A game changer for M2 Telecommunications

After announcing an increase of 33% in net profit for the full year, telecommunications player M2 Telecommunications (ASX: MTU) has announced that it will completely change its primary focus from heavy acquisitions to organic growth.

The Australian Financial Review quoted Geoff Horth, the company’s CEO, as saying “it’d be fair to say the cheque book is in the drawer for a little while and frankly… we actually don’t need to transact to grow the business anymore.”

Three of its more major acquisitions in recent times have been Eftel, iPrimus and Dodo. Concerns have been raised regarding the company’s level of debt – and rightfully so, considering its net debt climbed 121.5% to $277.3 million for the financial year – however, Horth believes this level is easily managed and is still at an acceptable level.

Nonetheless, the group will now focus on growing its customer base and will aim to continue claiming more market share from the likes of Telstra (ASX: TLS) or Singapore Telecommunications (ASX: SGT). One of the methods by which it will aim to achieve this is to spend more money on marketing for iPrimus.

The company has forecast net profit to increase by 48% for FY14 and to be between $60 million and $70 million.

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Motley Fool contributor Ryan Newman does not own shares in any of the companies mentioned in this article.

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