TeamTalk, unshackled from Farmside, lifts first-half profit 59%
By Paul McBeth
Feb. 22 (BusinessDesk) - TeamTalk lifted first-half profit 59 percent as the telecommunications group benefited from selling a controlling stake in the unprofitable rural broadband services provider Farmside.
Net profit rose to $2.1 million, or 7.6 cents per share, in the six months ended Dec. 31, from $1.3 million, or 4.8 cents, a year earlier, the Wellington-based company said in a statement. Revenue slipped 1.3 percent to $17.4 million on the slimmed down business, but the bottom line wasn't encumbered by a $1.4 million loss from Farmside as it was in the year-earlier period.
"TeamTalk's transformation is now entering the next phase where we are starting the major investments into our infrastructure which will enable the delivery of new products and services to our customers," chief executive Andrew Miller said. "This reduction in revenue is to be expected during the initial phases, but in the long term, the expected growth in revenue and profitability will more than mitigate this."
The telecommunications firm returned to profit in 2017 after selling a 70 percent stake in BayCity Communications, the Farmside operator, to Vodafone New Zealand for $10 million, with an option for the country's biggest mobile carrier to buy the rest for another $3 million. Those funds went to repaying debt, shoring up TeamTalk's balance sheet and giving the firm confidence to resume dividend payments this financial year.
Chair Roger Sowry affirmed that goal, with the company reducing debt by 7.8 percent in the half, taking net debt to $20.2 million. The company projected a reduction of net debt by 8-to-12 percent in the 2018 financial year..
Miller said TeamTalk is on track to meet annual earnings guidance for profit of between $4.1 million and $5.6 million.
The shares rose 2.1 percent to a month-high 96 cents.