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REDtone eyes Internet infra jobs

04 Dec 2013


KUALA LUMPUR: With experience in building telecommunications infrastructure under its belt, REDtone International Bhd is eyeing a slice of the government’s multi-billion projects targeted at expanding Internet coverage nationwide.



REDtone group CEO Lau Bik Soon said REDtone, which mainly provides Internet and data services to small to medium enterprises, could add value to Internet infrastructure in under-served areas.



“Based on the end-to-end experience that we have in the provision of engineering services, our ability to do side acquisitions, planning, optimisation, network deployment and others, we think these would add value to speed up the entire deployment [of the telecommunications infrastructure],” Lau told The Edge Financial Daily.



Lau said REDtone is not a new player in building telecommunications towers.



In fact, the telecommunications group inked a three-year deal with the government in 2012 to build, operate and maintain radio access network infrastructure in Sabah. Valued at RM82.5 million, this was REDtone’s biggest government contract hitherto ever since it ventured into the public sector two years ago.



At the tabling of the 2014 Budget in October, Prime Minister Datuk Seri Najib Razak announced plans to bolster Malaysia’s Internet access. This includes promoting public-private partnerships for the second phase of the nation’s high speed broadband rollout, which has an investment cost of RM1.8 billion.



Apart from that, the government plans to build another 1,000 telecommunications transmission towers worth RM1.5 billion over three years in rural areas and lay new underwater cables worth RM850 million to expand coverage in Sabah and Sarawak.



These investments will be covered by the Universal Services Provision (USP) Fund, which finances the installation of network facilities in areas with a low network penetration rate. The USP Fund stood at RM7.29 billion as at end-2011.



While REDtone has the know-how in building telecommunications infrastructure, the group’s main business is providing Internet data and service. For its first quarter ended Aug 31 of 2014 financial year (1QFY14), the group’s data business contributed 70.72% to its gross profit of RM13.13 million.



REDtone’s net profit for the quarter was RM3.65 million, which was 81.72% higher than the previous year’s RM2.01 million. Its revenue of RM36.11 million was a 17.74% improvement compared with RM30.67 million in the previous corresponding period.



Lau said small and medium enterprises (SMEs) and small and medium businesses (SMBs) make up over 50% of REDtone’s customer base. However, enterprises and government agencies contribute about 70% to group revenue and profit.



“As our portfolio of services has increased, I believe that there are a lot more opportunities for us to capture,” he said.



Lau is also excited with REDtone’s high speed mobile Internet segment’s prospects.



To recap, the group has a 10-year partnership with Maxis Bhd to share the infrastructure and spectrum for the fourth generation long term evolution (4G-LTE) network.



He said REDtone’s LTE service has a new tentative launch date of June 2014, at the latest.



Instead of competing for individual consumers in an overcrowded market that is dominated by telecommunication heavyweights, Lau said REDtone plans to offer the service primarily as a value-added service to enterprises, bundled with its existing services.



As at 1QFY14, REDtone was in a net cash position as its total borrowings stood at RM5.65 million against cash of RM38.81 million, which comprised cash and bank balances and bank deposits. Its total equity was RM126.28 million.



All in, Lau said, the group could sustain its growth momentum on the back of its core competencies.



For FY13 ended May 31, the group raked in RM25.14 million in net profit or 5.23 sen per share on revenue of RM142.05 million. Its FY12 net profit came in only at RM2.15 million or 4.5 sen per share on revenue of RM106.98 million.