This makes sense as they were originally the same company - but in the related party transactions notes to Megaports AR, it states MP1 has entered into an IRU with SLC on commercial terms for use of its Hong Kong and Singapore networks. Looks like this transactions is for circa $4m. There is another $1m payment during FY17 for direct network costs to SLC. These appear to be one off in nature - a good boost to FY17 revenue given $7m of the $8.8m revenue reported at HY17 related to Australian based revenue. These payments appear to have occurred in 2H.
This note also outlines the lease and other contractual commitments with SLC for the coming year (and next 5 years). Looks like $900k in recurrent revenue per annum from MP1 for HK and Singapore at this stage.
Worth being a holder in both of these cos in my opinion.
SLC Price at posting:
$2.42 Sentiment: Buy Disclosure: Held
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