 million in its datacentres to improve capacity.
Written by Corinne Reichert, Contributor

Macquarie Telecom has announced that it will be spending an additional AU$15 million on equipment for its datacentre business over a period of 20 months.

The investment occurred as a result of the telecommunications services provider signing on an unnamed Fortune 100 customer, which requires expanded datacentre capacity to meet its demands.

The customer has initially contracted for 2.5MW of capacity over six years, but will not be active in billing until Q3 of FY17.

During its Investor Presentation on Monday morning, Macquarie Telecom provided an update on its datacentres, saying it now has two carrier-neutral hybrid "intellicentres" in Sydney and one in Canberra.

Its Intellicentre 2, located in Macquarie Park, is a tier three datacentre that the telco said has seen strong customer growth in industries and the public sector.

Macquarie Telecom's financial results for the first half of FY16 saw its datacentre business grow by 6.6 percent over the year, to contribute revenue of AU$30.1 million, while earnings before interest, tax, depreciation, and amortisation (EBITDA) increased by 53 percent, to AU$6.3 million.

Datacentre growth was attributed to sales order generation and "proactive" commercial and operational management in both the business and government sectors.

"We are also leveraging our investments in our datacentre facilities in Sydney and Canberra to drive profit growth," CEO David Tudehope said in February.

The company reported an overall net profit of AU$1.96 million, jumping by 178 percent from the AU$2.53 million loss reported for the first six months of FY15, on revenue of AU$100.55 million, up 5.2 percent, and EBITDA of AU$15.6 million, an increase of 32 percent year on year.

Included in its EBITDA figure was the one-off AU$300,000 profit from selling its Intellicentre 2 land, shell, and core building to Keppel DC REIT for AU$43.3 million.

Net assets stood at AU$84.2 million, a loss of AU$3.3 million over the last six months, while cash and cash equivalents rose by AU$18.3 million, from the AU$7 million reported a year ago to AU$25.35 million as of December 31.

"Macquarie Telecom's half-year result reflects the continued successful execution of the company's strategic plan," Macquarie Telecom chairman Peter James said at the time.

"We enter the second half of fiscal 2016 confident that we will continue this momentum."

The company's telecommunications business contributed AU$70 million in revenue, a rise of 4.5 percent year on year, and EBITDA of AU$9.3 million, an increase of 21 percent. The company attributed its gains in the telco sector to sales order performance, improved customer retention rates, and higher-quality product offerings.

Macquarie Telecom came under fire last month, when the Australian Communications and Media Authority (ACMA) found it to be in contravention of both the Telecommunications Act and the Integrated Public Number Database (IPND) code by failing to provide accurate customer data for more than five years.

In breach of subsection 101(1) of the Telecommunications Act 1997 and clauses 5.1, 5.2, 5.6, and 5.12 of the IPND code, Macquarie Telecom failed to provide accurate records for 142,499 of its landline and mobile services during the period of March 23, 2010, and July 3, 2015.

Outdated customer details were entered into the IPND for 130,883 of those services, with Macquarie Telecom providing no details at all for the other 11,616 services.

The ACMA directed Macquarie Telecom to comply, and accepted a Federal Court-enforceable undertaking from it.

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