Home & Office

Spirit Telecom to continue acquiring companies despite being in the red

It has acquired four companies in as many months.
Written by Campbell Kwan, Contributor

Australian telco Spirit Telecom has fallen back into the red for the 2019 financial year, at a time when it underwent a spending spree by acquiring various telco companies to expand its network. 

During the year to June 2019, Spirit Telecom acquired LinkOne Group to allow the company to create networks in Sydney and Brisbane. One month later, the company acquired Building Connect to extend its Sydney network to an additional 31 buildings and business parks. 

"Acquisitions will continue to be part of Spirit's growth as will delivering innovative initiatives to grow its customer base and products per customer," said Geoff Neate, managing director of Spirit Telecom.

Despite making moves to expand its network and product range, the self-proclaimed "niche telecommunications carriage service provider" reported a net loss after tax of AU$830,000, which is a AU$1.4 million drop from the company's AU$570,000 profit in the year prior.

Spirit Telecom's revenue, meanwhile, jumped from AU$16.3 million to AU$17.4 million, representing a 7.1% year-on-year increase. Of that revenue, the company's SME/Business contracts continue to be the company's bread and butter, accounting for over 60% of its overall revenue. 

SME and business services provided almost AU$10.6 million in revenue, while student and residential services chipped in around AU$3.6 million, and the remaining AU$3.2 million in revenue came from legacy and non-recurring services.

Gross profit jumped 16% from AU$11.1 million to AU$12.9 million, while underlying earnings before interest, tax, depreciation and amortization (EBITDA), dropped 46.5% year on year to AU$1.6 million.

See also: Juniper Networks eye Australia as an AI market opportunity

Looking ahead for FY20, Spirit Telecom plans to continue its expansion into the managed services space, which it expects will provide a double-digit percentage increase in turnover from FY19. 

To start the new financial year, the company added to its managed services portfolio by acquiring another two companies, Arinda IT and Phoenix Austec, in July. It also plans to acquire more companies throughout the new financial year to bolster its offerings and customer base.

"The acquisitions of LinkOne and Building Connect have seen our addressable market expand, while the more recent acquisitions of Arina IT and Phoenix provide our team with and [sic] expanded product line. These two factors, coupled with the increased speeds coming from our network means that our ability to service our targeted SME customer has significantly improved for the forthcoming FY20," Neate said.

Spirit Telecom is currently working on a AU$1.7 million contract from the Victorian government to provide symmetrical gigabit fixed-wireless broadband in Horsham.

Due to be completed by the end of 2019, the service will provide coverage to Horsham CBD, enterprise park, aerodrome, and freight terminal, the state government said, and provide speeds that are 10 times faster than those available via the "Liberal and Nationals' botched NBN".

Related Coverage

Superloop FY19 smashed by AU$50m managed cloud services impairment

Steady revenue and 20% increased costs leads to smaller EBITDA before amortisation and impairment leaves company with AU$84 million net loss before tax.

Vocus network services and New Zealand covering for retail declines for FY19

Revenue flat for the full year, while EBITDA declined 3%, and net profit fell 44%.

Myriota and Optus Business add terrestrial connectivity to satellite IoT plans

Agreement will see IoT users able to maintain connectivity in remote Australia.

NBN reports positive full year EBITDA once Telstra payments excluded

Adjusted EBITDA of AU$608 million wiped out by AU$2 billion in payments to Telstra and Optus.

Network technologies are changing faster than we can manage them (TechRepublic)

Kentik's Cisco Live survey shows networks are changing faster than they have in decades, and companies are stumbling trying to keep up with the changes.

Editorial standards