REDtone back in the black

• Records first profitable year following repositioning in 2009
• FY12 revenue of RM107 million, up 19.5% from RM89.6 million in FY11

DATA and broadband service provider REDtone International Bhd has returned to profitability with a RM1.86 million (US$591,600) profit after tax for the financial ended May 31, 2012, following a RM12.3 million (US$3.9 million) loss after tax in FY11.
 
The profit after tax was mainly driven by significant growth in its data and broadband services, the company said in a statement.
 
REDtone’s revenue for FY12 stood at RM107 million (US$34 million), up 19.5% from RM89.6 million (US$28.5 million) the previous year. The growth in revenue was led by data and broadband projects amounting to approximately RM25 million (US$8 million).
 
The company has been EBITDA (earnings before interest, taxes, depreciation, and amortization) positive for the last four consecutive quarters.
 
For the fourth quarter ended May 31, REDtone’s pre-tax profit jumped 138% to RM2.9 million compared with a loss before tax of RM7.63 million in the previous quarter. The significant pre-tax rise was largely due to gains from deconsolidation arising from the disposal of a subsidiary as the group seeks to align its business focus, it said.
 
Revenue stood at RM22.74 million (US$7.2 million), a slight decrease from Q3’s RM23.58 million due to a drop in revenue from the group’s China operations.
 
REDtone’s core business is the provision of data and broadband and voice services. The company said it has numerous major government Wi-Fi projects under its belt, although it did not disclose details.
 
According to managing director Dato’ Wei Chuan Beng (pic), returning to profitability has been the company’s top priority since 2008 when its voice business was hit by stiff competition which led to REDtone repositioning itself as a data and broadband player in 2009.
 
“Challenges over the last few years have definitely made us stronger. With the turnaround in FY12, we are ready to be back on a growth trajectory and are very optimistic of this year’s prospects.
 
“Recently, REDtone inked an infra and spectrum sharing deal with Maxis which is expected to provide significant cost-savings for us as we will be riding fully on Maxis’ infrastructure. This will also enable us to fast-track our rollout of ultra-high speed 4G LTE (Fourth Generation Long-Term Evolution) services and the revenue generated from the shared network resources is expected to contribute positively from this FY onwards,” he said.
 
He also said that in March this year, REDtone collaborated with Telekom Malaysia on its HSBB (high-speed broadband) services, a move that is expected to sharpen the company’s competitive edge.
 
REDtone currently has a total of 4,500 Wi-Fi hotspots that either are already established, underway or about to be built by this year –end, the company said.
 
Currently, its data and broadband services contribute about 30% to the group’s revenue. It aims to grow its revenue from government projects to 50% from the current 30% by the end of its current 2013 financial year.