Unlike most carriers, Amcom has diversified away from their core telecommunications capability, bolting on acquisitions such as IP Systems and L7 to complement the existing fibre business and create more cross-sell opportunities. Reviewing the recently published HY12 numbers, things are looking pretty good:
Revenue up 39% to $55.1M
EBITDA up 20% to $16.6M
Cashflow up 30% to $14.1M
EPS up 21% to 3.5cps*
Based on these results it’s hardly surprising that AMM’s share price closed up 7.35% on the day of announcement, at 95c. Having closed at $1.07 as of this Friday, Amcom’s certainly experienced some nice appreciation thanks to these results.
Amcom now have a number of different business units, each of which are related and make each other stronger through cross-sell opportunities:
The core business, Amcom’s data telecoms asset may be maturing but it still posted an impressive 19% EBITDA growth. Additionally, Amcom’s cost of delivery has decreased further, requiring only 64c capex to turn on $1 worth of fibre revenue. The other businesses more or less extend the existing data business, moving up the value curve.
Developed through the Bluefire partnership, Amcom’s SaaS offering gives them the ability to deliver applications through their own private network, giving their clients security and Quality of Service across the network. While there still haven’t been any big name wins since UWA, Amcom’s management boasts a “strong pipeline of opportunities”. I will be watching this area carefully to see that it is confirmed.
Not much detail was provided on the Amcom voice business, although FY11 growth was impressive. It’s a fairly simple cross sell to make to an existing data network customer, so I look foward to seeing more growth here (and possibly a decent win with the NT Government as well)
The most recent acquisition, Amcom’s purchase of L7 should give them a longer-term value proposition which sits away from the ICT infrastructure story.
In summary, I continue to hold AMM, and am happy to do so. The business continues to perform and there are plenty of additional avenues for growth.
*Profit was reported up 169% due to the distribution of Amcom’s IIN shareholding