Superloop earnings return to normal after major project completion
Written on the 1 August 2019 by David Simmons
Major network builds will be the foundation for Superloop's (ASX: SLC) earnings recovery over the next financial year.
The company announced this morning it expects FY20 underlying guidance to double year-on-year to $14-$16 million.
This growth is backed by recent network builds as well as strong anticipated growth in its fibre connectivity business.
The company had previously slashed its FY19 guidance from $13-$18 million to $7-8 million due to a revision of negotiations.
The adjusted projection came about two months after takeover negotiations Superloop suitor Queensland Investment Commission (QIC) came to a standstill.
Superloop's shares then dived from $1.93 to where they were sitting yesterday at $0.98. This morning shares have surged 9 per cent to reach $1.07 each.
Major infrastructure builds are forming a solid foundation for the company. In particular the completion of the INDIGO subsea cable from Sydney to Perth to Singapore was a major milestone for the company.
"This is a major step in Superloop's vision to change the way Asia Pacific connects, creating seamless city-to-city, building-to-building fibre connectivity to bandwidth-intensive locations including data centres, CBD buildings, hotels, hospitals and education campuses, as well as homes and businesses across Australia," says Superloop.
Additionally, the internet service provider's core fibre connectivity growth has accelerated across the APAC region according to CEO Drew Kelton.
"With master service agreements in place with many global service providers, content providers and global enterprises, and with INDIGO and domestic fibre networks now live and billing, we expect to see continued connectivity growth in FY20 and beyond," says Kelton.
In addition to the underlying operational EBITDA, Superloop says the evolution of how fibre infrastructure is purchased by major customers is expected to be a new opportunity for the company to monetise its network assets in FY20.
"Financial Year 2019 has been a transitional year for Superloop and not without its challenges," says Kelton.
"The integration of our acquisitions and teams with the simplification of processes and systems was a necessity in order to move forward and provide bandwidth-intensive customers across Asia Pacific a differentiated and compelling service offering."
The company will release its FY19 results on 27 August, 2019.
Business News Australia
Author: David Simmons