Telstra (TLS – blue) is down -11% over the last year, but two other companies in the same space have run rings around TLS; Vita Group (VTG – red) is up +141% and Vocus (VOC – green) is up +49%. See chart below.
Vita Group – VTG – Making money on the Telstra name
VTG has been one of the best performing shares in the ASX Top 500 this year.
VTG run some Telstra Shops, Telstra Business Centres along with Fone Zone, Next Byte and a few other brands/shops.
Making the Telstra brand work hard for them, VTG management has remained nimble with “poorly performing stores in the network will be rationalised and Telstra Business Centres will be rolled out.” Say Alex Shevelev, Portfolio Manager at Glennon Capital (GC1).
VTG has gone from strength to strength because of a ”strong cash-flow business which has seen a huge margin uplift over the past few years.” Continues Shevelev.
There still looks to be more gains in VTG because “strong like for like growth from the first half is likely to continue into the second half” says Shevelev.
Vocus – VOC – Further cost-savings ahead
VOC (green) acquired M2 Communication (MTU – red) in February this year. It should be noted that Vocus are in a trading halt, pending capital raising.
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In the years leading up to the acquisition both companies independently out-performed TLS (blue) -see the chart below.
Synergies, or cost savings, are always a favourite topic after mergers and acquisitions such as VOC and MTU. However there still spears to be more benefits for sharesholders because “There are also plenty of cost savings from the merger with M2, with potentially more than has been guided for, but these will take time to implement.” Say Shevelev.
VOC also has “Plenty of scope to improve market-share in their consumer division through VOC’s position with NBN, being an advantage over the other large telcos.” Shevelev continues “VOC also have a strong position in their small to medium enterprises (SME) and corporate divisions by using M2’s selling expertise.”
Note – Alex Shevelev has been holding invested in VOC and VTG through as Portfolio Manager at Glennon Capital (GC1).
