Kevin Russell (Vocus Group)
Vocus’ New Zealand business has been labelled a “strong and stable performer” by its Group CEO, with revenue rising 5 per cent year-on-year, to $210 million, year-on-year, for the half year ending 31 December.
Underlying earnings before interest, tax, depreciation and amortisation (EBITDA) were also up 5 per cent, to $35.7 million compared to the same period last year, according to documents released by the telco provider to the Australian Securities Exchange (ASX).
Its consumer and business segment in particular recorded record growth, rising by 11 per cent year-on-year for the period to $146 million.
“Our acquisition of Stuff Fibre is on track to meet integration targets and we secured a major new wholesale customer in Sky Broadband," said Vocus Group managing director and CEO Kevin Russell.
“Preparations for an IPO of the New Zealand business are progressing well and the proceeds will enable us to make strategic investments in our network and capability.”
The results come as the parent company ends its run of declines in its statutory net profit after tax (NPAT) and minority interests, which grew 49.2 per cent year-on-year, to A$19.1 million for the six months ending 31 December.
This is a turnaround from its last few financial reports, which recorded a decline in NPAT for the first half of the 2020 financial year, as well as FY20 and FY19.
Statutory earnings before interest, taxes, depreciation and amortisation (EBITDA) were up by 3.8 per cent, year-on-year, to A$188.1 million. Statutory revenue however was not as successful, dropping by 0.5 per cent over the same period, down to A$897.4 million.
The uptick in profitability bookends the company’s three-year turnaround program ahead of schedule, according to Russell, and would now move into a new stage of investment and growth.
“Vocus’ first half FY21 results clearly demonstrate the company’s strong financial performance, strong operational performance and that we are executing a clear and consistent strategy,” he said.
“Fibre is the critical infrastructure of the modern economy, and Vocus’ high-capacity, highly secure fibre network is key to our momentum in the market.”
As for its other business segments, its Network Services arm was labelled as the provider’s “core growth engine” by Russell for the period, with 11.3 per cent year-on-year recurring revenue growth, to A$340.2 million, and 8 per cent growth over the same period in underlying EBITDA, to A$128.7 million.
“[Vocus Network Services] continues to win larger customers with higher contract value, with an increasing presence in the federal government market,” he said. “We’re investing in our network to deliver capacity upgrades, as well as construction the first Low Earth Orbit (LEO) Satellite ground stations in Australia.”
Its retail business, however, wasn’t as successful as the other two businesses, recording an overall revenue decline of 6 per cent year-on-year, to A$360 million, and underlying EBITDA dropping down 20 per cent year on year, to A$32.7 million.
Regardless, Russell remained optimistic, noting that its consumer segment returned to growth at 1 per cent year-on-year, to A$307 million, as well as SIO growth across NBN and mobile, and ongoing cost reductions of 9 per cent.
Vocus also mentioned in its financial report the current non-binding indicative takeover offer from Macquarie Infrastructure and Assets Holdings (MIRA) worth roughly A$3.4 billion, which was announced in early February.
According to the company, MIRA is now in co-operation with Aware Super to progress its proposal via a consortium, at the same proposed price of A$5.50 per share.
Looking ahead, Vocus said its priorities past its New Zealand IPO are to invest to capitalise on key market opportunities in Vocus Network Services, to maintain a net leverage ratio of below 2.5x net debt to EBITDA and to consider a sustainable dividend policy.
It also updated its FY21 guidance, with Vocus Network Service now expecting recurring revenue growth up to 8 per cent, and underlying EBITDA growth to now be within 10 per cent to 12 per cent, up from a range of 8 per cent to 12 per cent.
Meanwhile, the Group as a whole is expected to see its capex range increase to A$185 million to A$200 million, up from A$185 million to A$180 million.
