Vita Group weathers Telstra storm, but business ICT slides

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Vita Group weathers Telstra storm, but business ICT slides

Telstra’s sole master licensee partner Vita Group has weathered the storm battering its top partner to grow revenue by 10 percent to hit $753.7 million.

Vita Group has in recent years diversified its portfolio into non-ICT related businesses, namely non-invasive medical aesthetics and athletic wear, so we’ll only cover the ICT results.

ICT revenue for the year ending 30 June 2019 rose 9 percent to $739.3 million off the back of strong sales in connectivity, hardware and adjacent categories.

EBITDA rose 13 percent to $79.3 million, while Vita’s overall net profit rose 10 percent to $24.3 million.

While the ICT business was looking rosy, particularly retail which grew 17 percent, the business ICT channel dropped 42 percent in revenue. Vita doesn’t break out individual revenue figures for its retail and ICT channels.

Vita said the weak business ICT performance stemmed from changes to Telstra’s decision in 2018 to transition small business customers into the retail channel, as well as the introduction of larger geographical territories and a greater focus on higher value customers.

Vita announced in June that its remuneration structure had changed once again to accommodate for the telco’s simplified mobility plans. As part of the changes, Vita agreed to forego some of its legacy remuneration components, costing $12-13 million per annum. In exchange, Vita will receive better remuneration for hardware sales, but expects lower remuneration from selling connections to Telstra’s network.

The remuneration changes also resulted in Telstra introduction an annual performance-based extension mechanism, and extending Vita’s master license to June 2024.

“It has been a year of significant evolution at Vita,” said CEO Maxine Horne. “I am very pleased with our performance in FY19 and excited about the potential of our business as we move full steam ahead into FY20.”

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