Amaysim shares slump to record low as earnings cut by a third

Amaysim’s CEO say the telco can bounce back despite its shares plunging more than 20pc on its result.

Amaysim CEO Peter O’Connell in Sydney.

Challenger telco amaysim is banking on its revamped wholesale deal with Optus and its subscription energy service to lift its fortunes, with CEO Peter O’Connell saying the business has managed to see off ‘sub-optimal’ conditions.

Despite amaysim (AYS) shares falling more than 23 per cent to 51.5 cents on the back of grim full year 2019 results, Mr O’Connell is confident the telco can bounce back.

“This (FY2019) was a reset year for us, frankly we would have likes a few more subscribers but we cut back on marketing in the second half,” he told The Australian.

“We were also negotiating our wholesale deal with Optus, changing a number of arrangements that give us the flexibility to meet the market’s needs.”

Amaysim’s full year revenue, net profit and earnings all took a hit in FY19. It posted an after tax loss of $6.5m for the full-year through June, compared to a net profit after tax of 14.8m last year. Meanwhile, net revenue was down 7.8 per cent year-on-year to $508.3m and underlying earnings slid 14.5 per cent to $47.3m.

The telco also saw its mobile customer base drop 4.8 per cent in the period to 624,000.

“Our net profit looks bad but $15.7m of that was an (one-off) impairment that we had in relation to our energy business Click Energy,” Mr O’Connell said.

Energy is shaping up as an important sector for amaysim, which has already sold off its devices business and stopped selling fixed broadband over the National Broadband Network.

“We actually grew our customer base there by 8 per cent, we now have 207,000 energy customers and have a healthy margin in the high 20s.”

“Later this year we will fully launch our subscription energy product which looks at energy like data, it retrofits an energy product with features such as rolling over your energy quotas from one month to another.”

Amaysim has been trialling the subscription service in Victoria and Mr O’Connell said expanding it nationally was a top priority.

“Almost 85 per cent of energy is sold in a very old-fashioned way but we can convert it into a digital product.”

Mr O’Connell added the mobile business should start to get healthier as the three major mobile operators — Telstra, Optus and Vodafone Australia — start to raise prices.

“We can grow mobile now that the market is getting freer and the carriers start to look at 5G, we have the money to lift the business and we have the data inclusions as well.”

With the telco market keeping an eye on TPG Telecom and Vodafone Australia’s attempt to revive their $15 billion merger, Mr O’Connell said he was surprised the Australian Competition and Consumer Commission had rejected the deal.

“We like the TPG-Vodafone merger, it’s rational because we want a strong third carrier.”

“Optus is our preferred carrier but given wholesale charge is our biggest cost the last thing is we want is less competition, we don’t want a lame duck Vodafone and a lame duck TPG,” he said.