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Matthew Kidman (Livewire Markets): Now, Macquarie Telecom used to be really boring .... just sell your voice products. Now they build data centres. Buy, hold, or sell?

Gary Rollo (Montgomery Investments): Macquarie Telecom is a buy. This one has got everything for us. The top line over the course of the next four or five years is going to be driven by the data centre earnings power, and that is a great theme. You know, cloud is driving that market. The business can self fund the data centre development, so there is no need for extra capital. The stock is on 12 times EBITDA. You have got a management team that has delivered since it has been listed for about 12 or 13 years. It is a buy.



Matthew Kidman (Livewire Markets): Okay. You sound like you're falling in love, not picking a stock. Chris,: Macquarie Telecom. It's really changed itself over time. It might have been boring, but it has really got investor interest. Buy, hold, or sell?

Chris Stott (1851 Capital): Hold, Matthew. So, FY21 for Macquarie Telecom was an investment year, so they are deploying over $140 million of CapEx into a couple of new data centres at Macquarie Park and down in Canberra. So, again, David Tudehope, major shareholder, has done a terrific job with this business for well over a decade and continues to do so. But for now, it is an investment year, which will suppress their earnings in the second half of this financial year, so we'd look to review it around that stage, but for now, it's a hold.
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  • 2 months later...
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morphed to data and cloud

Data Centre Capacity.

• Total IT Load of all Data Centres is 21MW of which 19MW has been sold, including 10MW to a Leading Corporation (new customer).

• The remaining floor at IC3 East will be sold to our 3 business units and some wholesale customers.


Cloud Services and Government.

• Sales orders up 60% from FY19 to FY20

• 81% Cloud Services and Government FY20 revenue is recurring

• High quality Government customer base spread over 42% of Federal Government agencies

• Cloud Services and Government's HybridIT managed services deliver 10 times revenue per MW compared with colocation



● Company EBITDA will continue to grow in FY21, with first half of fiscal year 2021 in the range of $36 to 37 million. However, 2H FY21 will be relatively flat compared to 1H FY21 driven by investment in sales and operational resources to support continued growth.

● Construction of capacity under new contract will occur through CY21 for completion late CY21 / early CY22.

● Billing is due to start shortly after completion, Q3 FY22. FY23 will have full year impact of the contract.

● No material change to guidance for depreciation and amortization for FY21.

● FY21 total capex is expected to total $180 to $200 million


and now comfortably over $50 a share

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  • 7 months later...

another data centre ....


at the Macquarie Park Data Centre Campus, within the Sydney North Zone. The new data centre will be called IC3 Super West and will be the largest data centre on the campus, adding 32MW of IT Load to bring the total campus IT Load to 50MW over time. IC3 Super West is designed to seamlessly interconnect with IC3 East.


... this will be the 5th Centre, with 3 in Sydney and 2 in Canberra

.... Numbers have been confirmed: FY21 EBITDA will be within the previously announced guidance of $72 to $75 million.



and MAQ up 10% to $61+


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I had a look at MAQ results out today .... if market response both immediately after and in the lead up are anything to go by, then its a winner. But I can not get over a feeling of unease.


Macquarie Telecom is prepared to sacrifice its bottom line to maintain and build on its data centre, cybersecurity and cloud assets, with plans to spend up to $133 million on capital expenditure this financial year.


It will build on a $139 million [outlay] in the 2021 period, which doubled the prior corresponding interval even as growing depreciation and amortisation costs weighed on company after tax profits. Net profit after tax came in 7 per cent lower at $12.5 million ... the lowest Macquarie has reported in five years.


Still, chief David Tudehope was upbeat on Wednesday as the 2021 financial year marked the seventh straight year of earnings before interest, tax, depreciation and amortisation growth at $74.8 million.


This is very much the plan. We will continue to have high levels of capital expenditure, Mr Tudehope said. That flows through to much higher levels of depreciation and amortisation. So while earnings go up, profits go down.

Hope it all comes together. Seems like a successful morph from second tier telco to data centres and cloud. How much is being in right place at right time, though, and what happens if the music stops?

[As the #3 holding in MIR, I have got some (sufficient?) exposure. Never really understood the sector so I am glad for others to lift the bonnet]

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James Marlay (Livewire Markets ). Okay. Roger, I am going to stay with you. We have asked each of you to nominate a company that you think is a strong candidate for an earnings upgrade. Roger, what have you got to pitch to us today?

Roger Montgomery (M.I.M.) : Macquarie Telecom. We think the market does not appreciate how they make their money from selling their volume. They often sell a large part of their available power, if you like, at a lower price. But they can make just as much money .... they can actually double their revenue and their EBITDA ....  from selling the last 10 per cent of the volume at 10 times what they sold the original 90 per cent for. I do not think that is widely appreciated. So, we have got valuation on the stock of over $100, and its recent weakness gives, I think, us and other people an opportunity to buy.

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