half year profit up 50pc

M2 HALF YEAR PROFIT UP 50%


Melbourne, February 27 2007: Diversified telecommunications services company, M2 Telecommunications

Group Limited (ASX: MTU) today released its half year financial results for the 6 months to December 31 2006, delivering a 50% increase in half year Net Profit After Tax (NPAT) compared with the previous corresponding period (pcp), to a new high of $750,000.

Earnings Before Interest and Tax (EBIT) for the December half came in 65% higher than the corresponding period at just under $1M, with Earnings Before Interest, Tax, Depreciation and Amortization (EBITDA) of $1.275M, up 51% on pcp.

Supporting this strong earnings growth was a 42% increase in revenues on pcp, to a new high of
$19,930,000 for the half year. “This result is very pleasing and aligns with Director’s expectations of where the business would be at the end of the first half” said M2’s Managing Director, Vaughan Bowen. “Given that the telecommunications sector as a whole has not been delivering particularly impressive results in recent times, the solid uplift in both our earnings and underlying revenue base illustrates that M2 continues to remain capable of finding profitable niches and accessing them swiftly and cost effectively” Bowen said.

M2 offers a suite of unique bundled telecommunications services and value added offerings to Small and Medium Enterprises (SME’s) which are sold under the “M2 Telecom” brand through an exclusive national network of sales dealerships and agencies, which has proven a successful formula for delivering high double digit growth in both revenues and earnings for 5 consecutive years.

Additional to its SME business unit, the period saw marked growth in the Company’s recently established M2
Wholesale business, which was launched in June 2006 following M2’s appointment by Optus as its endorsed aggregator / Mobile Virtual Network Enabler (MVNE) of Optus Mobile (post-paid) services, including the new Optus 3G mobile voice and data network.

M2’s appointment as MVNE for Optus is a powerful strategic alliance, providing M2 with the opportunity to
deliver wholesale mobile services to telecommunications companies and Internet Service Providers (ISP’s) as well as to aspiring new entrants in the mobile telecommunications sector.


Key highlights of the period include:

• 50% increase on pcp in NPAT to $750,000
• 65% increase on pcp in EBIT to $959,000
• 42% increase on pcp in revenues
• Appointment of initial group of M2 Wholesale customers, following M2’s appointment by Optus as MVNE
• Completion of development and testing of Optus 3G mobile service, in readiness for launch in early 2007 to M2 Telecom & M2 Wholesale customers
• Negotiation of improved wholesale buying arrangements with carrier suppliers in Australia and New
Zealand
• Launch of M2 Accredited Agents sales network, Australia-wide
• Expansion of dealer sales channel in New Zealand, including Auckland, Tauranga and Wellington
• Relocation of M2 Melbourne office to new, consolidated Southbank premises
• Board has declared its fifth consecutive dividend, via a fully franked interim dividend of 1c per share


Outlook for M2 to 30 June 2007:

􀂃 Continued expansion of M2 Wholesale business unit, building upon the solid base of wholesale customers (telco’s and ISPS) and increasing output of new mobile connections per customer
􀂃 Completion of phase 1 of implementation of national M2 Accredited Agents sales channel, with a target
of not less than 50 new, trained M2 Telecom sales agents nationwide
􀂃 Advance negotiations with selected high profile (non-telco) MVNO prospects from retail, banking and utilities sectors
􀂃 Launch of Mobile Virtual Network Operator (“MVNO”) services in New Zealand via Vodafone NZ.
􀂃 Launch of broadband data services in New Zealand
􀂃 Appointment of additional M2 Intellectual Property (“IP”) Licensees in New Zealand and Australia, following the success of the M2 IP License issued to E-Direct Pty Ltd in February 2006.

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