With its stock up circa 160% since the start of 2020, Macquarie Telecom Group Ltd (ASX: MAQ) is set to spend as much as $129m in FY22 building data capacity to 54mw, from around 17mw currently, in its quest to ride the wave of rapid cloud computing growth in Australia.
The group, which hasn’t paid a dividend since 2018, has instead ploughed cashflow into new and expanded data centres as part of a move to seize a greater slice of the rapidly expanding cloud computing pie.
The total market size of cloud computing services in Australia is forecast to hit $14.1bn by 2025.
Management is currently seeking planning permission to construct a 32mw addition to its Western Sydney campus, and an expansion of one of the wings of its Canberra data centres is also on the cards.
All up, the planned additions should bring built capacity to about 54mw by 2023, from around 20mw currently.
The group reported first-half FY22 revenue of $149.3m, 4% above first-half FY21, while the 48% fall in net profit after tax (NPAT) reflected increased levels of capital expenditure.
The group spent $68.9m on capital spending in the period, compared with $32.9m in first half FY21, and is planning to spend between $120m and $129m for FY22.
Contracted load is around 19mw currently, representing capacity utilisation of above 90%.
Macquarie’s financial results give a snapshot of how the company is transforming itself - from a traditional telecom business a decade ago.
While 76% of the group’s revenues previously came from fixed line, mobiles and data services to the current situation, cloud services and government now account for half group revenue.
Cloud computing was already growing fast before 2019; but the covid pandemic has accelerated the trend.
Market intelligence firm Global Data predicts the total market size of Australia’s clouding computing sector to increase to $14.1bn by 2025, with public cloud services representing about half of the projected pie.
Macquarie expects in-house cloud computing in Australia to decline by nearly 50% over the next few years, as companies instead opt for public and hybrid cloud services offered by specialists such as Macquarie.
Its half-year FY22 results are already showing signs of that trend - revenue of its cloud and government services unit expanded at a compound annual growth rate (CAGR) of 21.3% over the past 2 years, compared with CAGR of -3.1% for its telecoms unit.
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