Vocus scraps NZ business sell-off

Vocus scraps NZ business sell-off

The company had planned to sell the NZ business by the end of June

Vocus Group (ASX:VOC) has halted the sale process of its New Zealand business, claiming that the offers it had received from potential buyers did not reflect the value of its assets in the country.

The publicly-listed company told shareholders on 24 April that it had ceased all discussions with interested parties in the sale process.

While the Australian-headquartered telco received multiple offers for its Vocus NZ business, the company said that none of the offers appropriately reflected the “fundamental and strategic value” of Vocus NZ.

Additionally, the company claimed that the proposals it received from the unnamed interested parties did not provide sufficient certainty of funding and execution.

“Vocus NZ is an excellent business with strong leadership, an attractive growth profile, a clear competitive position and a track record of delivering solid returns on capital,” Vocus chairman Bob Mansfield said.

“The board intends to continue to invest in and grow Vocus NZ to enable that business to realise its strategic potential for shareholders,” he said.

Vocus Group revealed in October last year that it would prepare its New Zealand business for sale. Earlier, in August 2017, the company announced a review of non-core Australian assets for potential divestment options.

The company said at the time it would appoint advisors for the sale and that it was aiming to complete a sale by the end of the 2018 financial year.

At the same time, the company said it had progressed the review of its non-core Australian assets, and had appointed advisors for the sale of its Australian data centre assets, with other non-core Australian assets set to continue to be evaluated with regard to potential divestment or disclosure.

The move to sell off its business in New Zealand and parts of its business in Australia came after a tumultuous time for the telco, which has seen earnings downgrades, faced legal action and weathered multiple leadership changes over the past year.

In May last year, Vocus wiped $100 million off its revenue target for the financial year ending 2017, blaming the forecast downgrade on lower than expected billings in its enterprise and wholesale business, and re-jigged terms on a number of large projects.

In August 2017, Vocus revealed its preliminary, unaudited financials for the 2017 financial year, showing that the company brought in a net profit after tax (NPAT) tally that came in $152.3 million below its guidance range of $160 million to $165 million.

In September last year, the company found itself getting set to face down a proposed class action, on behalf of shareholders, by law firm Slater and Gordon, alleging that it misled shareholders over its FY17 financial guidance.

In February, Vocus Group revealed that its former chief executive officer, Geoff Horth, would leave the company after the two came to a “mutual agreement”.

The role of interim group CEO was subsequently taken by the company’s wholesale and international division chief executive, Michael Simmons, who continues to hold the post. 

In January, Vocus announced it would separate its separate its enterprise and wholesale business units, the changes coming as a result of Vocus’ transformation program, in a bid to ramp up executives' focus on the opportunities within the segments.

The move saw the telecommunications provider claim four reportable operating segments: enterprise and government, wholesale and international, consumer and New Zealand.

Meanwhile, the company has told shareholders it is in the process of refinanced its debt facilities, a move aimed at providing the financial flexibility for the company to complete its strategic and transformation initiatives over the next few years.

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