Macquarie Telecom posts $0.8M loss

Blames increased operating expenses, customers moving to lower cost products, and yet to be realised revenue from government contracts

Macquarie Telecom on Thursday reported a net loss of $0.8 million for its full year ending June 30, largely due to increased operating expenses as new data centre facilities go live.

EBITDA was $25.5 million for the year, a decrease of $9.6 million on the previous year.

The company’s results were impacted by several factors, including its three-year $100 million program to build the Intellicentre 2 data centre in Sydney, and Intellicentre 4 facility in Canberra, said chairman Peter James.

“The short term consequence of this significant capital investment is that the company’s financial results have to absorb, without corresponding revenue, the increase in operating expenses for staff and maintenance costs required to run the new data centre facilities,” James said.

Macquarie Telecom’s dedicated managed hosting customers are moving from its higher cost managed server infrastructure to a lower-cost virtual private cloud offering.

Mobile customers are also moving to lower margin platforms to take advantage of greater network coverage and performance, James said.

Lastly, the company has expected longer than expected lead times to realise revenue from customers under the Australian Government’s Lead Agency Secure Internet Gateway program.

James said the company expects delivery of secure internet gateway services to the Department of Agriculture, the Department of Prime Minster and Cabinet, and the Department of Treasury at Intellicentre 4 in the first half of 2015.

Meanwhile, Macquarie Telecom’s hosting business revenue increased by 1 per cent compared to last year, contributed $61.1 million or 31 per cent of total service revenue.

The company’s telco business reported revenue of $135.7 million and EBITDA of $24.6 million, a decrease of $4.7 million from last year.

Capital expenditure for fiscal 2014 was $33.5 million, of which around $12.9 million was spent on expanding hosting capacity in Sydney and Canberra, and continued investment in cloud computing offerings.

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Tags macquarie telecomIntellicentre 4Australian Government’s Lead Agency Secure Internet Gateway programhostingPeter JamesIntellicentre 2cloud computing

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