iiNet grows profit by 17 per cent in six months

iiNet grows profit by 17 per cent in six months

With two acquisitions under its belt in the first half of its 2012 financial year, the Perth-based ISP now has around 16 per cent of the DSL broadband market.

Perth-based ISP, iiNet (ASX:IIN), has reported positive results for the first half of its 2012 financial year with a net profit after tax (NPAT) growth of 17 per cent.

NPAT reached $14.4 million in the six months ending on 31 December 2011.

Revenue was up 11 per cent to $365 million while earnings before interest, taxes, depreciation and amortisation (EBITDA) jumped by 36 per cent to $56.4 million.

The ISP’s business segment is projected to hit $100 million by the end of the 2012 fiscal year.

In the past six months, iiNet has made two major acquisitions: ACT-based ISP, TransACT, and South Australia based ISP, Internode.

Those two purchases have bumped iiNet’s DSL customer base up to 860,000 with 1.7 million active services. The Perth-based company now has around 16 per cent market share in the DSL broadband business.

iiNet’s churn rate is currently between 1.5 and two per cent. Company net debt sits at $173.6 million.

The acquisitions also expanded iiNet’s network footprint, particularly with TransACT, according to company chief, Michael Malone.

“Through this acquisition, iiNet also further penetrated the lucrative SME, corporate and government sectors, which is a key strategic focus for iiNet,” he said in a statement.

With a similar company culture to iiNet, Malone saw Internode as an excellent fit to his company and has bolstered customer service. Internode is often cited as the ISP with the best customer service in a number of surveys.

While iiNet is predominantly focused on broadband, it has made significant investments into broadening its range of services.

The ISP now has around 80,000 mobile (voice and broadband) customers, 18,000 FetchTV customers, and just fewer than 50,000 subscribers using its BoB modem and home phone device. Fixed voice customer numbers is just under 400,000.

iiNet saw great potential for its in-house research and development unit, iiNet Labs, to deliver more consumer geared products to complement its telecommunication services.

“Our goal is to increase the average number of products per customer from two to three by the end of the 2014 financial year,” Malone said.

Since launching the BoBsquad, a mobile tech support group, over 12 months ago, the ISP has seen 200 visits made to customer premises per month.

With the ACCC declaring new wholesale ADSL prices, telcos now have a more level playing-field as they transition to the National Broadband Network (NBN), Malone said.

iiNet has long promoted itself as ‘NBN ready’ and has already released its NBN price list.

“With continued focus on successfully integrating the acquisitions we have undertaken, as well as pursuing organic growth initiatives, we are confident we have the right strategy and growth platform in place, with the foundation laid for an exciting future,” Malone said.

More to follow.

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