Wednesday 08 June 2016

New roaming tariffs knock Alternative Networks in H1


First half results out today from Alternative Networks show the impact of the new roaming tariffs on its Mobile business. Overall revenue was down 4% to £69.3m, with Mobile revenue specifically down 7% (now 27% of total revenue), reflecting the reduction in roaming usage by customers. Profits were also hit, with adjusted EBITDA down 27% to £7.5m. The company is hoping that negotiations with carriers and an increase in mobile users (+9% in H1) will help counter the longer-term impact of the new roaming tariffs. Fixed line revenue was also down 7%.

Alternative Network's Advanced Solutions revenue, which is where its IT services offerings fit, held steady at £37m. Here, an increase in recurring revenue was offset by a decline in non-recurring revenue following the loss of a significant contract. A positive sign within the AS business is that revenue from its Online Desktop product grew 16% (read more on workplace trends here: The Connected Workplace: Enabling an experience beyond expectations).

Like other players with legacy business in the fixed/mobile voice markets, Alternative Networks faces the not insignificant task of balancing low/no growth markets with areas (typically in IT services) that are growing – e.g. hosting. The options are to reduce those declining businesses right down to the most profitable or strategically important contracts, or exit them completely. We understand the company has committed to withdrawing from the traditional, analogue and circuit switched fixed line voice services market by 2025.

With new developments around cloud expected to filter through during the year (e.g. the upcoming launch of OnlineCompute – an IaaS platform for enterprise workloads), and the cash/financing arrangements to support further acquisitions, there will be opportunities to support both organic and inorganic growth in the near-term.

Subscribers can see more analysis on the firm in our recent company research note: Company Snapshot: Alternative Networks.

Posted by Kate Hanaghan at '09:21' - Tagged: results   cloud   mobility   voice