Alt-X listed holding company, Huge Group has reported mixed results for the six months ending August 2013, noting a drop in revenue, but a jump in profits.<\/p>\n
The group – which holds and draws most of its revenue from telecoms companies, Huge Telecom, Huge Mobile and Huge Cellular – saw revenue decline\u00a031.6% to R106.7 million, from the R156.0 million in 2012.<\/p>\n
However, group operating profit increased 102.4% from R4.1 million to R8.3 million,\u00a0driven by a drop in mobile termination rates\u00a0(MTRs).<\/p>\n
Headline earnings per share declined to 6.07 cents, from 10.01 cents in 2012.<\/p>\n
On 1 March 2013, MTRs dropped from 56 cents to 40 cents, pushing gross profit up by 21.9% from R37.9 million to R46.2 million.<\/p>\n
Huge Telecom, a wholly-owned subsidiary of Huge and the principal trading operation of the Group, provides wireless, GSM-based, fixed-cellular, last-mile connectivity services for voice, messaging, and data.<\/p>\n
Operating off a base 75% wholesale, the effect of MTRs pushed margins up 78.2% to 43.3% for the six month period.<\/p>\n
“The profit and cash flow benefits were material and immediate,” the group said.<\/p>\n
According to the group, its telecom segment experiences a significant time delay in the revenue effect of sales activity of about about twelve months – meaning, revenue recorded in the current six month period is a function of the sales activity in the six month period, a year ago.<\/p>\n
From 1 March 2013 to 31 August 2013, Huge Telecom said it acquired in excess of 500 new clients and grew net connections by more than 2,100 lines.<\/p>\n
“In the last twelve months Huge Telecom has also experienced a substitution of higher revenue, lower margin clients for lower revenue, higher margin clients and this has also exacerbated the extent of the decline in revenue,” it said.<\/p>\n
The group expects the revenue results of its current reporting period (which will reflect next year) to trend upwards.<\/p>\n
Huge to continue despite further losses<\/a><\/strong><\/p>\n Huge Telecom reports profit fall<\/a><\/strong><\/p>\n