iiNet profits up 36 per cent

AFACT-related legal costs top $2.7 million

Internet service provider, iiNet’s (ASX:IIN) has recorded revenue growth of 13 per cent to $474 million for the full year to 30 June 2010.

The result, detailed in an ASX report, was fuelled by growth in products and services, higher average revenue per user (ARPU), and continued growth in small business revenue of 18 per cent in FY10.

Additionally, the company’s EBITDA was up 20 per cent year on year to $80.7 million. The result was driven by a focus on cost efficiency, sustained natural growth and cost savings flowing from its acquisition of Westnet.

Underlying net profit after tax (NPAT) was up 36 per cent to $34.8 million, while earnings per share (EPS) was also up 36 per cent year on year to 23 cents per share, based on strong EBITDA growth partnered with no material change to shares on issue.

The company also noted legal costs of $2.7 million after tax, for a AFACT vs iiNet copyright case.

Underlying operating cash flow is up 30 per cent from $67.8m in 2009, to $88.3m due to growth in revenue and earnings and tighter management of working capital.

Capital expenditure to fund network growth and Westnet on-net migration synergies was $33.4m.

iiNet’s total services has increased by 27 per cent to 960,000 with the acquisition of Netspace adding 120,000 services and 70,000 broadband subscribers, while net DSL added 48,400 in FY10. Naked subscribers are also up 59 per cent to 106,400.

An increase in small business and naked DSL customers led to a growth in on-net ARPU, while off-net ARPU remained static.

The launch of iiNet’s IPTV offering, fetchtv, had to date acquired more than 300 live customers, 15 per cent of which were also buying pay per view movies. The company also noted that fetchtv's launch had seen a lower support overhead than expected.

The results also noted that its proposed acquisition of AAPT's consumer division would provide significant additional scale and growth.

As reported by Computerworld Australia, the ISP generated plenty or speculation in July, around the acquisition, when it halted trading of its shares, before confirming the buy.

The $60 million deal saw iiNet become Australia's second largest ADSL2+ Internet service provider.

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