When 5G tech was introduced, Australia became the first country in the southern hemisphere to adopt it. Around four in five Australians have access to 5G already and by 2025, 95% are set to have 5G coverage. 

Companies like Perth-based telecommunication and gaming company, Pentanet (ASX: 5GG) are at the forefront of this adoption. In the first half of FY24, the Company showcased a 7% increase in revenue to reach $10.4 million, driven by its 5G rollout and gaming ventures.

In the telco segment, revenue experienced a 3% growth, totaling $9.5 million. Pentanet maintained a breakeven EBITDA across the first half of FY24. It also undertook the rollout of 5G infrastructure spanning eight towers, paving the way for the imminent launch of 5G wireless services for both residential and business subscribers.

Pentanet also wrapped up the planning phase for the Greenfield neXus network deployment, accompanied by the launch of a new website geared towards enhancing user experience and automation.

On the financial front, the Company saw a 22% reduction in overhead costs, amounting to $5.4 million. It also saw a 43% decline in marketing expenses and a 28% reduction in general company overheads.

Pentanet Managing Director, Stephen Cornish, said, “Our strategic initiatives in both the telecommunications and gaming segments are yielding positive results, with the growth of the gaming segment and the new suite of competitive on-net and off-net plans that position us well for driving growth in telecommunications. We are optimistic about the growth prospects and look forward to maintaining this positive momentum.”  

Pentanet’s gaming division witnessed a 212% increase in gross profit, reaching $0.3 million with a 30% gross margin. This surge was driven by an 83% growth in paid GeForce NOW (GFN) memberships, surpassing early-stage fixed costs.

Its subscription revenue soared by 51% to $0.4 million quarter-over-quarter. Pentanet expanded its user base by integrating with Samsung Gaming Hub, LG TVs, Google Chromebook, and Microsoft’s Xbox PC Game Pass, anticipating further growth through the integration of upcoming Microsoft-owned content, including the Call of Duty series.

The Cloud Gaming sector also saw positive developments, with the commercial launch of Gen3 GeForce NOW hardware, enabling higher tier plans. The integration of Optus SubHub also contributed to the retail push for paid subscriber growth.

The second quarter of FY24 closed with a total of 17,100 subscribers. On-net subscriber installs increased by 24% quarter-over-quarter for the six weeks following the 5G Fixed Wireless launch in October 2023.

Revenue grew by 5% to $5.2 million, with telco revenue up by 1% to $4.6 million. The gaming segment revenue experienced a 86% increase to $0.4 million, influenced by an 83% growth in paid memberships.

Looking ahead to the second half of FY24, Pentanet plans to accelerate marketing investment for new on-net/off-net product offerings, install and commercialise neXus builds in planned greenfield deployment areas, and implement improved customer retention and churn management strategies.

For cloud gaming, the Company aims to leverage additional revenue streams and commercialisation opportunities, focusing on ongoing marketing strategies around new key titles coming to the platform.