MENU

iiNet: Number 2 in DSL broadband

Internet services provider iiNet Limited (ASX: IIN) has today reported an 11% increase in profits to $37.1m on revenues of $831m for the 2012 financial year, on the back of a string of acquisitions. The company bought TransACT Group in November 2011 and then Internode in January 2012, and its total debt has soared from around $100m to more than $225m in the current year.

Those acquisitions have helped push iiNet into the clear number 2 spot in DSL broadband (copper network), behind Telstra Corporation  (ASX: TLS) but ahead of Optus – owned by Singapore Telecommunications (ASX: SGT) and TPG Telecom (ASX: TPM). That doesn’t include customers using fibre or satellite connections – Optus has around 1.5 million broadband subscribers in total. iiNet has stated that it now has 15% of the broadband market, although chief executive Michael Malone has said that the number of broadband subscribers is no longer growing.

Looking to the year ahead, the company hasn’t outlined any further plans for acquisitions, but instead will be looking to complete the integration of TransACT and Internode, and increasing cross selling to existing customers, to offset a lack of growth in new broadband subscribers.

As the number one provider of services on the National Broadband Network (NBN), iiNet will also be looking to grow its NBN services, and its presence in key Business markets. As well as growing its exposure to business, iiNet announced today that it has also launched mobile handsets and mobile phone plans, and will be trying to capitalise on that opportunity.

As network and carrier costs represent the lion’s share of the company’s expenses, it will also be looking to reduce its costs, as it consolidates agreements on international bandwidth. With Internode and TransACT yet to be fully integrated, iiNet could potentially reduce its staffing costs, once it integrates the back office and IT systems into its own.

The Foolish bottom line

The great thing about investing in the sharemarket, is that investors don’t have swing at every pitch. With debts of more than $225m, compared to equity of $287m, and a net profit margin of just 4.5%, this is one company I’ll pass on for now.

If you’re in the market for some high yielding ASX shares, look no further than our ”Secure Your Future with 3 Rock-Solid Dividend Stocks” report. In this free report, we’ve put together our best ideas for investors who are looking for solid companies with high dividends and good growth potential. Click here now to find out the names of our three favourite income ideas. But hurry – the report is free for only a limited time.

More reading

Motley Fool writer/analyst Mike King doesn’t own shares in any companies mentioned.  The Motley Fool ‘s purpose is to help the world invest, better.  Take Stock  is The Motley Fool’s free investing newsletter. Packed with stock ideas and investing advice, it is essential reading for anyone looking to build and grow their wealth in the years ahead.  Click here now  to request your free subscription, whilst it’s still available. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

The 5 mining stocks we’re recommending in 2019…

For decades, Australian mining companies have minted money for individual investors like you and me. But if you believe the pundits and talking heads on TV, those days are long gone. Finito! Behind us forever…

We say nothing could be further from the truth. To earn the really massive returns, you’ve got to fish where others aren’t fishing—and the mining sector could be primed for a resurgence. That’s why top Motley Fool analysts just revealed their exciting new research on 5 ASX miners they believe could help you profit in 2019 and beyond…

Including:

The best way we see to play the global zinc shortage… Our #1 favourite large-cap miner (hint: it’s not BHP)… one early-stage gold miner we think could hit the motherlode… Plus two more surprising companies you probably haven’t heard of yet!

For free access to our brand-new research, simply click here or the link below. But be warned, this research is available free for a limited time only, and we reserve the right to withdraw it at any time.

Click here for your FREE report!