Vocus records profit following 2016 acquisitions; inks $20M deal with Superloop

Vocus records profit following 2016 acquisitions; inks $20M deal with Superloop

Company now tasked with consolidation after a "record lift in revenue" and profit for the first half of fiscal 2017

Vocus CEO, Geoff Horth

Vocus CEO, Geoff Horth

After completing multiple acquisitions of M2 Group, Amcom and Nextgen Networks, telecommunications conglomerate, Vocus Group (ASX:VOC), has recorded "thriving half yearly figures", with a revenue up 403 per cent and more than doubling its profit to $47 million for the six months ending 31 December 2016.

This 1H FY17, which also saw the exit of Vocus founder James Spenceley and Amcom co-founder Tony Grist, saw Vocus post a net profit after tax of $47.2 million and revenue of $888.2 million.

The company posted an underlying net profit of $91.9 million for the six months - a figure significantly higher than the $27.4 million recorded in the same period last year.

Additionally, Vocus’ underlying EBITDA increased by 201 per cent to $187.3 million.

Vocus Group CEO, Geoff Horth, told investors that the "high figures" could be attributed to contributions from its M2 Group and Nextgen Networks acquisitions - a deal that also included the North West Cable System and the Australia Singapore Cable projects.

The company also attributed the 42 per cent rise in revenue to $204.1 million to a contribution of $34.3 million from Nextgen Networks and $36.3 million from M2’s wholesale business.

Based on a full six month contribution from Nextgen, paired with acquisitions synergies from the development of the National Broadband Network (NBN) and New Zealand’s Ultrafast Broadband Network, Vocus also reaffirmed its annual underlying EBITDA to fall between $430 and $450 million.

Horth added that the group’s performance in the NBN market in A/NZ was “particularly pleasing”, deeming the rollout of fibre in both countries as an "extremely positive opportunity" for Vocus, with similar margins expected for copper broadband and to significantly lower churn from "enhanced on-net customer experience”.

He said currently copper broadband churn is at six per cent churn per month, which is above market statistics and that the NBN churn is at 1.5 per cent per month.

Despite recording "significant success" in the figures, concerns remain if Vocus can pull together the integration of its acquired entities, which it bought over the last 18 months.

"While there is a large program of integration work to be completed to realise the full benefits of the recent acquisitions, we have a detailed plan and an experienced and passionate team," Horth said.

In terms of the future outlook for the business, Horth said the company expects 1.9 billion in revenue in FY17. He said these figures are underpinned by a combination of assets and acquisitions, but also growth of the consumer broadband base and corporate team selling fibre and ethernet.

The big figures also come as digital service provider, Superloop, signs a $20 million agreement with Vocus for international, intercapital and regional ethernet access and metropolitan fibre capacity in Australia.

Superloop owns and operates more than 540km of fibre networks in Australia, Singapore and Hong Kong, connecting more than 70 of the region's major data centres.

The deal sees Superloop working with Vocus to upscale its metro, national and global capacity over a 15-year period. Superloop said it allows the business to realise greater cost synergies from the BigAir acquisition.

Additionally, it provides a platform of scalable services locally as part of the Superloop pan-Asian network.

Services are set to commence coming online around July 2017 with synergies through migration of some services expected to be realised soon after.

At the time of publication, Vocus' shares were trading at $4.78.

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Tags NBNNextgen NetworksVocus GroupM2 groupGeoff Horth


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