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Hosting business driving MacTel profit growth

Although it only accounts for one third of revenue, Macquarie Telecom's cloud and government business unit made up over half of its EBITDA.
Written by Chris Duckett, Contributor

Macquarie Telecom has announced that for the 2017 fiscal year it has seen earnings before interest, tax, depreciation, and amortisation (EBITDA) jump by AU$8 million to AU$40.3 million, representing a 25 percent increase.

Over the course of the year, the company booked AU$220 million in revenue, compared to AU$203 million for FY2016, while almost doubling its capital expenditure to AU$38.5 million.

Broken down by business, its Hosting arm that includes the company's cloud and government units accounted for almost AU$82 million in revenue, and approximately AU$21.6 million in EBITDA; while the eponymous telecom division made shy of AU$19 million of EBITDA on AU$142 million of revenue.

Looking ahead, Macquarie Telecom said it expects underlying profits to continue to increase; however, the first half of fiscal 2018 will be hit by power prices and investments in sales.

The company flagged expansion of its Canberra datacentre due to the high number of government agencies on its books.

"There will be further investment in expansion in Canberra and our cloud platform, with an increase in opex of around AU$3 million and capex by AU$1.6 million across FY18," the company said.

Over the next six months, the company will decide whether to build or purchase datacentre capacity.

In February, the company completed its Intellicentre 4 expansion in Canberra.

The 50 percent expansion included new secure data halls, greater resiliency and backup power, and 24/7 power and plant systems monitoring, with the datacentre "bunker" connected directly to the ICON fibre network in Canberra.

For the telco side, MacTel will continue building out its software-defined networking, and insourcing its network operations to reduce costs.

In March, Vocus Communications announced the sale its 16 percent stake in MacTel, pocketing AU$41 million in the process.

According to MacTel, the Vocus sale increased its shareholder diversity and improved the trading liquidity of its shares.

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