Subscribers up but profit down for Amaysim in 2018 first half

The budget mobile operator has reported a net loss after tax to the tune of AU$237,000 for the first six months of the 2018 financial year.
Written by Asha Barbaschow, Contributor

Amaysim has reported a 129 percent drop in profit, seeing the budget mobile operator AU$237,000 in the red for the first half of the 2018 financial year.

Underlying net profit after tax and amortisation decreased by 28 percent to AU$7.5 million, while statutory earnings before interest, tax, depreciation, and amortisation (EBITDA) for the period ended December 31, 2018 also dropped by 41 percent to AU$10.2 million.

Revenue was up by 115 percent, however, totalling AU$294 million for the first half.

Amaysim separates its business into four categories: Broadband, Mobile, Devices, and Energy.

Amaysim launched NBN plans in May that sees it differentiate its NBN offering by providing customers with assistance during their broadband switchover, including in completing tasks like finding electricians.

During the six months, Amaysim completed the build of its national core network infrastructure, and implemented multiple carrier capability with the launch of Optus network integration, in addition to an arrangement already in place with AAPT.

In its results, the company revealed it now has 13,000 broadband subscribers, up from 5,000 in June 2017.

During the six month period, Amaysim's broadband business generated AU$3.6 million in revenue, but posted an EBIDTA loss of AU$3.3 million.

The company also announced a series of new SIM-only mobile plans in July in an effort to further take on the big three providers by bringing down costs while increasing data inclusions.

During the quarter, mobile subscribers increased by 10 percent, with just under 1.13 million subscribed as of December 31, 2017. According to the company, it is the fourth-largest mobile services provider in Australia.

Despite this subscriber growth, mobile statutory net revenue was flat at AU$137 million, which Amaysim said was due to a 15 percent reduction in mobile ARPU. EBIDTA for the mobile segment was AU$5.6 million.

Excluding devices from the mobile result, underlying EBITDA was AU$11 million, which was down 36 percent over the same period last year.

The company said ARPU was primarily impacted by the broadening of its mobile offerings, which resulted in existing subscribers migrating towards lower price plans and fewer subscribers purchasing data top-ups as inclusions were increased across the portfolio.

"In our mobile business, we increased data inclusions, while also expanding into the sub-AU$20 market -- a previously untapped segment of the market," company CEO and managing director Julian Ogrin told shareholders on Monday.

1 percent of Amaysim branded mobile subscribers receive at least a second service from the company.

"Traditional, single-vertical customer acquisition models are expensive because the only way for these businesses to grow customers is to effectively buy them in the open market through marketing and promotions," Ogrin added.

"Our strategy is different. We will predominantly drive growth through our mobile vertical, which remains our most cost-efficient channel for acquiring new households with a low cost-per-acquisition and efficient cost-to-serve.

"This allows us to focus on cross-selling higher ARPU broadband and energy products to these subscribers who have already chosen to be with our brand for their mobile plan."

Taking a step outside of the telecommunications realm, Amaysim announced its energy play in October, hoping to scoop up Australian customers with its "amazingly simple" proposition by offering discounts and extending a no-lock-in contract format.

On Monday, Amaysim told shareholders it had 185,000 energy subscribers by the end of December.

Energy accounted for AU$153 million of the company's total revenue, and EBIDTA was reported as AU$7.8 million for the six months.

Amaysim also launched an online device store in October, with the company shipping approximately 16,300 devices by the end of December.

In readying its NBN and energy plans, Amaysim has been busy acquiring companies.

It scooped up online pure-play energy retailer Click Energy for AU$120 million in May, as part of its long-term strategy to become the "remote control for the smart home", and completed its acquisition of Australian Broadband Services (AusBBS) in August last year, with Amaysim paying AU$1 million in cash and AU$1.5 million in shares upfront to own the company.

"We finalised the acquisition of Click in May, which actually was the same month we launched NBN as well, which is already quite aggressive, but it is sort of how we do things," Peter James, head of IT and operations at Amaysim, told ZDNet in December. "We launched energy five months after that."

By 2021, the company hopes to have approximately 300,000 accounts with multiple products generating a total ARPU of AU$200 per month, as part of its "cross-sell to the Aussie home" plan.

For FY17, Amaysim announced a total net profit of AU$11.5 million, down 7 percent year on year on net revenue of AU$327 million, up 29 percent. Statutory EBITDA was AU$34 million, up 35 percent.


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