Australia's Vocus puts Kiwi business up for sale

Tuesday 24th October 2017

ASX-listed Vocus Group plans to sell its New Zealand assets, which include the Orcon and CallPlus retail businesses, by the end of June next year.

Sydney-based Vocus yesterday said the board has decided to sell the New Zealand assets and was in the final stages of appointing an adviser with a view to wrapping up a sale by the end of the financial year on June 30, 2018.

The telecommunications group wrote down the value of its assets by A$1.47 billion in the June 2017 year after rapid expansion through a series of acquisitions, including A$199 million on the New Zealand business. That shook out interest from private equity bidders, although no deal was forthcoming, and Vocus subsequently identified some Australian assets it could divest.

At an investor briefing yesterday, the company said it would sell the New Zealand business and the Australian data centres with the proceeds going to pay down debt.

Vocus gave an update on the Kiwi business at the briefing, which showed broadband customer numbers rose to 192,000 as at Sept. 30 from 189,000 three months earlier with average broadband revenue per customer slipping 3 cents to $71.18. It also added 4,000 customers to its energy retailer Switch Utilities, taking it to 9,000.

The New Zealand Vocus business more than doubled underlying earnings before interest, tax, depreciation and amortisation to $60.9 million in the year ended June 30 on a 126 percent jump in revenue to $342 million after a merger with rival M2 Group brought the CallPlus, 2talk, Orcon, Slingshot and Flip businesses and local fibre line provider previously called FX Networks under one umbrella.

Yesterday's briefing shows Vocus anticipates the New Zealand business will generate a high single digit increase in revenue and low single digit gain in earnings.

Vocus shares last traded at A$2.80 on the ASX and have dropped 28 percent so far this year.

(BusinessDesk)

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