1 Attention ASX Company Announcements Platform Lodgement of Open Briefing® Amcom Telecommunications Limited Level 18, 44 St Georges Terrace Perth Western Australia 6000 Date of lodgement: 13-Dec-2007 Title: Open Briefing®. Amcom. Earnings Outlook for FY08 Record of interview: corporatefile.com.au Amcom Telecommunications Limited grew underlying net profit after tax by 26 percent to $4.1 million in FY07 and together with earnings from your investment in iiNet reported a total net profit of $7.9 million. Recently you indicated net profit after tax from underlying operations will increase at least 20 percent for FY08 and this earnings growth trend will continue in FY09. What is driving this 20 percent plus growth rate? MD & CEO Clive Stein There is a series of factors driving growth in FY08 and beyond, but the fundamental driver to our business is the very strong position we have as owner of our fibre infrastructure. We are now leveraging the value of that asset with more products and more customers. Also, the resources boom is creating a very buoyant corporate market in Perth and Adelaide at a time when fibre has emerged as the most effective delivery technology for business IT systems. Our marketing and sales approach has also been revitalised. Our team is highly motivated and its improved performance coincides with much improved recognition of the Amcom brand as a premier telecommunications provider. 2 These positives coincide with our larger scale following the acquisition of the Peopletel business in Perth in April. corporatefile.com.au What gives you confidence that revenue and profit growth is sustainable through 2008 and into 2009 the next financial year? MD & CEO Clive Stein This year we expect group revenue growth to be in the 15 to 20 percent range over last year. The business that is growing the fastest, however, is our highest margin business, being the Fibre unit, which provides data telecoms to larger corporates and government. This unit represents at least two thirds of group turnover and is achieving record new sales. Next financial year should see this trend continue or even improve. This is because revenue from new sales or “sign ups� connected during this year will be received for the portion of the year they have been connected, whereas in FY09 we will get the benefit of a full 12 months of revenue from those customers. Another way of looking at revenue is our “run rate�. We basically operate an annuity style business where at the start of each period we have a predictable base of annualised revenues from existing customers who are connected to our networks and use our telecoms services month in, month out. corporatefile.com.au What progress have you achieved year to date in increasing you annuity revenue base? MD & CEO Clive Stein At the start of this financial year we had a base of around $35 million in annualised revenues from existing connected customers. New “sign-ups� in the Fibre division for first half look like coming in at around $5 million of new annualised revenues versus new sales of $5.8 million for the whole of the last financial year. It’s a strong start to the year for this very important lead indicator. Our annualised annuity sales base should comfortably exceed $40 million by June 30. corporatefile.com.au What is the typical duration of your contracts and what level of churn do you experience? MD & CEO Clive Stein Our contracts typically average about two years in duration, however, customer relationships are usually ongoing as we become an integral part of our customers “mission critical� IT infrastructure. Our close customer relationships and differentiated products translate to a low churn rate. 3 corporatefile.com.au What is the effect on EBITDA? MD & CEO Clive Stein The Fibre Division EBITDA before corporate costs and excluding project revenue was $10.2 million last year and the growth trend is positive. It’s all about scale. We’re building “traffic� on our network which has a relatively flat cost structure with only a few variable costs, such internet bandwidth usage when bundled with fibre. As we build revenue from new and existing customers we expect margins to trend upwards. corporatefile.com.au What changes are occurring in customer mix? MD & CEO Clive Stein The corporate/SME component of our customer base is growing rapidly. Almost 50 percent of all new sales so far this year originate from the corporate/SME segment. Eighteen months ago this segment represented only 20 percent of our total fibre revenue, the balance from government and wholesale. It’s a positive trend as this segment is dynamic and is receptive to innovative products. It also gives us a wider base across more customers. corporatefile.com.au What capital investment outlays are required to fund the growth? MD & CEO Clive Stein Last year we spent $4 million to $5 million on new connections, while our maintenance capex was just over $1 million. New connection spend will be slightly higher this year as a result of the record sales. Connection capex is likely to be in a range of $5.2 million to $5.9 million for FY08. This is well covered by operating cashflow, which leaves room for re-investment in growth oriented activities, including smaller acquisitions and dividend payments. corporatefile.com.au Looking beyond current new sales momentum what growth drivers can you point to for future years? MD & CEO Clive Stein We’re using new technologies to build customer engagement. This year we are investing $2.6 million to upgrade our fibre network technology to DWDM (dense wave division multiplexing). In the next quarter we’ll launch the platform to deliver Gigabit Ethernet, offering customers the fastest service available. This new platform will offer existing customers the opportunity to upgrade capacity and features as well as the ability to take on additional products, thereby enhancing our relationship. In addition, this platform will re-position us with respect to product differentiation and market leadership. This is an investment in the future. 4 With the ever increasing need for higher bandwidth speeds, we are extremely well positioned to capitalise on this trend. Our fibre assets are already in place and with an abundance of capacity, we will be able to cost effectively address the needs of business customers. corporatefile.com.au Thank you Clive. For Previous Open Briefings by Amcom Telecommunications Limited visit www.corporatefile.com.au For further information on Amcom Telecommunications Limited visit www.amcom.com.au or contact Clive Stein on 08 9244 6022. 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AMM Price at posting:
0.0¢ Sentiment: Buy Disclosure: Held
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