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​Amaysim reports AU$8.3m H1 profit after signing 59,000 new customers

Amaysim's after-tax profit has jumped after adding 59,000 new mobile customers to its books during the first half of the 2017 financial year.
Written by Asha Barbaschow, Contributor

Australian telecommunications provider Amaysim has announced its results for the first half of the 2017 financial year, reporting a 10 percent increase year on year in underlying net profit after tax, to AU$8.3 million.

Statutory earnings before interest, tax, depreciation, and amortisation (EBITDA) came in at AU$17.3 million for the six months to December, an increase of 564 percent over the same period a year prior. Net revenue for H1 was AU$136.6 million.

The company said its first half figures were affected by AU$8.3 million in IPO costs as a result of Amaysim debuting on the Australian Securities Exchange in June 2015.

As of December 31, 2016, Amaysim boasted 1.03 million mobile subscribers, securing 59,000 new customers during the six-month period.

"Allowing subscribers the flexibility to switch plans is a key component of the Amaysim experience and brand strategy," Amaysim CEO Julian Ogrin told shareholders. "It improves customer satisfaction and tenure, and allowed us to simultaneously reduce churn to 2 percent."

Amaysim said previously that it holds almost 30 percent of the mobile virtual network operator (MVNO) market in Australia, after tipping the 1 million customer mark in November.

At the time, Ogrin said Amaysim's market share equated to "close to 3 percent" of overall Australian mobile market share.

"We're seeing a new normal, with Aussies catching on to a better way of mobile and shaking off the shackles of traditional telco contracts," Ogrin said previously.

"Aussie mobile users are at a real tipping point of change, with over 3 million people on lapsed contracts that haven't yet made the move and the BYO market becoming more popular than ever before."

According to market research company Kantar's latest statistics on mobile market share in Australia released last week, Amaysim holds 5.2 percent of the total local mobile market.

Telstra's total market share rose from 39.3 percent to 40.3 percent; Optus followed Telstra with 23 percent; then Vodafone Australia with 14 percent; other MVNOs, with 6.3 percent; Virgin, with 5.1 percent; Aldi Mobile, with 2.9 percent; TPG/iiNet, with 2.4 percent; and Boost, with 0.8 percent.

"The Amaysim Group is performing well and in line with management's expectations, driven by strong momentum in mobile services," Ogrin said on Monday.

"In a competitive environment, our aim is to maintain a strong challenger brand position and achieve profitable growth by leveraging our superior operating platform, offering a competitive product suite and delivering high customer satisfaction.

"Our success is reflected in our ability to profitably grow subscribers and keep churn low."

Average revenue per user (ARPU) for the six-month period was AU$22.37, a 15 percent drop from last year's AU$26.34. Amaysim attributed the ARPU decrease to market competition, and said it expects ARPU to "gradually increase" in the first half of the 2018 financial year, based on greater stability in the competitive landscape as well as the company's planned initiatives to grow revenue.

Such initiatives include thelaunch of Amaysim broadband, which Amaysim confirmed on Monday will be in May.

"We will launch our broadband offering in the next 90 days with an initial focus on our 1.03 million subscribers or over 600,000 households across the Amaysim Group aligned to the NBN rollout," Ogrin said on Monday.

"Success in our mobile business has positioned Amaysim to continue to grow share of household wallet by acquiring new subscribers, while expanding our focus to become a multi-vertical company. We are excited to complement our competitive mobile products with a compelling broadband offering."

During the first quarter of the 2017 financial year, Amaysim invested AU$0.4 million into its Amaysim broadband offering, and expects a "modest" full year investment of approximately AU$3 million to develop and launch Amaysim broadband.

The Australian Telecommunications Industry Ombudsman (TIO) in October revealed that from July to September 2016, consumer complaints about Amaysim rose slightly, from 0.9 a year prior and 0.8 during the previous quarter to 1.1 for the reported quarter.

On Monday, Amaysim said it experienced its lowest contextualised complaints during the six-month period.

Amaysim's communications director Ged Mansour said previously that after acquiring Vaya, Amaysim managed to bring down the "huge level of complaints" associated with the former company by introducing a new workplace culture.

"It's about instilling a culture of simplicity and a culture of compliance across the industry, whether you're big or small," Mansour said previously.

"And we dove in straight away, and while we see Vaya as the real price fighter, whereas Amaysim is more about the customer experience, there was some basic things that we could do straight away, like remove unnecessary fees, make some of the plans easier to understand, make the plans even more powerful for customers that really are wallet conscious.

"As a result, we saw complaints through the TIO drop by 80 or 90 percent when you look at year-on-year comparisons."

Amaysim acquired fellow MVNO Vaya for AU$70 million in January last year via AU$5 million in cash, AU$15 million in Amaysim scrip, and assumption of Vaya's AU$50 million liability to Optus.

Amaysim reported a full-year net profit of AU$12.31 million for 2015-16 on revenue of AU$253.5 million and EBITDA of AU$25.1 million.

Profit was down 48.7 percent from the AU$24 million reported a year ago due to its acquisitions of Vaya and AusBBS, while EBITDA was up by 79.3 percent and revenue increased by 19.3 percent.

Looking forward, full-year underlying EBITDA for Amaysim's mobile business is expected to grow to between AU$42 million and AU$44 million, while total underlying EBITDA which includes the company's investment in broadband is expected to come in at between AU$40 million and AU$42 million, driven by growth in the mobile business, sustained low churn, and disciplined cost management, Amaysim said.

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