Superloop says earnings will double after 'transitional' year

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Superloop says earnings will double after 'transitional' year

Major network build, declining cloud.

Superloop expects its FY20 pre-tax earnings to double year-on-year, according to new guidance issued on Thursday by the fibre provider.

On the back of a significant network build, including the INDIGO subsea cable connecting Sydney and Perth to Singapore, it now expects an EBITDA of between $14 million and $16 million.

“This is underpinned by strong growth in core fibre connectivity business delivering operation leverage into the future, coupled with a return to growth of complimentary offerings and partially offset by planned further declines in the non-core cloud managed services business,” the company said in an update to the market.

Superloop had previously flagged its plans to retire its non-core cloud managed services portfolio, which provides outsourced IT services to small and medium enterprises, contributing to around 10 percent of the group’s margin.

The portfolio’s continued decline is now being assessed for non-cash impairment as part of the company’s full-year results.

Additionally, Superloop said the evolution of the way fibre infrastructure is purchased by its largest customers provides the company with “a significant opportunity” to monetise its high-capacity network assets.

Nevertheless, chief executive Drew Kelton said FY19 has been a transitional one for the company, “and not without its challenges”.

“The integration of our acquisitions and teams with the simplification of processes and systems was a necessity in order to move forward and provide bandwidth-intensive customers across Asia-Paficic a differentiated and compelling service offering.”

News of the revised guidance coincided with an 8 percent jump in the company's share price. Superloop’s full -year results will be released on 27 August.

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