The Amaysim Australia Ltd (ASX: AYS) share price climbed more than 1.5% yesterday after an update on the ACCC's proceedings against its subsidiary Click Energy – but is Amaysim better value than Telstra Corporation Ltd (ASX: TLS)?
What did Amaysim announce yesterday?
Amaysim announced that proceedings brought by the ACCC against Click Energy have been resolved as both parties submitted an agreed statement of facts and consent orders to the Federal Court of Australia.
The statement agreed that Click contravened Australian Consumer Law in relation to statements it made about discounts and savings that consumers in Victoria and Queensland could obtain on its energy products.
The Federal Court ordered a penalty of $900,000 and for Click Energy to take a number of steps such as displaying a message on its website and contacting affected customers.
The penalty was anticipated by the company in its half-year 2019 accounts and will be reflected in the company's statutory full-year results. The penalty will not impact the company's FY19 full-year underlying earnings before interest, tax, depreciation and amortisation (EBITDA) guidance.
Amaysim acquired Australia's fastest growing independent energy retailer in April 2017 as it looked to diversify its earnings base and increase revenue growth in Australia.
Is Amaysim better value than Telstra?
The Amaysim share price has fallen 28.5% so far this year as it raised $35.1 million from its institutional investors at $0.60 per share – a 36% discount to the market price at the time.
The company's half-year results were also not received well by investors as Australia's fourth largest telco reported a statutory net loss of $13.7 million. On a continuing basis, the company posted a net loss after tax of $4.8 million while its $263.2 million was down 2% on last year's numbers.
While some might think Amaysim is on a downward slide, I think the company could see significant growth in the next few years as an aggressive upstart against the likes of Telstra and Optus.
Telstra's share price woes are well-documented with the Aussie blue-chip 's shares falling 34% in the last 5 years amid ongoing profitability struggles and a declining market share as a result of the NBN rollout.
Amaysim is currently paying a handy 11% dividend yield to its investors which is much better value than the 4.52% offered by Telstra.
With a potential merger between TPG Telecom Ltd (ASX: TPM) and Hutchinson Telecommunications (Australia) Ltd (ASX: HTA) on the cards, profit margins in the Communications sector should be boosted higher on less aggressive pricing competition.
I think Amaysim could climb higher on its full-year results in August, but for those who aren't quite as bullish, I'd suggest checking out this top-rated stock in a booming industry could give you the edge as a growth investor.
