On Friday, the $700 million information technology (IT) and telecommunications company Amcom Telecommunications Limited (ASX: AMM) reported a 3% decline in revenues to $80.7 million and a 4.5% drop in net profit after tax to $11 million for the half year ending 31 December 2014.
Amcom's interim results included a lacklustre performance from the group's IT division which led management to highlight the performance of Amcom excluding this division. On this adjusted basis, revenues increased 10% to $67.3 million and earnings before interest, tax, depreciation and amortisation (EBITDA) also increased 10% to $23.4 million.
Operational highlights
While IT services failed to impress with a 39% decline in revenue on account of the resource sector downturn in Western Australia, Data Networks performed strongly with a 13% increase in revenues. Meanwhile, Hosted and Cloud services revenue added 9% and EBITDA soared 28%.
Amcom continued to expand its footprint along the east coast thanks partly to the acquisition of the Megaport fibre network. Management also reported good momentum in Unified Communications.
Looking forward
Shareholders in Amcom are set to receive an interim 5 cent fully franked dividend which is up 127% on the previous corresponding period. Management also noted that it expects an improved performance from the IT services business in the second half with the operations now "right sized" and set to return to profit.
The big focus for shareholders however is the proposed merger with peer Vocus Communications Limited (ASX: VOC) that will create a $1 billion plus national telecommunications company. The proposal is set to be voted on in April and is expected to lead to a number of positive synergies for all shareholders.
