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Macquarie Telecom growth saved by hosting and datacentres

With telco-related revenue and profit stagnant, MacTel's first half growth was driven by its hosting division.
Written by Chris Duckett, Contributor
(Image: Gorodenkoff Productions OU, Getty Images/iStockphoto)

Macquarie Telecom reported its 2018 first half financials on Wednesday, seeing revenue grow by 8 percent and earnings before interest, tax, depreciation, and amortisation (EBITDA) increase by 18 percent, but the differences between its divisions was stark.

The company's traditional telecom business reported steady revenue of AU$71 million and EBITDA dropping by 2 percent to AU$9.1 million, while its hosting division increased revenue by 22 percent to AU$46 million and experienced a 38 percent jump in EBITDA to AU$13 million.

Over the past three years, MacTel said its hosting business had seen compound annual growth rate on revenue of 14.7 percent and EBITDA of 48 percent, while telecom clocked in with compound annual growth rate of 2 percent for revenue and 5.7 percent for EBITDA.

Macquarie said its telecom EBITDA was hit by the insourcing of a network operations centre, but that it would reduce costs and improve customer service during the second half. For its hosting business, the company said it was boosted by gaining protected-level cloud accreditation from ASD in September.

With each reporting period that passes, the hosting business is collecting a greater share of revenue and profit. For the 2017 full year, hosting made up one third of revenue and roughly half of EBITDA, whereas now it collects 40 percent of revenue and nearly 60 percent of EBITDA.

"Sustained growth in profitability over the last seven halves has allowed Macquarie to consider opportunities to invest for future growth," MacTel CEO David Tudehope said. "We are well positioned to continue to benefit from the megatrends of cloud and cybersecurity."

For the full year, MacTel said it expects to report EBITDA in the range of AU$44-46 million.

The company also flagged its AU$18 million takeover offer for Bulletproof, however last week the board of Bulletproof accepted a rival AU$24.7m offer from AC3.

Bulletproof had instructed shareholders to reject the offer made by Macquarie on December 22 on the grounds that it was "not fair and not reasonable".

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