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M2 TELECOMMUNICATIONS GROUP LIMITED (MTU)

M2 TELECOMMUNICATIONS GROUP LIMITED (MTU)

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General Information
Company Name: M2 Telecommunications Group Limited
Stock Code: MTU
Website: www.m2.com.au
GICS Sub-Industry: Integrated Telecommunication Services
Market Cap ($M): 395
Equiv. Shares (M): 124

Current Price Data+
Current Price Open High Low Last Close Volume Price Movement
 $ 3.170 $ 3.200 $ 3.210 $ 3.170 $ 3.200 240,748 $ -0.030  -0.938 %

Company Overview

Business Description:
M2 Telecommunications Group Limited (MTU) is a network independent provider of retail and wholesale fixed line, mobile and data telecommunications services specifically tailored towards small and medium businesses (SMB) in Australia and New Zealand.

Strategy Analysis:
M2 continues to focus on its two core target markets: Small & Medium Businesses (SMBs) and Telecommunications resellers and Internet Service Providers (ISPs), via our M2 Wholesale division. In respect of our infrastructure strategy, M2 remains 'infrastructure light´, utilising the network infrastructure of (principally) the largest telcos in Australia and New Zealand combined with limited company-owned infrastructure, used to deliver our range of data services. This strategy enables the Company to continue to generate strong cash flows without the requirement for heavy capital investment and also provides us with technological flexibility so as to ensure we continue to provide our customers with products and services which are relevant to their requirements. M2 Telecommunications Group reported NPAT up 72.28% to $27.68m for the year ended 30 June 2011. Revenues from ordinary activities were $426.85m, up 5.11% from last year. Diluted EPS was 22.23 cents compared to 14.1 cents last year. Net operating cash flow was $39.74m compared to $13.31m last year. The final dividend declared was 9 cents, taking the full year dividend to 16 cents compared with 10 cents last year.


Financial Summary
Year to Jun NPAT EPS EPS chg (%) PER DPS Yield (%) Franking (%)
2013  F 41.3 34.1 16.0 9.3 23.2 7.3 --
2012  F 33.6 29.4 32.4 10.8 19.0 6.0 --
2011  A 27.7 22.2 56.3 12.8 16.0 5.6 100.0
Source: Aspect actuals / Thomson IBES estimates

Peer Comparison
EPS Growth (%) P/E (%) Dividend Yield (%)
Company Mkt Cap 2011 A 2012 F 2013 F 2011 A 2012 F 2013 F 2011 A 2012 F 2013 F
Chorus (CNU) $974 M -- -- 0.3539 -- 7.6993 5.6867 0.0000 0.0668 0.0860
M2 Telecommunications Group (MTU) $398 M 0.5677 0.3243 0.1569 14.3950 10.8696 9.3952 0.0500 0.0594 0.0725
Telecom NZ (TEL) $3,254 M -0.0466 0.2054 -0.0061 13.7734 11.4266 11.4966 0.0651 0.0787 0.0781
Telstra (TLS) $42,058 M -0.1664 0.0943 0.0389 12.9552 11.8389 11.3958 0.0828 0.0828 0.0828
TPG Telecom (TPM) $1,191 M 0.3311 0.3925 0.1851 14.8662 10.6762 9.0090 0.0300 0.0405 0.0429

Market Comparison
Earnings P/E Ratio P/B Ratio P/E Growth P/S Ratio
MTU 0.21 11.9 4.18 0.50 0.92
Market 0.82 12.5 1.38 1.18 1.90
Sector 0.39 12.1 2.26 1.28 1.09

Directors
Name Position Start Date
Mr Vaughan Garfield Bowen Executive Director 14 February 2000
Mr Craig Lehmann Farrow Non-Executive Chairman 18 February 2000
Mr John Sanford Hynd Non-Executive Director 18 February 2000
Mr Michael Simmons Non-Executive Director 26 November 2009

Management
Name Position
Geoff Horth --
Darryl Inns Chief Financial Officer
Michael Speglic Commercial Director
Kellie Dean Company Secretary
Steve Wicks Group Sales Director

Substantial Shareholders
Holding Name
8,370,737 (6.80%) Bowen, Vaughan Garfield
12,385,958 (10.06%) Hunter Hall Investment Management Limited
10,250,000 (8.34%) Cornish Group Investments Pty Ltd and Associates
8,246,661 (6.75%) National Australia Bank Limited

Calendar of Events
Date Event
24 September 2012 Report (Annual)
27 August 2012 Report (Prelim)
27 August 2012 Report (Annual)
27 February 2012 Report (Interim)
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