Telco gets its groove and profits back

Telco operator, SP Telemedia Limited (ASX:SOT), is planning a major expansion program into Western Australia next year following a strong 2009.

The company, which runs broadband provider, TPG, went from an $18.9 million loss in 2008 to a 2009 net profit of $17.66 million in the year to June 30. Pre-tax profit rose from $24.9 million to $98.5 million over the same period.

This beat SP’s earlier guidance of $93 million in pre-tax and $16 million net profits and followed the recent market pattern of rapid improvement in the second half of 2009.

“The continued growth of the company has been underpinned by broadband subscribers, with net additions for the FY09 year of 88,000 including 56,000 added in the second half-year,” the company said in a statement.

According to SP’s results presentation, the Government’s proposed National Broadband Network (NBN) would provide a level playing field and provided a chance to expand its network, but was “still years away”.

The company also revealed 63 new exchanges are in progress with the telco’s main expansion priority being Western Australia.

But the company’s guidance showed an expected drop in revenue from $481 million this year to $460 million in 2010.

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