Hosting business delivers profits for Macquarie Telecom

Macquarie Telecom’s (ASX:MAQ) hosting business continues to be one of the telco’s major profit contributors with the company posting an increase of 102 per cent on net profits after tax of $9.7 million for the half year to 31 December 2010.

In a statement to the ASX, the company reported its earnings before interest, tax, depreciation and amortisation (EBITDA) from continuing operations was in line with its predicted earnings at $20.3 million, a growth of 48 per cent for the six months to 31 December 2010. This also included a benefit from the settlement of a prior year dispute of $1.5 million.

"The company is experiencing increased demand for its hosting services due to the growing trend of selective outsourcing of internal information technology," Macquarie Telecom chief executive, David Tudehope, said in a statement.

"We believe this trend of outsourcing is accelerating due to higher speed internet connectivity driving new web technology and the associated demand for managed hosting."

Revenue from continuing operations for the period has dropped 3.7 per cent to $115 million, down from $119.4 million for the previous six month period.

Macquarie Telecom chairman, Robert Kaye, said the company had delivered a strong half year result with its strategy to transition to a higher-margin of revenue being performed.

Specifically, the revenue from the company’s telco business fell 9.3 per cent on the previous corresponding period from $100.5 million to $89.7 million, which it attributed to a reduction in voice services as further price competition and fixed to mobile and data substitution continues.

The company also reaffirmed full year earnings guidance for EBITDA to be in the vicinity of $37 million to $39 million, representing a 30 per cent rise from the prior year.

Late last year the hosting and telco provider announced plans to invest $60 million into its data centre facility project, Intellicentre 2, in North Ryde. $49 million will be injected for mechanical, electrical, plant and equipment, in addition to the $10.8 million purchase of land and an existing building which settled in December 2010.

As reported by Computerworld Australia, the company recently penned a $1.2 million deal with BMC Software to automate IT processes and cut costs across its data centres.

Additional reporting by AAP Follow Chloe Herrick on Twitter: @chloe_CW

Follow Computerworld Australia on Twitter: @ComputerworldAU

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