TeamTalk’s profitability ensures reinvestment into infrastructure remains on track: Profit after tax $4.4 million

TeamTalk Limited (NZX: TTK), the publicly listed telecommunications services provider today announced its annual result for the financial year ended 30 June 2018. Profit after tax was $4.4m.

Highlights of the company’s financial performance for the year to 30 June 2018, against last year, were:

• EBITDA is up 4.7 percent from $11.59m to $12.1m;
• EBIT for the period increased 5.94 percent to $7.8m;
• Net debt for the group was down 19.1 percent from $21.9m to $17.7m; and
• Profit after tax for the group was $4.4m.

TeamTalk’s Chief Executive Andrew Miller said: “This result shows that we are continuing to deliver to our plan. Over the last 12 months we have grown EBIT, sold the remaining 30% in Farmside, secured a new banking partnership with BNZ and continued to reduce debt.”

As previously signalled, TeamTalk is in the early stages of a comprehensive investment phase to grow and underpin its existing business and is on track to have the majority of these programmes completed by June 2020.

Of particular note, we have now commenced the roll-out of our new digital radio network across New Zealand and:

• We have completed the roll-out of the pilot area across Canterbury, on time and on budget, and the first customer will be on the network within the next 2 weeks;
• We will have 50% of the roll-out completed before Christmas 2018; and
• By June 2019, we will have completed the nationwide rollout positioning TeamTalk with the only national digital radio network in New Zealand.

This is an exciting opportunity for TeamTalk as this new digital network will ensure the continuity in delivering mission-critical communications and value to both existing and new customers. The new network will also enable integration with other communications networks as well as offering new services and solutions. This will not only underpin our existing radio business but enable TeamTalk to grow its revenues and improve our margins by reaching into the conventional radio market, an area that TeamTalk has traditionally not competed in.

Andrew Miller said: “Changes within the Health and Safety legislation along with the findings from the reviews following the Christchurch and Kaikoura earthquakes mean many organisations are now considering diversity across their communications portfolio and mobile radio is critical in providing this service.”

The other area of investment to be completed by June 2020 is around our Wired Networks which provide broadband connectivity and ancillary related services to a range of wholesale customers and end users in the Wellington and Auckland CBDs. Although the catalyst for investment has been the closing of the trolley bus infrastructure in Wellington where we need to transition 32Km of our 250Km there underground, we are taking the opportunity to also modernise and upgrade the electronics to provide a modern and robust solution which will be a leader in its sector:

• We have signed a 10 + 10-year agreement with Powerco for the exclusive use of their ducts in Wellington which will enable a quicker and more cost-effective solution of going underground.
• This investment will solidify our position as a leading provider of broadband services and enable a growth in revenue and higher margins through the delivery of new services to our customers.

The investments TeamTalk are making are substantial and will both improve our existing infrastructure and enable us to offer new services and products to our customers. This will result in sustainable profitable growth and better returns for our shareholders.

TeamTalk Chairman Roger Sowry said: “The Board believes firmly that the investment we are making in our infrastructure over the next two years will deliver significant returns to our shareholders. As such the Board believes that substantial reinvestment of our profits into the business at this time will be of considerable benefit to shareholders rather than a resumption of dividends this financial year.”

TeamTalk will provide an update on earnings guidance at the AGM in October.

Ends