5G Networks reaps benefits of strategic execution as core earnings surge >200pc
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Special Report: The result is evidence of strong execution by the 5GN management team to build a vertically integrated digital services provider.
Following a successful half-year earnings report this morning, 5G Networks (ASX:5GN) is beginning to capitalise on the growing demand for telecommunications infrastructure.
The company booked total revenues of $25m in the half-year to December.
But what really stood out was the company’s operational performance, highlighted by half-year underlying earnings of $3m – an increase of 236 per cent from the prior comparative period.
Operating cash-flow – a key metric of business performance among listed small-caps – also increased 80 per cent to $3.3m
The figures are strong evidence that 5GN is starting to benefit from favourable unit economics as a result of organic growth and a disciplined approach to acquisitions.
“5GN continues to go from strength to strength as we focus on broadening our infrastructure footprint and creating material value for our shareholders as one of Australia’s fastest growing managed service companies,” 5GN managing director Joe Demase told Stockhead.
“Our indirect sales channel will form a key part of our commercialisation strategy as we continue to identify new partner prospects that resonate with our long term commitment towards accelerating our strategic growth and optimising our existing assets to cultivate new revenue streams.”
Demase said there were “significant expansion opportunities” for 5GN on the horizon as the Company continues to invest in Sydney’s digital infrastructure market.
“Now, with Nigel on our team, we have the requisite skills and leadership expertise to take 5GN into its next growth phase as we focus closely on the channel market in the months to come,” Demase told Stockhead.
To build out its network across major metro centres, the company has targeted a number of existing data centres that are valued at attractive multiples and have low relative rates of utilisation.
By doing so, the company has found an effective way to establish a market-leading position as an end-to-end digital solutions provider for business customers , encompassing secure, high-speed data transmission, infrastructure hosting and cloud services.
Key highlights in the December half included the launch of 5GN’s Indirect Channel – strategic partnerships with existing server-host platforms to help expand the company’s product offering and accelerate growth.
5GN also continued retention of its revenue streams, securing $4.6m worth of new and re-signed revenue which leaves it with more than 75 per cent of current income under contract.
With a strategic footprint across the major east coast markets, the company is now in a position to leverage its operational platform and accelerate growth into 2020.
Across its data centre network 5GN now has 720 racks of capacity which now connect mission-critical high-speed data services to its growing customer base. Importantly,, 300 racks are currently utilised, demonstrating the potential for further growth.
For its FY20 outlook, the company is focused on “optimising those operational efficiencies”, with continued expansion of its network and new and improved cloud-service capabilities with a launch planned for later this year.