Michael Malone, managing director of Perth internet services company iiNet, is upbeat about the company’s earnings outlook this year following the company’s release of a record half-yearly profit of $7.1 million.
The result was boosted by the sale of its New Zealand business, iHug.
Excluding the iHug proceeds, iiNet’s net profit for the half came in at $1.7 million, 15 per cent lower than the previous corresponding period’s $2 million.
Mr Malone said the half-yearly result was “fantastic” and that the company would have posted a profit of $2.1 million, or a gain of 5 per cent, if it had been able to include the $422,000 profit made by iHug during the three months to September 30 in the headline profit.
Mr Malone said the earnings outlook for iiNet was strong, particularly considering that Telstra has been forced to slash its wholesale charges.
The ACCC ruled last year that the price wholesalers like iiNet have to pay to use Telstra’s broadband network could not be more than $3.20 per line per month. Telstra has been charging iiNet $9 per line per month.
iiNet expects to gain at least $9 million in credit from back charges from Telstra.
Mr Malone said the $3.20 charge, as opposed to the $9 charge, would lift iiNet’s operating cash flow from $8.4 million to $21 million.
iiNet’s earnings before, interest, tax, depreciation and amortisation was 80 per cent higher than the previous half at $14.8 million.
Mr Malone said he was pleased that the company had been able to improve its earnings amid higher charges forced upon it from Telstra.
iiNet also declared a fully franked dividend of 1 cent per share.
It was forced to withhold a dividend payment in the previous half as it restructured the business after management revised down earnings forecasts after a series of internal accounting blunders was discovered.
iiNet said its once problematic call centres were performing well and that it had recorded a 24 per cent increase in customer numbers using its own network.
