Austar predicts growth, posts profit February 21, 2007 11:31am
REGIONAL pay TV company Austar United Communications Ltd expects accelerated earnings growth this year after posting a big jump in annual profit.
Austar (aun.ASX:Quote,News) today reported a net profit of $210.19 million for the 2006 calendar year, up 247 per cent, although the result was boosted by one-off items.
These included a tax credit of $243.1 million, offset by a $84.2 million goodwill adjustment.
Austar said it had ended the 2006 year with a record number of subscribers and solid financial growth.
Revenue rose 11 per cent to $502.8 million, as the subscription television company, or cable as it is known in the United States, added 67,166 subscribers to its service, resulting in a total of 601,126 subscribers.
Operating expenses increased 18 per cent to $134.5 million as the company aggressively chased subscribers, with almost half of the increase stemming from expenses like commissions and marketing related to subscriber acquisition.
Earnings before interest, tax, depreciation and amortisation (EBITDA) grew 10 per cent to $142 million in 2006.
Chief executive John Porter said Austar was in a great position, with strong financial health, and value-enhancing strategic options.
"The flow-through benefits from our subscriber growth initiatives should see an acceleration of EBITDA growth throughout 2007," Mr Porter said.
Mr Porter said the company would focus on cost management in 2007, as well as harvesting the investments it had made in the past year, particularly MyStar, due to launch this first half.
He said Austar was capturing audiences across every demographic, and subscription television ratings had risen 10 per cent since the beginning of 2006, while free-to-air viewing stayed flat.
"Viewers are increasingly watching what they want, when they want to watch it," he said.
In the most recent quarter, the three months ending December 31, 2006, total average revenue per user (ARPU) rose five per cent to $76.08 a month.
With penetration of the market still below 30 per cent, Mr Porter said there was still a great opportunity for the company to keep the momentum going and accelerate growth.
Profit before interest and tax grew 31 per cent to $84.2 million in the 12 months ended December 31.
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