“This is what creates a valuable asset. The data centres have long-term contracts and secure revenue streams from demand for cloud services in both the corporate and government sectors,” Mr Tudehope said.
High capex ‘very much the plan’
In the 2021 financial year, the company finished building the “South Bunker” expansion to its Canberra data centre complex in December.
Macquarie Telecom also completed work on the first phase of its new data centre complex dubbed Intellicentre 3 (IC3) at its Macquarie Park campus. It plans to break ground on the core “Super West” portion of IC3 by late 2023.
“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.
“From our point of view, the result is really strong.”
Shares in the company slid as low as 1.6 per cent to $74.82 in early trade, but had recovered by the early afternoon to be up 0.4 per cent at $76.28.
Asked whether the business would still be attractive to investors if it kept on spending on new projects at the expense of profits, Mr Tudehope said: “Well, if you look at NextDC, then yes.”
NextDC is another player in the data centre space aggressively upgrading its capacity and, despite analyst projections that it will report its third straight after-tax loss when it discloses its full-year accounts on Friday, has seen the share price grow around 11.5 per cent in year-to-date terms.
“This is normal across the industry,” Mr Tudehope said. “We are not a mature infrastructure business, but we are a growing infrastructure business and this is very much a feature of that.”