Australian Financial Review, 3rd February 2009 –...

Australian Financial Review, 3rd February 2009 – Telecommunications group Macquarie Telecom is set to return to profitability after a strong performance from its data and webhosting business helped the group double earnings to $12 million in the first half of financial year 2009.

The telecoms group, which focuses on providing services to business and government, revealed yesterday that earnings before interest, tax, depreciation and amortisation would rise to $12 million for the six months ended December, up from the $6 million it posted in 2008.

Chief executive David Tudehope, who through investment company Claiward owns 61 per cent of the group, said it was Macquarie's best trading result for any half year period and that it would allow the telecoms provider to deliver a profit. It recorded a $1.6 million net loss in the previous corresponding half.

Mr Tudehope said the result was driven by the company's higher margin data management and webhosting business. He said Macquarie had been expanding that division of its business which now accounted for more than a third of its revenue compared with about 17 per cent six years ago.

"Data and hosting benefits from scale and as you add more revenue, your margins grow substantially," Mr Tudehope said.

Shares in Macquarie Telecom rose sharply yesterday, climbing 25¢ or 27 per cent to finish at $1.15.

One analyst noted that Macquarie Telecom had so far insulated itself against the wider economic downturn because most of the services it offered to businesses were not typically affected by levels of discretionary spending.

Mr Tudehope said Macquarie Telecom had been receiving strong customer interest in its webhosting and web communications services as businesses sought ways to bring down costs.

"In times like these, businesses may cut back on their travel spend and instead turn to phone and internet and videoconferencing services," he said.

"Our experience so far, and what we've seen, is that customers are continuing to invest in web communication and web marketing because it's easy to measure the benefits from these and adjust them [to demand] in real time."