Huge Telecom primed for ‘strong organic growth’

CEO of Huge Telecom, the communication expense management and managed telecommunications firm, James Herbst says the group is well-positioned for continued financial and operational improvement in 2012.

However, the group says that it faces the challenge of margin pressure along with “having to produce more with less” within the current economic climate.

Huge Telecom is a wholly owned subsidiary of Alt-X listed Huge Group (HUG), and in December it reported diluted headline earnings per share of 1.09 cents for the six month ended August, from 9.42 cents previously.

Revenue slipped to R212.33 million, from R275.37 million, with an operating profit of R8.57 million, from a prior loss of R4.24 million.

Total turnover for Huge Telecom declined 23% to R212.3 million, from R275.3 million, “attributable to the loss of a number of high-revenue-generating, but low-profit-generating clients,” it said.

In an interview with BusinessTech, Herbst said, however, that a marked turn-around at Huge Group in the second half of the year turned an interim loss into a year-end net profit of R8 million – with improved profitability reflected in year-on-year increases in gross and net profit, headline earnings and gross profit margin.

“We are expecting continued improvement in the financial and operating performance of the company. The solid foundation is in place and we can now double our client base and product offering with very little additional overhead.

“This year we are pushing for strong organic growth, as well as keeping an eye out for any new opportunities which may arise.”

Herbst warned that margins remain tight, “our competitors are hungry and clients are more demanding. Consolidation may provide interim relief as we seek to maximise the economies of every increasing scale.”

Looking at avenues for future growth, the CEO said that residential fixed wireless solutions present an interesting opportunity. “There are so many service delivery problems with traditional fixed-line voice services; wireless services solve many of these issues.

“I also think there may be some opportunity at the top-end of the corporate market for alternatives to fixed-line solutions – like fixed cellular routing (FCR),” he said.

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Huge Telecom primed for ‘strong organic growth’