MNF Group Ltd (ASX: MNF) shares fell 14% early Tuesday morning, despite releasing its half year report to the ASX.
MNF Group, formerly MyNetFone, is a $430 million communications business which provides cloud-based services to households and the business sector. MNF Group’s business is divided into three segments: Australian Domestic Retail, ANZ Domestic Wholesale and Global Wholesale.
Here’s the key news from MNF Group’s half-year report for the six-month period to 31 December 2017:
- Revenue up 28% to $117 million
- Profit up 25% to $6 million
- Interim dividend of 4.3 cents, up from 3.75 cents per share
- FY18 profit guidance lowered from $15 million to $12.5 million
MNF Group said its improved financial position was the result of all three of its businesses putting in strong performances.
The Domestic Retail business improved its result by 39% and begun to benefit from “encouraging increases in government business”, the company said.
The ANZ Domestic business, which includes the core Symbio and iBoss brands, reported a 16% better result.
Finally, MNF Group’s Global Wholesale business reported a 36% increase in revenue and an operating profit of $14 million.
MNF Group announced that it will launch a new suite of mobile products under a national brand, Pennytel. This will cost $3.5 million.
“The relaunch of the Pennytel brand represents a unique opportunity for MNF Group to benefit from the mainstream telco market”, CEO Rene Sugo said.
“Our strategy is to lead with a mobile first product offering based on our Telstra Wholesale MVNO agreement and taking advantage of our vast mobile enablement platform.”
MNF Group expects Pennytel to acquire 250,000 subscribers by June 2020, which should result in an EBITDA contribution (what the heck is EBITDA?) of $7.9 million.
Because of its strategic Pennytel investment, MNF Group expects its 2018 financial results to come in below previous expectations. Net profit is forecast to be $12.5 million instead of $15 million, with full-year profit per share equivalent to 17.2 cents.
MNF Group shares were trading 14% lower at $5.15 on Tuesday morning.
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