How Will Comms Group Overcome EBITDA Dip After TasmaNet Acquisition?

Solid Revenue Growth Amid Strategic Expansion

Comms Group Limited has reported a modest 2.1% increase in revenue for the year ended 30 June 2025, reaching $56.6 million. This growth was underpinned by organic expansion, particularly within its Global business segment, and the recent acquisition of TasmaNet, a leading Tasmanian telecommunications and managed IT services provider. The acquisition, completed in mid-June 2025, added valuable network assets and a portfolio of government and corporate customers, broadening Comms Group’s domestic footprint.

Underlying EBITDA Decline Reflects Strategic Investments and One-Off Revenue Adjustments

Despite the revenue uptick, the Group’s underlying EBITDA fell by 13.6% to $5.7 million. The decline is attributed to several factors, investments in new sales and support roles within the Global division, the absence of significant one-off revenues that boosted the prior year, and cost pressures within the SME division that slightly eroded margins. Acquisition, integration, and restructuring costs related to TasmaNet also weighed on profitability, alongside amortisation of intangibles and interest expenses linked to the Group’s refinancing activities.

Net Loss and Dividend Declaration

The Group recorded a net loss after tax of $0.7 million, a notable increase from the prior year’s loss of $0.1 million. This result includes $2.4 million in one-off costs associated with acquisition and integration activities. Nevertheless, the Board declared a final dividend of 0.125 cents per share, maintaining total dividends at 0.25 cents for the full year, signaling confidence in the Group’s ongoing cash flow generation.

Balance Sheet and Financing

Comms Group strengthened its balance sheet during the year, increasing net assets from $31.8 million to $36.7 million, bolstered by the TasmaNet acquisition which contributed $9.4 million in net assets. The acquisition was funded through a combination of a $4 million increase in term debt via a new facility with Regal Tactical Credit Fund and a $6.6 million equity raise. The Group refinanced its previous Commonwealth Bank term loan as part of this process. However, the new term loan matures within 12 months, creating material uncertainty around going concern, which the Directors acknowledge but believe will be managed through refinancing or extension.

Operational Highlights and Future Outlook

Operationally, the Group reported a record year for new sales contracts, with $10.4 million in annual recurring revenue signed, a 35% increase over the prior year. The Global business expanded its international footprint, onboarding new carrier partners and enhancing service offerings. The integration of TasmaNet is underway, with expected synergies from network consolidation and process standardisation anticipated within the next 12 months. The Group continues to focus on cost management, cross-selling opportunities, and strengthening its cybersecurity and compliance posture, holding certifications such as ISO 27001 and SOC 2 Type 2.

Risks and Governance

Comms Group remains vigilant regarding risks including technology disruption, cybersecurity threats, regulatory changes, competition, customer concentration, and liquidity constraints. The Board and management have established governance frameworks and committees to oversee these risks and ensure alignment with shareholder interests. Executive remuneration remains linked to performance metrics, including share price hurdles and continuous employment conditions, reinforcing a focus on long-term value creation.