Can Comms Group Sustain Growth Amid Integration and Cost-Cutting Challenges?
Comms Group Limited reports a strong start to FY26 with a 41.6% revenue increase and successful integration of TasmaNet, positioning the company for ambitious annual targets.
- 41.6% revenue growth to $19.4 million in 1Q FY26
- Underlying EBITDA doubled to $2.2 million
- TasmaNet contributed $4.9 million in revenue, with full-year estimates of $17–19 million
- New sales contracts of $2.8 million ARR in 1Q and $1.8 million ARR early 2Q
- Cost synergy project underway to save up to $2 million annually
Robust Revenue Growth Signals Momentum
Comms Group Limited (ASX, CCG) has kicked off FY26 with a compelling trading update, revealing a 41.6% jump in group revenue to $19.4 million for the first quarter ended 30 September 2025. This surge reflects strong demand across its diversified business units, including Global & Wholesale, Secure Managed IT Solutions, and Cloud Communications and Collaboration. Underlying EBITDA also doubled to $2.2 million, underscoring improved operational leverage.
TasmaNet Acquisition Driving Growth and Integration
The recently acquired TasmaNet business contributed approximately $4.9 million in revenue during the quarter, with $3.7 million from its core Tasmanian operations and $1.2 million from mainland customers now integrated into Comms Group’s other divisions. Management projects TasmaNet-related revenue for FY26 to reach between $17 million and $19 million, highlighting the acquisition’s strategic value. The transition is progressing smoothly, with all customers and key suppliers onboarded and a dedicated standalone entity established for Tasmanian clients.
Strong New Sales and Expanding Market Reach
New sales momentum remains robust, with $2.8 million in annual recurring revenue (ARR) contracts signed in 1Q and an additional $1.8 million ARR secured early in 2Q. Notably, TasmaNet secured a major connectivity contract valued at over $1 million. The Global business unit has expanded its footprint across Asia Pacific and Europe, landing deals with a diverse range of industries including financial institutions, government organisations, and multinational corporations. This geographic and sector diversification bodes well for sustained growth.
Operational Efficiencies and Strategic Partnerships
Comms Group is actively pursuing cost synergies through a network and cloud platform rationalisation project aimed at consolidating multiple domestic telco networks and cloud platforms. Expected to complete in Q4 FY26, this initiative could save up to $2 million annually in external costs. Additionally, the company’s new status as a Cisco Webex Certified Calling Partner enhances its product portfolio, enabling enterprise-grade voice services across 14 countries and strengthening its position in the competitive unified communications market.
Outlook and Market Positioning
With the company on track to exceed its annualised revenue target of $75 million and underlying EBITDA guidance of $9–10 million, Comms Group is demonstrating both growth and operational discipline. The integration of TasmaNet and expansion into new markets and product offerings suggest a company poised to capitalize on increasing demand for cloud communications and secure IT solutions.
Bottom Line?
Comms Group’s strong start to FY26 sets the stage for ambitious growth, but investors will watch closely for synergy realisation and contract finalisations.
Questions in the middle?
- How quickly will the projected $2 million in cost savings from network consolidation be realised?
- What is the potential impact of the Cisco Webex partnership on Comms Group’s competitive positioning?
- How will the company manage integration risks as TasmaNet’s mainland customers are novated to other divisions?
