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Macquarie Telecom (ASX:MAQ) share price surges on contract win

handshake agreement

Macquarie Telecom Group Ltd (ASX: MAQ) has just announced a significant client contract win. Macquarie Telecom’s share price is up 4.39% at the time of writing amid a broader rise in the ASX.

What was the deal?

The company advised that its Macquarie Data Centres business has entered a contract to provide approximately 10MW of capacity (IT load) at its Macquarie Park Data Centre Campus. The contract details cannot be disclosed at this stage for confidentiality reasons.

Macquarie Telecom said it would provide updated guidance on the associated capital expenditure in an upcoming investor briefing later this month.

Chief executive David Tudehope said: 

Macquarie’s 20-year strategy of investing in world class data centres is based on strong demand for data centre capacity as customers migrate to cloud and colocation services. This customer win recognises the world class investment we have made in the Macquarie Park Data Centre Campus in Sydney’s North Zone.

A brief take on Macquarie Telecom

Macquarie Telecom provides telecom services to corporate and government customers within Australia. The company operates through two segments, namely: Hosting (for business and government customers), and Telecom mobiles.

The hosting segment relates to the provision of services utilising Macquarie Telecom’s data hosting facilities. The company generates the majority of its revenue from the this segment. The telecom segment on the other hand, relates to the provision of voice and mobile telecommunications services utilising the Macquarie Telecom data network. 

Macquarie Data Centres’ customers include Fortune 500 companies as well as the Australian Federal Government, where it provides secure and compliant data centre services.

Macquarie Telecom won the award for Best Customer Experience in the World, and Macquarie’s CEO won the CEO of the Year at the World Communications Awards in London on 28 October.

How has the company performed in 2020?

Macquarie Telecom’s full year revenue for FY20 was $266.2 million, a year-on-year increase of 8%. Its earnings before interest, tax, depreciation and amortisation (EBITDA) rose 25% to $65.2 million. This compared favourably against its competitor Nextdc Ltd (ASX: NXT), which posted an overall net loss after tax of $45.2 million for FY20. 

Macquarie Telecom’s share price has gone through the roof this year, gaining around 110%, including today’s rise of 4.39%, where the share price is currently trading at $48.96. The company has a market cap of $1 billion at this price.

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Motley Fool contributor Eddy Sunarto has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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