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Macquarie Telecom bounces back to AU$2m profit

The telco has attributed its financial gains to customer retention thanks to a high net promoter score, as well as leveraging its datacentres for business and government customers.
Written by Corinne Reichert, Contributor

Telecommunications and datacentre provider Macquarie Telecom has published its financial results for the first half of FY16, reporting a 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.

Revenue for the company was AU$100.55 million for the six months, up by 5.2 percent from last year's AU$95.331 million.

Earnings before interest, tax, depreciation, and amortisation (EBITDA) were AU$15.6 million, an increase of 32 percent year on year from the previous year's AU$11.8 million.

Included in its EBITDA figure is the profit of AU$300,000 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.

"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.

Its datacentre business grew by 6.6 percent over the year to contribute revenue of AU$30.1 million, while 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.

Macquarie Telecom boasted that its customer experience score is the highest in the Australian telco and IT services market, causing the higher retention rates.

"Our commitment to world-class customer service has translated into strong customer retention and revenue growth," Tudehope said.

The company began providing live data on its Net Promoter Score (NPS) in December last year, to make customer satisfaction feedback available for potential customers to view on its website.

The NPS, a score gauging the percentage of customers who would recommend a certain business to others, is updated daily on the telco's website on a 30-day rolling average.

Tudehope encouraged other telcos to begin doing the same.

"This is something people might consider a gutsy move, but one I am urging all other telcos -- and, indeed, other industries, as well -- to follow," Tudehope said at the time.

"Australian telecommunications has been plagued by terrible consumer satisfaction for as long as anyone can remember; complaints from telecom customers run at about four times the complaints about banks."

Tudehope said that with the NPS publicly available, customers will be able to compare price, product, and customer satisfaction, helping them make a more informed purchasing decision.

Subsequent to acquiring Amcom and prior to merging with M2, Vocus Communications took a 14.5 percent stake in Macquarie Telecom for consideration of AU$15.63 million in April last year.

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