The legal stoush between the Australian Federation Against Copyright Theft (AFACT) and iiNet (ASX: IIN) will cost the ISP $4 million.
In a presentation to shareholders at its annual general meeting, iiNet predicted its underlying earnings for the 2010 financial year to hit $80m – a 19 per cent year-on-year increase. The company has, however, set aside a net $4m one-off legal cost from the estimated growth figures.
The ISP has been battling a copyright case in the Federal Court brought forth by AFACT, which represents a number of high-profile Hollywood movie studios. The group has accused iiNet of allegedly turning a blind eye to piracy by subscribers on its network and therefore authorising illegal activity.
“We firmly believe that the legal action by AFACT was an ambitious and adventurous attempt to extend liability for piracy to Internet services providers who merely provide infrastructure and facilities for customer use,” iiNet said in a statement. “iiNet has not infringed, nor condones infringement or illegal activity of any sort.”
iiNet expects 2010 first-year revenue to reach $224m and underlying net profit to hit $14m. That is an increase of 9 per cent and 27 per cent respectively compared to the first half of 2009.
The figures factor in a marketing fund increase of $4m for further growth in Perth, Sydney and Brisbane, as well as its debut in the Melbourne market.
In August, iiNet reported a profit jump of 28.8 per cent to $25.6m in its preliminary 2009 financial report.