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Amcom set to break earnings target

AMCOM Telecommunications Limited (ASX: AMM) says it is on track to achieve and possibly exceed its projected revenue and earnings for the 2001 financial year.

The broadband carrier said that a record month in December 2000 and strong growth in new customers positioned the company to achieve financial projections from its metropolitan “last mile” operating subsidiaries for 2001 and 2002 financial years released in October last.

These were 2001 revenue of between $9 and $10 million and EBITDA (Earnings Before Interest, Tax, Depreciation and Amortisation) of approximately $2 million.

The financial performance for 2002 was forecast as revenue of approximately $18 million with EBITDA and EBIT of approximately $11 million and $8 million respectively.

Continued focus on its core business in the provision of last mile high-speed broadband data carriage services in the uncontested second-tier capital cities could see Amcom exceed these projections.

These projections do not include sales on leased inter-capital fibre links, nor pre-sales of capacity on Amcom’s own long-haul project, IP1. This long-haul division received a major boost recently with the first major pre-sale of capacity on the East-West fibre link through a landmark US$10 million (A$18.5 million) agreement with Asian telecommunications giant Singapore Telecommunications (SingTel).

Amcom posted sales revenue for the half year to December 31, 2000 of $4.029 million, which was in line with budgeted revenue of $4.04 million.

At the EBITDA level, the operating subsidiaries posted a loss of $280,000, which was also in line with budget.

Significantly, EBITDA for the month of December was around $90,000 positive. These figures exclude corporate overhead relating to the parent of around $480,000 for the December half.

Key financial and operational highlights for half year to December 31, 2000 included:

o Sales revenue for the December half of $4.029 million (excluding long-haul sales), exceeding last year’s full year performance in the operating subsidiary of about $3 million.

o Short-term focus on existing sales and marketing paying off with strong growth in new customer connections, including a record number of new connections in December 2000.

o Average contract period standing at 3.3 years.

o Amcom Pty Ltd operating expenses stable at $2.5 million for the December half year with a level of $2.7 million for the June half forecast.

o On target for projected local loop revenues of $9 to $10 million.

o Maturing of metropolitan fibre network build in Perth, Adelaide, Darwin and Hobart, with budgeted apex for the June half year going forward of about $ 4 million, on top of December half year to date of $6.3 million.

o Cash as at December 31, 2000 and undrawn bank facilities of approximately $10 million

The strong first half performance has positioned Amcom to achieve sales revenue of $10 million and EBITDA of $2 million for the full year to June 30, 2001. This is in line with the financial projections made in October 2000.

Forecasts exclude long-haul sales on the leased inter-capital fibre links provisioned last month (January 2001), which total approximately $3 million on an annualised basis and growing.

The longer term outlook is for continued strong revenue and earnings growth for the company, with sales revenue expected to increase to $18 million for 2002, generating EBIT of $8.8 million for the 2002 period.

The year 2001 represents the first full financial year for Amcom as a carrier with “switched-on” operating networks. It provided detailed financial projections in October 2000 in order to assess performance in terms of new customers and connections.

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