5G Networks posts record quarterly cashflow, signs first indirect channel agreement

5G Networks quarterly activities 4C cash flow servers Australia channel partner
5G Networks has achieved quarterly positive operating cashflow of $2 million.

Next generation telecommunications company 5G Networks (ASX: 5GN) has posted a record $2 million operating cashflow for the December 2019 quarter and boosted its year-to-date cashflow by 58% to $3.3 million.

The growth was achieved primarily through the migration of existing customers to high-margin annuity services and synergy implementation, and resulted in the distribution of a maiden one-cent fully franked dividend to 5G shareholders.

5G also reported consistent cash receipts of $14.6 million and half-year cash receipts of $28.1 million, representing a 19% increase on the previous corresponding period.

The company said approximately $4.6 million of its new and re-signed revenue secured during the six months to December demonstrated continued customer commitment and expansion of services.

More than 80% of its revenue base is contracted.

An investment in cloud infrastructure and a fibre network roll out across Sydney’s city area and Melbourne’s St Kilda Road district saw a capital expenditure for the period of $843,000.

5G also reported a substantial cash balance of $2.8 million and an additional $2.2 million of available debt to fund targeted acquisitions.

Indirect channel agreement

During the quarter, 5G signed its first indirect channel agreement with Servers Australia which will allow 5G to provide capacity across its city-based data centres in Melbourne, Sydney and Adelaide for an initial 24-months period and a minimum spend of $750,000.

As one of Australia’s largest hosting providers, Servers Australia will also have the opportunity to resell the 5G Cloud solution with high-speed fibre networking, currently connecting geographically-diverse data centres to a national high-speed network footprint.

5G managing director Joe Demase said the agreement represents a major win for the company given Servers Australia’s significant presence in the hosting market.

“This development underlines our value proposition in providing end-to-end services which deliver more value than simple data centre co-location,” he said.

“It also highlights that channel partners are demanding a combination of choice and simplicity in supporting the digital experience for customers.”

The new partnership will allow 5G to provide a diverse packaging of carrier and support services for Servers Australia customers.

At mid-morning, shares in 5G Networks were up 16.17% to $0.970.

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