The Amaysim Australia Ltd (ASX: AYS) share price will be one to watch this morning after the growing telco company released its half-year results.
Here are the key highlights:
- Revenues from ordinary activities up 16.5% on the prior corresponding period to $136.6 million.
- Underlying EBITDA up 38% to $17.3 million.
- Net Profit After Tax and Amortisation up 29% to $10.3 million.
- Underlying earnings per share of 4.6 cents.
- Closing mobile subscribers up 34% to 1.03 million.
- Average revenue per user (ARPU) down 15.1% to $22.37.
- Broadband offering to be released in the next 90 days.
Overall I felt this was a solid result from this fast-growing telco company and was impressed with the growth of Amaysim's subscriber numbers.
Although Amaysim saw a reasonable decline in ARPU, the company did this deliberately in order to retain its challenger market position and to attract and retain subscribers.
The good news is that ARPU isn't expected to fall any further, with management expecting it to stabilise at current levels in the second-half.
The big news today though is the long-awaited launch of its broadband service. Amaysim will launch the service within the next 90 days, targeting around 600,000 households across the Amaysim network that are aligned to the NBN rollout.
Thanks to its asset-light business model the company has the ability to offer low-cost plans that are still highly profitable. I believe this puts it in a great position to disrupt the broadband market, in the same way it has disrupted the mobile phone market.
Should you invest?
Following today's result Amaysim's shares are changing hands at a little under 17x trailing earnings.
Although this is a premium to its peers TPG Telecom Ltd (ASX: TPM) and Vocus Group Ltd (ASX: VOC), I believe its solid growth prospects and foray into the broadband market go some way to justifying the premium.
For the full-year management has reiterated full-year underlying EBITDA growth guidance of between 13% and 19% on last year's result, which I think makes its shares about fair value now.
