• Acquisitions not the only growth avenue for telco M2 Group

    Date: 2019.07.17 | Category: 苏州美甲美睫培训学校 | Tags:

    M2 Group chief executive Geoff Horth runs one of Australia’s quietest success stories – a telco that the average punter has probably never heard of.

    But where some may see a silent public as a curse, he claims it is a blessing – a point that lets the company get on with growing profits for shareholders.

    The Melbourne-based telecommunications provider is best known as the owner of household names including Dodo, iPrimus and Commander. It has enjoyed a meteoric rise by buying its rivals to become a $1.5 billion giant.

    In an interview with Fairfax Media, Mr Horth said his goal was to make M2 one of the largest consumer internet service providers in the country with a double-digit percentage market share – up from the circa 6 per cent it currently holds. This will be done using the Dodo brand it bought in 2013 for $250 million.

    The company struggled for much of the year to convince shareholders it had shaken its reliance on using acquisitions to grow revenue and profits, having made more than 20 in the past five years alone. It recently stepped out of the race to buy energy reseller Lumo when the prices got too hot.

    “But our overall business did not do a transaction in financial year 2014 and yet for FY15 we’re guiding for 8 to 9 per cent revenue growth, which from a $1 billion revenue base is not trivial,” Mr Horth said. “That’ll drive 15 to 20 per cent net profit growth.

    “We want to remove once and forever the question of whether our business can grow organically and we don’t see any reason why we can’t continue this growth rate for many years to come.”

    M2’s low-cost products face huge competition from rivals such as TPG Telecom, which gets higher margins thanks to its ownership of infrastructure like fibre optic cabling. iiNet is also looking to ramp up sales in the small to medium business segment.

    But Credit Suisse thinks there is plenty of opportunity in the company, with its most recent note giving M2 an “outperform” rating on the stock and putting a target price of $9.35 per share on the company.

    The company’s share price also hit an all-time high of $8.45 thanks to a small number of high-volume trades that began on Thursday afternoon.

    Mr Horth said his organic strategy hinged on two key pillars – bundling energy products into telco offers and building its broadband subscriber base.

    “Energy is a highly, highly strategic part of our business,” he said. “It’s a $53 billion category and we’ve got $100 million of it today.

    “It would be very difficult to justify our new Dodo kiosk strategy without an energy product because we wouldn’t be making enough sales.”

    Getting products into the market is an area M2 will improve through acquisitions and new retail stores, Mr Horth said.

    Dodo aims to have 40 kiosks in centres across Australia selling internet, mobile and power products by early next year with some up and running by Christmas.

    “The retail strategy is a core ingredient for our growth in the medium term,” Mr Horth said. “It won’t pay dividends in FY15 or frankly FY16 materially but it’s about recognising that if we have hundreds of these things in three to four years’ time they’ll be the things delivering the next stage of growth.”

    And behind it all Mr Horth will aim to keep a low profile – the quiet parent of a garish birdy brand upon which M2’s hopes rely.

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