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Macquarie Telecom turns AU$4.3m loss to AU$5.4m profit for FY16

Improvements in customer service and growth in the government sector contributed to Macquarie Telecom's profit of AU$5.4 million on EBITDA of AU$32.3 million and revenue of AU$202.6 million.
Written by Corinne Reichert, Contributor

Macquarie Telecom has reported its results for the 2015-16 financial year, with the telecommunications services provider announcing a net profit of AU$5.4 million, turning around last year's AU$4.3 million net loss.

Earnings before interest, tax, depreciation, and amortisation (EBITDA) were AU$32.3 million, a substantial 22.8 percent year-on-year increase from the AU$26.3 million reported for FY15.

Revenue was up by 5.5 percent, from AU$192.1 million to AU$202.6 million, with its Telecoms business contributing AU$138.9 million in revenue, up 2.7 percent from AU$135.2 million, and Hosting Services adding AU$68.4 million in revenue, a 10.9 percent increase from the AU$61.7 million reported a year ago.

Macquarie Telecom reported total equity of AU$82.4 million, down AU$5.1 million from AU$87.5 million, and cash and cash equivalents stood at AU$36.5 million as of June 30, up a substantial 470.3 percent from AU$6.4 million.

The company attributed the growth in its Telecoms business to improvement in sales order performance and higher customer retention rates thanks to "service delivery improvement, operational efficiency, and exceptional customer service", while Hosting improved due to greater focus on customer experience, along with growth across cloud services and government.

"The continued focus on providing an outstanding customer service experience has been a major driving force behind Macquarie's continued profit growth," CEO David Tudehope said.

"In July, we launched our brand evolution to reinforce our differentiation and our passion to make a difference in customer experience as measured by our market-leading net promoter score.

"As part of this evolution, we have created three new brands around our customers. They will be known as: Macquarie Telecom, focused on mid [and] large-sized business customers; Macquarie Cloud Services, focused on tech businesses and Digi SaaS [software-as-a-service] customers; and Macquarie Government, focused on cybersecurity and cloud for government customers."

Macquarie Telecom also announced that its CFO Stuart Pauly has resigned, effective as of September 5.

Macquarie Telecom has been so focused on improving its customer service that it began providing live data on its Net Promoter Score (NPS) results in December last year in order to make customer satisfaction feedback available for potential customers to view on its website.

"Our Net Promoter Score of 59 is now so far ahead of any other telco, we simply don't bother to measure ourselves against other telcos," Luke Clifton, group executive of Macquarie Telecom, said in May.

"The only standard that matters is how we can continue to push the boundaries of highest standard of service we can deliver against the needs of each one of our customers."

It has also been pushing the National Broadband Network (NBN) company to report its live NPS real-time customer experience measurement in order to make customer service more central to its provision of wholesale broadband services.

"We need the NBN to move to Net Promoter Score, move to measure customer experience in real time, so we can then as retail service providers provide that same input as part of our service experience to our customers," Tudehope said in July.

"It would be incredibly transformational for the NBN; it would be incredibly transformational for us as an industry."

In May, Macquarie Telecom announced spending an additional AU$15 million on equipment for its datacentre business over a period of 20 months, following the signing of an unnamed Fortune 100 customer that requires expanded datacentre capacity to meet its demands.

The customer contracted for 2.5MW of capacity over six years, but will not be active in billing until Q3 of FY17.

Macquarie Telecom has two carrier-neutral hybrid "intellicentres" in Sydney and one in Canberra. Its Intellicentre 2, located in Macquarie Park, is a tier-three datacentre that the telco said has seen strong customer growth in industries and the public sector.

In May, Macquarie Telecom also became the first business-to-business telecommunications provider to offer 4G mobile services across Telstra's network.

The telco upgraded all of its customers who use Telstra's network -- which represents around 70 percent of its customer base -- to 4G services at no extra cost, with businesses also given access to a "portal" allowing them to determine the timing of their migration onto the 4G network.

Macquarie Telecom in February reported a net profit of AU$1.96 million, up 178 percent year on year, for the first half of FY16, on revenue of AU$100.55 million and earnings before interest, tax, depreciation, and amortisation (EBITDA) of AU$15.6 million.

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