Maverick telco Amaysim (ASX:AYS) cancelled dividends as full-year profit fell 76 per cent to $2.7 million, with revenue from its mobile phone business sliding and margins squeezed on broadband internet sales.

However, the mobile phone and broadband player picked up revenue from Amaysim Energy, trading as Click Energy, selling power to consumers.

Overall revenue was 77 per cent higher at $577 million with 54 per cent of that coming from energy.

The mobile sim card company last year launched itself as a energy utility with no lock-in contracts and discounts which don’t expire, buying Click Energy, an online pure-play energy seller, for $120 million.

The bigger telcos also are reporting intense competition in the mobile market, dragging down the value of each customer. Telstra earlier this month report a flat result for mobile, with revenue rising just 0.4 per cent.

“Our diversification into energy has enabled amaysim to deliver growth despite a challenging mobile market,” says Amaysim CEO Peter O’Connell.

“The early success of Amaysim energy reinforces our belief that our cross-sell offering will differentiate the company in a crowded telco market.”

Amaysim Australia shares (ASX:AYS) over the past year
Amaysim Australia shares (ASX:AYS) over the past year

The energy business delivered revenue of $310 million. Subscribers grew by 16 per cent to 191,000.

The broadband business had 15,000 subscribers, delivering revenue of $8.6 million and an underlying EBITDA loss of $6.3 million.

In the second half of the 2018 financial year, the company made the decision to reduce investment in broadband as intense competition and high wholesale costs put pressure on already low margins.

The mobile business grew subscribers by 8 per cent  to 1.2 million but revenue was down 7 per cent to $259 million as the amount of revenue collected from each customer fell.

Intense competition

O’Connell says he expects competition in mobile to remain intense in 2019.

“We are still confident about the sector over the medium to long-term,” he says.

“We continue to achieve strong mobile subscriber growth in July 2018 and expect the roll out of 4.5G and 5G networks in Australia over FY19 and FY20 to provide increased rationality and a slowing of competitive excess.

“Notwithstanding the difficult market, the company is actively reshaping itself to access new services, when ready, by developing our technology platforms to deploy additional services quickly; improving our analytics and marketing capability to attract and serve customers; increasing cross-sell of mobile and energy; and elevating our marketing capabilities.

“We are focused on delivering strong value by growing awareness of amaysim as a utilities service provider to increase cross-sell of energy to our mobile subscriber base. We intend to push hard on this strategy to achieve profitable growth.’

The company held back dividends.

“The board holds the view that it is in the interests of shareholders for the company to retain a greater proportion of profits in the business and has made the decision not to declare a dividend for the 2018 financial year,” the company said.

“The board expects this approach to continue for the short to medium term.”

The 2018 results by segment:

Source: amaysim


This article first appeared on Business Insider Australia, Australia’s most popular business news website. Follow Business Insider on Facebook or Twitter.