TeamTalk lifts annual profit 15.9% as broadband operations shine

Another record result likely in the current year, thanks to lower depreciation and interest expense.

BUSINESSDESK: TeamTalk, the owner of the CityLink fibre-optic broadband business, lifted full-year profit by 15.9% to a record on improved returns from broadband operations.

TeamTalk's net profit for the year ended June 30 rose to $5.4 million from $4.7 million the previous year as revenue rose 2% to $32.4 million, it says.

It expects to achieve another record result in the current year, thanks to lower depreciation and interest expense.

The broadband operations, which include the business customer focused CityLink and Araneo, increased earnings before interest, tax, depreciation and amortisation (ebitda) by 18.8% to $8.1 million.

It cited highlights in the year including CityLink's successful launch of free wi-fi in the Wellington CBD and Araneo's successful tender in the government's remote schools broadband initiative.

"While neither had a material impact on the financial results for the year just gone, they are both good examples of initiative and enterprise as the group attempts to 'stay ahead of the pack' by developing new market niches," it says.

TeamTalk's traditional mobile radio business achieved a small increase in revenue, against expectations it would decline, but EBITDA fell 11.1% to $5.1 million.

The company says services provided to the Rugby World Cup provided "a good contribution" but costs rose, particularly from third parties who provide services to the network.

Its focus for the past year was on developing new services to provide new revenue streams, largely from selling more to existing customers.

"The big opportunity now is to acquire some quality assets that complement our existing business," it says. "We think both our financial position and the external environment for asset purchases combine to make the prospect of something happening on this front the best it's been for years."

TeamTalk will pay a fully imputed final dividend of 10 cents per share, taking the year's payout to 20 cents, the same as the previous year.

TeamTalk shares rose about 2% to $2.60, below their recent peak at $2.71 but up from their year low last October at $2.03.