REDtone Q4 net profit shrinks by half
By Goh Thean Eu August 1, 2014
- One step closer to transferring listing status to Main Market of Bursa Malaysia
- Full year earnings could be higher if no delays in billing some of its projects
TELECOMMUNICATIONS services provider REDtone International Bhd saw its fourth quarter net profit shrink by almost half, mainly due to lower data revenue.
For the fourth quarter ended May 31, 2014, REDtone registered a net profit of RM7.9 million, about 48% lower than the RM15.19 million it posted in the same quarter a year ago. During the quarter, its revenue also declined by 15.5% to RM37.34 million.
[RM1 = US$0.31]
For the 12-month period, the company’s revenue rose marginally to RM144.82 million while net profit fell by 10% to RM25.09 million.
Although group revenue rose – in the low-single digit percentage range – its data segment managed to grow by 14% to RM86.62 million, versus RM75.94 million a year ago.
“While government projects took the lead, there was also higher data usage from corporate customers as we enhance our value-add solutions as part of the total offering to them,” REDtone chief executive officer Lau Bik Soon (pic) said in a media statement issued yesterday (July 31).
“Adding value is important to our business as it helps to build customers’ ‘stickiness’ and differentiates us from the rest,” he added.
In the same statement, the company also said that if weren’t for delays in billing some of its projects, it would have posted a stronger top- and bottom-line for the just-ended financial year. Earnings from these projects will now be recognised in its 2015 financial year.
Despite the lower earnings, REDtone said it remains optimistic on its future outlook. For a start, it has recorded three consecutive financial years of profitability – this paves the way for the company to transfer its listing status to the Main Market of Bursa Malaysia in 2015.
If it succeeds in transferring its listing status to the Main Market, the company would be able to attract a larger pool of institutional investors. Many fund managers, bound by investment criteria, are not allowed to invest in companies not listed on the Main Market.
REDtone is also expecting to see its profit strengthened, partly driven by its network sharing collaboration with Maxis Bhd.
“The group intends to continue to build its success as a data and broadband solutions provider by actively tendering projects from the government sector and telco industry, as well as securing more small and medium enterprise customers,” REDtone said in its filing to Bursa Malaysia.
Over the near to medium term, the company said it will be focusing on four core areas:
- Telecommunications services (where it offers data and voice services);
- Managed telco network services (which includes building infrastructure and managing WiFi hotspots for third parties, USP projects and other government projects);
- Managed value-added services (which includes data centres); and
- Mobile services (involving the LTE or Long-Term Evolution spectrum it was awarded more than a year ago).
REDtone said added that it plans to roll out its 4G (Fourth Generation) LTE services in the first quarter of next year to “niche market,” but did not elaborate.
“These four core offerings are expected to propel REDtone’s growth over the next three to five years,” the company said.
REDtone back in the black
LTE is good to go, so now what?