Redtone ... Nov09

It expects to increase its profit moving forward with contributions from several business segments including broadband services.

It posted a net profit of RM1.2 million in its first quarter ended Aug 31, 2009 versus net losses of RM3 million and RM354,000 in the preceding quarter and a year earlier, respectively. Earnings per share totalled 0.31 sen.

Revenue fell over 9% to RM19.4 million from RM21.4 million a year earlier, but was 4.3% higher from the preceding quarter’s RM18.6 million. No dividend was declared.

It also expected its China operations based in Shanghai to start making greater contribution to revenue and profit, reducing its reliance on its Malaysian operations.

The company’s broadband offering, which was launched in 2007, was beginning to gain ground among the corporate sector and its contribution to group revenue was expected to increase significantly beginning FY10, which started in June.

Its aim was to expand the corporate market. Its data and broadband customers are usually on mid-term contracts of two to three years, so the revenue and profit streams are sustainable.

It had more than 1,000 corporate subscribers on board for its data and broadband services.

They are also actively bidding for other projects including government projects.

It would continue to expand its WiMAX coverage and services in Sabah and Sarawak at a reasonable pace to serve the consumer, business and government sectors in the major cities and towns in Sabah and Sarawak.

Recognising that WiMAX services in East Malaysia may not be commercially viable, REDtone is looking into possible partnerships with the government who may jointly provide funding to facilitate REDtone’s WiMAX rollout, especially to the rural areas.

REDtone also has subsidiaries providing IPTV (Internet protocol TV) and mobile phone services. Although the voice segment had reached maturity, it remained profitable albeit its margins were now lower.

It was working with various telcos in China to offer discounted voice services and the business had been profitable since last October 2008.

REDtone would also be looking at possible acquisitions of complementary businesses for its China operations and it was also actively pursuing new areas of business to complement its core businesses.
It is projecting a 50 per cent jump in revenue for the year 2011, mainly coming from its data and broadband segment and a higher contribution from China.

In two years, the group also foresees China market contributing half of its revenue against 30 per cent now.

REDtone provides discounted call service and mobile Internet services in the country. It is also venturing into mobile Internet devices via 3G technology in China to tap growing demand for 3G services.

REDtone is looking at possible acquisitions of complementary businesses to expand in China.

REDtone wants to expand in new areas like Mobile Virtual Network Operator and Internet protocol television. However, broadband business still has strong growth potential and sees the segment contributing most to revenue in years to come.

REDtone will also continue to expand its WiMAX service in Sabah and Sarawak and is looking at a possible venture with the government to provide funding to facilitate its WiMAX rollout.

For the first quarter ended August 31 2009, the group posted a net profit of RM1.2 million against RM3 million losses before. Revenue increased by 4.3 per cent to RM19.4 million from RM18.6 million.

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