Macquarie Telecom targets business NBN market

Despite a 7.7 per cent drop in telco revenue, Macquarie Telecom firmly has its sights on the business end of the market for the National Broadband Network (NBN).

Macquarie Telecom released its full-year results for 2012 this morning, reporting mixed results.

While it stated strict cost control and automation has helped to improve margins in the telco business, telco revenue still recorded a 7.7 per cent drop to $160.3 million due to increasing competition in the fixed to mobile and data substitution market and Vodafone network issues in fiscal 2011.

However, capturing the business market for the NBN could provide a saviour for Macquarie Telecom’s falling telco revenues.

Chris Greig, group executive of Macquarie Telecom’s telco business, told Computerworld Australia it plans to bring NBN business plans to the market in October this year.

While the company is still working out the finer details of what its plans will comprise, he said existing business clients have already shown interest in switching onto the NBN once it is available.

“People don’t buy the NBN for the pleasure of buying the NBN and we sense there’s a perfect storm going on between the rollout of the NBN and the increased digital economy and the need for hosting-type services and a growing mobility message. It’s really in the transaction of those three elements that Macquarie is going to be playing,” Greig said.

“I think most of the debate on the NBN has been fixed line on the left and mobile on the right, but in fact they will converge at some point in time and people will want access to telecommunication using both of those technologies, so it’s important to be in both camps.”

Macquarie Telecom will be targeting mid- to large-sized businesses – companies that have a higher requirement for IT and telecommunications, but may not have large IT departments to aid with the transition to the NBN.

Instead, Greig said Macquarie Telecom will be ‘hand-holding’ companies through the switchover and project manage the process from their existing infrastructure to the NBN.

He said so far companies are considering two options for the migration to the NBN. “There are some customers who have said, ‘I want to wait for the whole NBN to roll out across my sites and then I’ll do one project’. Then there are a number of others who have said, ‘I want to plan to roll it out as it comes through in my territory’,” he said.

“One of the risks is that they’re going to be in some sort of project management for a fair amount of time because as it rolls out … We’re testing that out now as an industry to make sure it’s not too painful. Certainly there is an expectation that once the NBN goes down a certain part of the country, they will migrate existing services.”

Macquarie Telecom today recorded a net profit after tax (NPAT) increase of 10.6 per cent to $19.6 million for the FY2012, with NPAT steadily increasing since 2009 when it recorded a $6.1 million NPAT; $10.4 million in 2010; and $17.7 million in 2011.

However, revenue at the company has been falling since 2009. In FY2012, revenue dropped 3.8 per cent to $218.9 million. This compares to $241.6 million in 2009; $236 million in 2010; and $227.5 million in 2011.

Macquarie Telecom also spent $51.9 million on capital expenditure, including $27.0 million on the construction of the Intellicentre 2 data centre, $7.0 million on software implementation and development for data centre networking and $17.9 million on business-as-usual expenses.

Follow Stephanie McDonald on Twitter: @stephmcdonald0

Follow Computerworld Australia on Twitter: @ComputerworldAU

Copyright © 2012 IDG Communications, Inc.

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