Thank you for standing by, and welcome to the Superloop half-year results conference call. All participants are in listen-only mode. There will be a presentation followed by a question- and- answer session. If you wish to ask a question, you will need to press the star key followed by number one on your telephone keypad. I would like to hand the conference over to Mr. Paul Tyler, MD and CEO. Please go ahead.
Thank you very much, and welcome to everyone to our first half of FY 2022 results. I'm sitting here with Luke Oxenham, who is our CFO. The first half has been a pretty incredible half for Superloop. Before we get into the highlights itself, I just wanted to touch again on who we are and what we communicated back in November in our investor day. First and foremost, it's around our purpose, and our purpose being, we want to be a company that enables better internet through competition. By competition, we mean we want to be a catalyst for the market, the telco market in Australia, achieving its more natural state of some 30% market share sitting with those challenger brands.
We have invested very heavily in a platform. We call it our Infrastructure on Demand platform, and we think that platform really differentiates us in the market and sets us apart from, you know, other players that have similar aspirations. Some 18 months ago, we set in place an accelerated growth strategy. I'm very pleased with the way that growth strategy has played out, so we'll share more about that during the presentation today. We're really seeing that organic growth and inorganic growth coming through. We have in place now a capital structure that really gives us optionality, that allows us to invest in growth.
With a number of the changes we've made over the last year, you know, around our organization and the way we report to the market, we're now in a place where we believe our strategy, our business, and our financials are very clear and simple. I hope you, at the end of this presentation, would agree with that. If we jump into the highlights themselves for the first half, which as I said, I'd characterize as very strong for Superloop. I'll touch on the financial, the strategic, and the operational highlights. Starting with the financial, obviously, we lead with revenue. The revenue of the group has grown dramatically there with an increase of 125% to nearly AUD 120 million for the half.
Now, obviously, a large chunk of that growth has come on the back of inorganic acquisition of Exetel. We're very pleased with the fact that our underlying growth, the growth of our 3 Superloop segments or all 3 segments in the business, has continued and recorded at a group level some 18% growth to the previous comparable period. The growth hasn't just been in the top line, of course. You can see in the gross margin an improvement in the gross margin of some 60% to AUD 39 million or rather AUD 31 million, and then flowing through to the EBITDA line with improvement in the underlying EBITDA up to AUD 9.1 million, which is a 12% increase year-on-year.
On the financial side, we'll dig more into that during the presentation, but clearly strong progression in the business over the half. On the strategic side, this again, some substantial milestones met during the half. Firstly, the completion of the Exetel acquisition, which was completed towards the end of July in FY 2021. We realized nearly a full six months of the Exetel business in our first half results. Very seismic, I think seismic is a good word, acquisition for Superloop, largely underpinned by the synergies that were expected through that, which I'll come back to.
Another strategic milestone that we tackled during the first half was in the monetization of our Hong Kong and Singapore domestic businesses. We were very pleased to announce back in October that we had entered into a transaction with DigitalBridge and Columbia Capital. That transaction saw us monetize our Hong Kong business in its entirety and certain assets in Singapore at a premium to the carrying value, so at a profit. The deal is on track. We still expect to complete that deal by the end of this current quarter. Another strategic change we made during the half was in realigning our reportable segments in line with the way we changed our organization. We look at our business as management.
We look at our business through the lens of three distinct customer segments: our consumer business, our business segment, and our wholesale segment. What we've done, and you'll see in these results, is we've recut our reporting, our reportable segments, in line with the way we look at things through management. That seems like a simple change, but it is quite fundamental because it really is how we look at the business, as management, so through the eyes of management. But it also, I believe simplifies things for investors to look at how we're progressing across each of the elements of our business. Again, at the end of this presentation, I hope that you'll have formed that same view.
On the operational side, obviously, a key number there is the number of subscribers supported on our platform are growing dramatically over the period, more than 175,000 end customers that are now sitting on the platform. But a second highlight there that we call out is one category of those subscribers, which is a new category for us, the what we've called wholesale broadband customers. We launched an automation platform called Superloop Connect back in September, and we've seen a lot of demand for that platform. I think we announced quite a number of deals of RSPs or retail service providers who have signed up to that platform.
We're really now starting to see it hit its straps with more than 11,000 subscribers that are now supported on that platform and growing quite quickly. As I mentioned before, the Exetel transaction, while obviously completely on strategy for us, was underpinned by the promise of synergies. The final operational highlight that I would call out here is how those synergies have been realized or not. We're very pleased with the way that program has gone. We're actually running well ahead of the plan. We will actually hit the full AUD 5 million of annualized synergies well ahead of what we'd had previously communicated. Anyway, I'll cover that in more detail a bit further into the presentation.
Those highlights really sum up to having us in the position that notwithstanding the impacts of COVID and the various challenges of overage from NBN and international students not coming back in the timelines we would like. Various headwinds in the business, we're still able to affirm the guidance that we gave to the market for the full year of FY 2022, EBITDA coming into the range of between AUD 23 million and AUD 25 million. Okay. If we look at how the business has been developing over the last few halves, a good proxy for that, of course, is the number of end customers supported on the platform.
If we look at where Superloop had previously been growing from back through the periods ending June 2020, December 2020, June 2021, you can see the steady and progressive growth in the underlying subscriber numbers sitting on the Superloop-owned platform. Two large events happened. One was the acquisition of Exetel back at the end of July 2021, and the launch of the Superloop Connect platform that I mentioned before enabling us to have a new product, our wholesale broadband offering there, going live in September. That brought us to some 176,000 subscribers in aggregate to the end of December 2021.
If you look at the breakup of those, you can see the consumer business continues to grow very quickly as you would expect with that large inorganic addition from Exetel, but continues to grow organically as well, which is encouraging. The business segment and this new wholesale broadband platform adding on top of those, of course, not reported in those numbers are the mobile and VoIP customers that continue to grow there nicely as well. Strong growth over the period, and we're quite happy with the way that the underlying platform is accommodating all that usage. If we go to the P&L, you can see what I touched on before there.
Revenue coming in for the half of nearly AUD 120 million, which is some 125% up year-on-year. Gross margins at around that 32.7%. Gross margin across the group, some AUD 39.6 million for the half, leading to an underlying EBITDA of that AUD 9.1 million for the half that I mentioned. Both the gross margin and the EBITDA, of course, being representing growth year-on-year with the underlying EBITDA being 12.2% up on the previous comparable period. That's the group P&L. There's a lot of moving parts in that we recognize. With the acquisition of Exetel in particular, and the shift to the three reportable segments, a lot of moving parts.
Luke, I'll hand to you if you could sort of take us through the waterfall just to explain those moving parts to the investors.
Yeah. Thanks, Paul, and good morning, everybody. Thanks for your interest and time in spending some time with us this morning to look through the results. As Paul mentioned, the result is probably on the face of it, a little bit difficult to read through, given the fact that we have had the acquisition of Exetel in the half, but also from an accounting standard perspective, we've been required to account for the assets of Hong Kong and Singapore that we have entered into the transaction for. We've been required to account for those, and reclassify them as assets held for sale. When you look at the face of the income statement in the accounts and in the 4D this morning, you have to remember that does separate out from ongoing activities, those assets that are held for sale.
What we've attempted to do over the next couple of slides is really just provide everybody with a bridge to ground them in what you have seen previously in relation to results that Superloop presented in the first half of last year, and build a bridge between those results to where we've ended for the first half of this year. Slide eight builds that bridge from a revenue perspective. If you start on the left-hand side, the reported revenue in the first half of FY 2021 was AUD 53.3 million. Just to remind everybody that that did include AUD 3.1 million of revenue from the managed services business, which Superloop made a decision to exit from during FY 2021. Only the first half of FY 2021 contained results for that particular business.
By the time we got to the second half, that had washed through. It will be a feature as we talk about the prior comparative period in the first half of 2021, and obviously when we get to the full year results, it'll still be a feature as well. What we've done on the slide here is to adjust for that number, and you see that the rebased revenue for Superloop on a same-store basis, to steal that term, was AUD 50.2 million for the first half of FY 2021. What you can see is that all of those three core segments that Paul has spoken about have contributed in terms of growth to the overall performance. Clearly, the Exetel acquisition was a significant portion of that and contributed in both the business and consumer space.
We've attempted on the right-hand side to show you what the contribution in revenue from the Exetel business was in the first half at AUD 60.5 million. The contribution from the same-store ongoing Superloop business in the first half was AUD 59.3 million. That AUD 9.1 million increase over AUD 50.2 million is an 18.1% increase in revenue from the Superloop business on a same-store basis, and an overall doubling of revenue for the group as a consequence of the acquisition of Exetel during the half. We've attempted then on the following slide to do the same thing from an EBITDA perspective. Again, the reported numbers are slightly confusing given all the movements from an accounting standards perspective.
You know, after this call, we're happy to take any questions and help people understand that in more detail. What we've tried to do on this slide is to brief people in what the market saw in the first half of FY 2021 of the reported underlying EBITDA of AUD 8.2 million on the left-hand side. Then we've attempted to show the various factors that have contributed to the change in EBITDA, a 12.2% growth to AUD 9.1 million in the first half of this year. You can see again the feature of that managed services business, which was discontinued. It had a AUD 1.7 million EBITDA contribution in the first half of last year.
The first half of last year also featured an abnormal one-off item of benefit from JobKeeper of AUD 2.5 million that was received by the business in the first half of last year. When you adjust the reported number from the first half 2021 for those two items, you can see that, you know, on a core basis or, you know, rebasing the number, the EBITDA would have been AUD 4 million. You can see that that has increased from AUD 4 million, more than double to AUD 9.1 million in the first half of this year. That does include the fact that we have, and we'll talk about this as a feature of the business moving forward, we have started to increase that reinvestment for growth in the business.
There has been a step change in the marketing spend that was experienced in the first half of this year. That reported EBITDA of AUD 9.1 million included an additional AUD 2.6 million of marketing spend over and above what was spent in the first half of last year. All in all, a very solid result. That reinvestment for growth, as Paul will talk to in the coming slides, really positions us well for, as Paul said, the delivery of that FY 2022 guidance of EBITDA between AUD 23 million and AUD 25 million.
Thanks, Luke. What I might do now is jump into each of the three segments in turn. If we start with the consumer segment. Obviously, there's some huge numbers here in terms of growth percentages with the growth in subscribers and revenue increasing more than 200% and 300%, respectively. Now, clearly that growth is fueled by the Exetel transaction and bringing those subscribers onto the platform. But there is organic growth in the consumer segment as well. We have called out more than 6,000 net subscribers growth in the underlying Superloop business.
Another feature here of the consumer business, which continues to perform well, is that we've made some substantial investments in the platform, really around improving customer experience and bringing cost to serve down as well as we continue to push the trend line down on churn. You will notice here the reduction in gross margin. The reduction in gross margin really is a mathematical function. It's blending the higher margin Superloop business with the lower margin Exetel business as we brought it onto the platform. The fact that the synergies from the Exetel transaction, while we've realized fully in the run rate, weren't enjoyed in full in the full half.
As we come into the second half, clearly those synergies will be realized in full, and so there will be an improvement in the gross margin in the outlook. If I jump to the business segment, again, characterized by pretty dramatic growth there in the revenue line, again, largely underpinned by the addition of the Exetel business into the platform. One interesting highlight to call out here, though, in the business segment is that, in an effort to not see our costs grow linearly with our revenue. We are pushing more and more into the partner channel. Very pleased with the level of partner sales we have now achieved through that platform.
More than half of the sales that are coming into the business segments are now being brought through our partner channel. It's a feature that we wanna continue to push. We think it's a very cost-effective way of scaling that segment in a business which is largely a person-to-person sale. Of course, the gross margin decline is also evident there for the same reasons that it was evident there in the first half. With the addition of the fact that we have seen some further headwinds in some of the on-net business from the traditional Superloop space being we didn't see a significant resumption of students in our Managed Wi-Fi business with COVID.
Although some early signs of that look to be a bit more positive now, with the February results coming through. Maybe we hope for a better outlook into the second half. Also we see that our fixed wireless business continues to be suffering from some headwinds there. Also, the synergies from the Exetel transaction will lead to an improvement in gross margin into the second half. With the wholesale segment, this segment obviously is not impacted by the Exetel transaction. The growth that we're highlighting here, the 13% growth, or 12.8% growth, is all organic growth.
One of the main contributors to that growth is the new platform that we have established there, or new automation for wholesale broadband users through the Superloop Connect platform, as I said. We're really quite chuffed with that offering, and we have high hopes for it into the future. The gross margins that we see here in the wholesale division are actually now above the target gross margins that we have set for the division, which we'd set as discussed back in the investor day or the strategy day at the 70% level. Everything I've talked through there is about revenue and subscriber numbers, which I guess is a lagging indicator.
To give you a leading indicator for our two B2B segments, so our wholesale and our business segments, we've called out here some of the sales progress that we've actually had, which clearly will be a leading indicator for what we'll then see flow through to revenue. As you can see on the chart, we've signed some marquee customers. Quite a significant amount of marquee customers here. I mean, this is a small subset of the new and renewed customers that we have signed during the period in both the wholesale and the business segments. Perhaps an interesting callout for you to look at here is how the backlog of contracted sales has been building over time.
You can see in the wholesale segment there, we have progressively increased the total contract value that we write in each half, to the point that we wrote some AUD 32 million worth of contracted revenue into the wholesale segment and the eight point AUD 7 million into the business segment. Where you really see the rubber hit the road there is how the new monthly recurring revenue has been increasing progressively during the half. That gives you a bit of a, as I say, a forward indicator of what will flow through to revenue into future halves. Okay. The other thing I wanted to highlight and mention previously was the Exetel acquisition synergies.
A lot of the industrial logic of the transaction, while being on strategy and all that, you know, all that good stuff and appropriately priced, was really around the realization of the synergies. We had committed to realizing some AUD 5 million worth of run rate synergies by the end of the financial year. There's been some incredible work done here by some really smart, hardworking engineers, and I'm very grateful for that. That program has actually run well ahead of the schedule. I won't go through each of the acronyms that's over on the right as to what that program comprised of. But I think what's interesting to everyone is the fact we've been able to bring forward the full realization of those run rate synergies to January this year.
As of now, we are at the point where we are realizing the full AUD 5 million worth of run rate synergies, or annualized run rate synergies. You can see here a breakdown of where those synergies have come from and the phasing in the first half. The result was we did enjoy some synergies in the first half, some AUD 1.3 million worth of synergies, but as we get into the second half now, we'll be realizing that run rate in full. Great work, and we're very grateful for all the professionalism that was approached through that program. Okay. I'll hand back to you, Luke, for the cash flow.
Yeah, thanks, Paul. Just some very brief comments from a cash flow perspective. I think the first thing to point out on slide 15 is that from an operating cash flow point of view, we were operating cash flow positive during the first half of this year. What will be reported in the numbers does have a slight negative on that line, but that does include two very significant one-off items. We had a tax payment that we needed to make in relation to Exetel, you know, a period of time before we acquired them. Obviously, there was an adjustment made in the final purchase price when we settled the transaction for that. It was a known cost that we were taking on and we were able to adjust for that.
From a cash flow point of view, it did show up as a payment that came from us to the ATO in the first half of this year, and that's not something that will be repeated, obviously, moving forward. Secondly, there are a significant amount of transaction costs that were related to both the Exetel transaction, but also more recently to the sale of Singapore and Hong Kong, which were obviously cash payments that we've made out, the benefit of which will come through once that transaction finally settles, in the first quarter of this calendar year. The remainder of the cash flows, you know, relatively, sort of large items, but obviously the majority of which is focused on the acquisition of Exetel, which as we've spoken about, completed on the 31st of July.
I guess the last point that I would make just on this slide is around the capital expenditure. The CapEx in the first half, not exactly a sort of even split of the AUD 20 million CapEx spend that we believe that we'll have on an annual basis. Certainly that's because some of that CapEx has been front-ended, and you see there that we spent around AUD 11 million of capital expenditure in the first half. We're still well and truly on track to be within that capital window of AUD 20 million for the full year this year.
Lastly, before I sort of hand back to Paul to sum up, I wanted to spend a little bit of time just talking about the Hong Kong and Singapore disposal, and in particular the use of funds, if you like, that we'll be thinking about as we go through the end of this quarter and into the rest of the year. We have evaluated a number of options that are available to us. We've also canvassed a number of views from investors in relation to how they think that we should be applying the funds. We also had a look across the sector to understand the sort of, you know, balance sheet position of a number of people who are in a similar space to ourselves.
We did evaluate the potential from a capital perspective of returning some of this capital to shareholders, either by way of a dividend or a special dividend or potentially, on or off market buyback. We did run the rule over all of those alternatives. Ultimately we came to the conclusion that the best use of funds, that we have at the moment, and given the momentum that's starting to build in the business, is to apply those funds to continue to grow the Superloop business and continue to fill out the number of users that are sitting on the platform at the moment. That will be the key use of funds from the disposal of the Hong Kong and Singapore assets. We will look at both organic and inorganic growth opportunities.
Obviously we can't talk about the inorganic opportunities that we are sort of in the process of evaluating at the moment, and there are some that fit into that category, but we're not in a position to be able to speak about those. Certainly from an organic growth point of view, we're gonna continue to invest in each of the three segments and grow them over the course of the second half of this year. In the meantime, and until those inorganic growth opportunities present themselves or solidify from where we are at the moment, we will look to in the medium term repay some of the debt just to save on, you know, obviously the cash cost of interest and other associated sort of costs over the remainder of this year.
Ultimately, we do believe when you look at the metrics of the business and from the transaction that goes through, we have probably in excess of AUD 110 million available to us from this transaction to reinvest in those organic and inorganic growth opportunities moving forward. We'll obviously look to move as quickly as we can to deploy that potential into the market moving forward.
Thanks, sir. Okay, if I sum up. I characterize the first half as very strong half for Superloop, and I think that's a fair characterization. The mix of organic and inorganic growth across our three segments in revenue and EBITDA is really encouraging, and I think speaks to the strength of the diversification of our businesses over a single network platform. We passed some really major strategic milestones with the completion of the Exetel transaction and the monetization of Singapore and Hong Kong. We're really encouraged with the way the synergy capture has proceeded for Exetel, and I think really does bear out that we are able to plan and execute M&A in a you know, in a diligent and successful way.
We believe we are very well positioned for growth from both a P&L and balance sheet perspective. That's allowed us to affirm our guidance for the full year, as I said, in a range of AUD 23 million-AUD 25 million for EBITDA. Those are the points we wanted to make for the first half. With that, we're happy to take the questions.
Thank you. If you wish to ask a question, please press star one on your telephone and wait for your name to be announced. If you wish to cancel the request, please press star two. If you're on a speakerphone, please pick up the handset to ask your question. The first question comes from Bob Chen from JP Morgan. Please go ahead.
Hey, morning guys. Just a few questions from me. I mean, firstly, just around some of the working capital movements. I mean, it looks like the trade payables balances has increased quite a bit this half. Any reason why there?
Sorry, Bob. Just breaking up a little bit. Did you say increased?
Yes. Increased.
Yeah. I think one of the major factors will be the acquisition of Exetel. We've obviously brought on not only, you know, the Superloop business that we've had sort of moving forward, but we've also now got the Exetel business and that brings with it that increase in the overall balance there.
Okay, cool. No worries. Just on the operating cash flows, it looks like the cash flow conversion's a little bit softer this half. I think you called out some sort of one-offs there. I mean, is there anything else that might be impacting that as well?
No, I mean, they're the major sort of factors at this point in time. Obviously, we want to increase that, and we believe that it will increase sort of over time. I think that we'll see that improve in the second half as we get the benefits of the realization of those synergies coming through on, you know, that same factor that you're talking about, you know, the cost of goods sold, in particular, in relation to the Exetel side of the business. As we see that sort of coming through in the second half, I think that you will see that improve in the second half as well.
Okay, great. I can see the Exetel acquisitions obviously had some impact to gross margins, particularly in the consumer segment. I mean, given that the run rate synergies are tracking ahead of plan, I mean, do you expect that GP margin to improve materially in the second half then?
I think we sort of stated at the investor presentation back in November that we had a goal for the consumer segment to produce a gross margin around about 25%. I think that when we have the full run rate of synergies coming through in that business in the second half, just if you work that out mathematically, it does get you back much closer to that 25% number. We do still continue to believe that, you know, medium to longer term, 25% gross margin in the consumer space is the appropriate level to be targeting, and we think that we will be able to deliver that in that timeframe.
Okay. Perfect. Just on the overall, sort of M&A strategy going forward, I mean, which areas would still be interesting for Superloop to play in? I mean, can you break that down in terms of, like, which segment of your business you think has more opportunity for M&A?
Yeah, thanks, Paul. Look, I think one of the real strengths of our business is that we have three distinct market segments, and the single underlying platform that serves all those markets is best served by us aspiring to grow each of them independently. We are considering both organic and inorganic investments in each of the three segments. We have been and will continue to be quite prudent and disciplined in our approach to inorganic opportunities. We're not forced to buy anything. We've got a lot of organic opportunity in each of them. If we find opportunities, and as Luke said, we are considering a couple of things at the moment, then we'll explore those if we think they're appropriately priced and on strategy, et cetera.
We are considering opportunities in all three segments, and I wouldn't say there's any one of them that is, you know, a preferred or primary area of focus.
Okay, great. Thanks, guys.
Thank you. Your next question comes from Joseph Michael from Morgan Stanley. Please go ahead.
Great, thanks. Good morning, Paul. Good morning, Luke. Thanks for taking my questions. I just had a couple. Maybe the first one I'll start off with is just around the seasonality in the business. I guess the guidance implies a first half, second half EBITDA skew of 38% to 62%, 38% in the first half, 62% in the second half. Can you just talk us through what's driving that second half skew?
Yeah, there's probably a couple of factors. I appreciate that they're probably difficult to disaggregate, but, you know, the couple of factors are that we have been investing in growth in the consumer business, for example, so we have seen a significant growth coming through in net new subscribers in the first half. It does take some time, obviously, for that then to flow through from a revenue and profitability point of view. That will be one factor that will contribute. The growth in the wholesale segment that we've spoken about, we do have an expectation internally that you will see a fairly significant growth in those number of wholesale broadband aggregated services that will be sitting on the Superloop Connect network by the time we come and report at 30 June of this year.
That will contribute to growth in the second half as well. Probably the most meaningful contribution in difference between first half and second half will be the fact that we did only achieve AUD 1.3 million of those synergies from an Exetel point of view in the first half. You will see, if you look at the slide, those numbers are a realistic expectation of what we hope to get out of the synergies in the second half based on what we're experiencing in particular in the months of December and January. We think that full realization of those synergies will also make a contribution to the sort of, you know, seasonality, if you like, between first half and second half.
All of those factors are the things that give us the underlying confidence from our own internal forecasting that the guidance that we provided back at the AGM remains appropriate at this point.
Okay. Got it. Just a follow-up there. I mean, if the synergy targets have been brought forward, but the guidance has been maintained, is there any other offsetting factors in the guidance?
Look, I think I touched on a couple of things there. If you listen to some of our peers' reports, obviously there are some headwinds, largely due to COVID in the business, be they headwinds in the NBN business there with excess overage charges, reflected that, you can imagine from people staying at home, working from home, studying from home, and you see that flowing through. I think that's well understood in the market across multiple parties now. We've absorbed that. The other thing is the student business, as I said, has not freaking out. Omicron came a little bit unexpected. When we gave the guidance, we were seeing the tail end of Delta.
with the hope that we would see a recovery in that Wi-Fi business. Obviously, Omicron knocked that for a bit of a six, but actually it is starting to recover a little bit now, but certainly not at the pace that we had hoped when we gave the guidance in the first place. Notwithstanding those headwinds, obviously the balance of the business is performing very well, so we're able to maintain the guidance.
Okay, great. Just one last question from me, just around I guess your returns on marketing spend. I guess it's well sort of documented that the digital marketing environment's become more challenging with some, you know, channels becoming more expensive and other channels becoming less effective. Just wondering if you could comment on the returns you're getting on your marketing spend.
Look, I don't think we've actually disclosed a cost of acquisition for competitive reasons. We've learned a lot about the consumer business over the last 12 months, really, at a very granular level. We know exactly the threshold at which we get a return on investments. I think we've looked at the blend of digital marketing channels we use. We try and maintain a very competitive CPA relative to others in the market, and that does mute our growth a little bit. We could certainly grow faster if we chose to spend more. Again, relative to peers, you can see we've not taken that decision despite having the capacity to do so, because we do want to get the right balance between investment and return there.
Maintaining a reasonable CPA is something that we are very focused on and will continue into the future.
I might just add a comment to that as well, Paul. I mean, the other side of it, Paul did speak to, is that a part of what we spoke about in terms of that additional spend that we're looking at in the consumer business is not only in marketing, but the, you know, behind the scenes from a back office point of view. You know, we are focused on the customer experience. That obviously contributes to lowering the churn rate, which is definitely a target that we have internally to improve our performance there, and secondly, to improve our performance on a cost to serve basis.
There's a number of initiatives that are happening across the consumer business to improve both of those factors so that, you know, we can balance that cost to acquire the business against how long do we hold that business for before it churns off. Obviously, if we can improve on the back end in relation to churn and cost to serve, it does give us more latitude from a growth point of view on the flip side to invest in acquisition moving forward as well.
Okay, great. Thanks for that.
Thank you. The next question comes from Nick Harris from Morgans. Please go ahead.
Good morning, Paul and Luke. Thanks for the call and questions. Starting with an easy one, just that slide 16, that AUD 110 million of potential growth capital. Just so I understand the framework and make sure I'm actually reading it right. AUD 135 million of cash AUD - 50 million of net debt gives you AUD 85 million in net cash. To get to the AUD 110 million, you're saying add basically AUD 25 million or 1x net debt to EBITDA. Is that right? Am I thinking about that right?
Yeah. There's obviously, I mean, they're very sort of high-level numbers, Nick, that we provided from, you know, a guidance point of view. You know, clearly because, you know, the framework that we're looking at, you know, the opportunity within and, you know, the potential of what we have to spend does include a, you know, a leverage sort of number as well. A debt to EBITDA kind of opportunity. Now, you're right, that's sort of, you know, a very basic sort of view that we have at it. Clearly, the acquisition or any acquisitions that we might make to the extent that they do add EBITDA, then they, you know, it does give you the opportunity, and it becomes a bit of a circular sort of discussion then, you know.
If you're adding AUD 5 million of EBITDA, does it give you more firepower? Yes, is the answer to that. You know, it's really put down as a bit of a guide for you to understand, you know, a very conservative potential we have to look at opportunities that are out there. Obviously, depending on the opportunity, you know, there may be more scope to actually have the growth opportunities that are larger than that AUD 110 million number.
Gotcha. Thank you. Yeah, I just wanted to understand your kind of framework. Second question is probably a Luke question as well. Just the Exetel contribution. I think on slide 8 you've got that AUD 59 million of revenue. This is probably not fair, but if I just annualize that, it sort of suggests it's down maybe 9% year-on-year. First question, is it actually fair to annualize that or is there some seasonality in that business? And I guess should we be thinking that'll bounce back a bit in the second half on sales and marketing upwards?
Yeah, it's probably not fair to annualize it, to be honest. You know, much like our sort of guidance expectation from an EBITDA point of view, some of those initiatives that we've sort of invested in the first half. To be fair, in the back half of last year from a growth point of view, should see a greater contribution to the annual revenue come in the second half of the year. There will be some seasonality to that.
Excellent.
The other thing I should say, you know, obviously excluding the Exetel, but just as a reminder, the Exetel revenue number that sits there is only five months worth of revenue in the first half of this year.
Got it. Yep. Got it. Thank you. That's great. Just one last question and just a statement as well. Just the Guest WiFi business, obviously it's kind of a sleeper in the business that has the potential to bounce back, as Paul pointed out. You know, that we've opened international borders today or this week, I should say. I guess, are you able to give us any idea of the leverage in that business in terms of, you know, if it was 100% or whatever your peak sort of occupancy is, would that add a couple million bucks to EBITDA or more? Or how should we think about the upside in that business?
Well, there's no reason to think that it won't go back to the pre-COVID levels in terms of the business in its entirety. We have not lost any market share. In fact, we've continued to try and grow that business at an infrastructure level. Yes, there is capacity there for a recovery. You know, how much recovery are gonna you know come in the next couple of months versus progressively over the year? It's a bit hard to say at this stage. We were quite pessimistic about it in January, but a little bit more optimistic over the last sort of week or so with students starting to come back in. I think you're right, it is a bit of a sleeper in our business. It's something we do want to scale.
We are still quite motivated to expand that business and you know have plans to do so.
I think just to round out the conversation. From an expectation point of view, we haven't built that expectation in at this point in time. It's probably dangerous to try and put a number on, you know, what could the potential benefit be if we did see a turnaround. It's worthwhile just noting that, you know, we can only go on what we have seen and experienced. That's, you know, the number that's sort of gone in and informed our position in relation to guidance.
Got it. Thanks. Thanks, Luke. I'll sort of interpret that as don't expect a big bounce back this half, but in the medium term there's some really good potential.
I think that's fair.
I just wanted to say, hey. Thanks, Paul. I just wanted to say well done. I think on the results call 12 months ago, you'd just recently hired a couple of your previous colleagues, and I'd asked you know, what should we expect? Should they give the business side of Superloop a good kick along? You were a little bit hesitant to say too much, but obviously that segment's ripped, so well done.
Excellent.
To you and those guys.
Thanks. Thanks, mate.
Thanks, Luke.
Thank you. Your next question comes from Cameron Bell from Canaccord Genuity. Please go ahead.
Thanks. Morning, guys. I just wanted to quickly ask about just expand on the second half guidance basically. It was sort of asked before, but I wanted to follow up on it. Guiding effectively to, I would call it, AUD 14-AUD 16 million EBITDA in the second half. You've just done AUD 9 million. Is it fair to say the waterfall looks roughly, you know, Hong Kong, Singapore falls by, say, 1-2, synergies come through 2-3, and then organic growth is on top of that?
Yeah, that's roughly fair.
Yep. Okay, great. Thanks, guys. Just wanted to double-check.
Thanks, Cam. Always got a nice easy one there, mate.
Thank you. Once again, if you wish to ask a question, please press star one on your telephone and wait for your name to be announced. Ladies and gentlemen, that would be our last question for today. That does conclude our conference. Thank you all for participating. You may now disconnect.