Reporting Season: Macquarie Telecom poised to exceed earnings guidance

By Trevor Hoey. Published at Aug 7, 2018, in Features

Name: Macquarie Telecom Group (ASX:MAQ)

Market Capitalisation: $444 million

Opening Price: $21.52

Ahead of releasing its full-year result towards the end of August, Macquarie Telecom Group (ASX:MAQ) has flagged the expansion of its existing Macquarie Park Intellicentre to a 43 megawatt Campus.

While this growth initiative is likely to be well received, investors will also be buoyed by upgraded earnings guidance provided by the group.

From an operational perspective, the expansion will be undertaken in phases.

Phase 1, Macquarie Intellicentre 3 (IC3) East, will enable the company to expand its data centre capacity from a total load of 10 megawatts to 26 megawatts.

Subsequent phases will add a further 17 megawatts through the build-out of Macquarie IC3 West.

The campus is designed to meet the growing needs of global hyperscalers and cloud, enterprise and government customers.

Management expects that the initial capital expenditure on the Intellicentre 3 East Data Centre will be in a range between $75 million and $80 million, the bulk of which will be incurred across calendar year 2019.

The first data hall in the new Intellicentre Campus should achieve practical completion in late calendar 2019.

Upgrade in fiscal 2018 underlying earnings

Management advised that the unaudited fiscal 2018 EBITDA is expected to be in a range between $47 million and $48 million.

This exceeds previous mid-range guidance of $45 million announced in February 2018.

Management intends to declare a final fully franked dividend of 25 cents per share for the financial year-end 2018.

However, it is important to note during the upcoming expansion, capital constraints will result in the company ceasing dividends, commencing in the first half of fiscal 2019.

MAQ’s full year results will be released on 29 August 2018.

Those considering this stock shouldn’t make assumptions regarding future earnings, nor should they base investment decisions on performances to date. Those considering this stock should seek independent financial advice.

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