Vocus shares jumped sharply yesterday after the company reaffirmed its 2017 profit guidance and detailed more asset sales as it seeks to make up for the damage done in the wasteful $5.8 billion expansion splurge of the past couple of years.
The shares closed at $2.805, down 0.3% (after being up nearly 3% in early trading) as investors appreciated the lack of any surprise from yesterday’s annual meeting. The shares had leapt 6.8% on Friday ahead of yesterday’s meeting.
The AGM was told that the company is aiming to sell its New Zealand business by the end of June.
Vocus, which is in the midst of an aggressive review of unwanted assets and their divestment said it wants to sell Vocus New Zealand in the current financial year.
“Looking at the market in NZ and the opportunity for our shareholders more broadly, we thought it was in our shareholders’ interest to put that asset up for sale,” Vocus CEO Geoff Horth told the meeting.
"I think we’ll get a competitive process and a healthy return for our shareholders."
It said the proceeds would be used to reduce debt and provide strategic options.
Vocus also has appointed advisers for the sale of its Australian Data Centre assets, while other non-core Australian assets are still being looked at.
Australia’s fourth largest telecommunications provider said it had received offers across its entire portfolio since announcing its review in August.
Vocus has been looking to slash the value of its headline acquisitions since reporting a $1.46 billion annual loss for FY17.
Vocus also confirmed its guidance for 2017-18, with revenue expected between $1.9 billion and $2 billion, underlying EBITDA (earnings before interest, tax, depreciation and amortisation)of between $370 million and $390 million, and underlying net profit of between $140 million and $150 million.
"The financial performance of the business is driven by its lead indicators and we’ve got good momentum across all three divisions," Mr Horth said.
Vocus reported a net loss of $1.46 billion for 2016-17 after making heavy write downs on goodwill for some of its recent acquisitions and abandoned dividend paying to redirect funds to projects and debt reduction.
While revenue for the year to June 30 more than doubled to $1.82 billion, (boosted by the acquisitions of M2 Group, Amcom and Nextgen Networks) a review of goodwill values on its assets had forced a $1.53 billion non-cash impairment and the loss.
"To miss [guidance] in FY17 was extremely disappointing, shareholders had every right to feel like the business wasn’t realising its potential. We’re very focused on remedying that this year."
In the last two years Vocus has completed a $1.2 billion merger with Amcom, a $3.8 billion merger with M2 Group and bought Nextgen for $807 million – more the $5.8 billion, now cut to $4.3 billion and with further write downs to come on some of these asset sales.
Earlier this month the company appointed former M2 boss Vaughan Bowen and former Telstra chairman Bob Mansfield to lead a board in turning around the business.
