Publicly listed Vocus has seen its net profit after tax take a 22 per cent hit down to $12.8 million for the first half of FY20 ending December 31.
Revenue also declined seven per cent down to $901.9 million as the company is still feeling the effects from the NBN rollout. The retail business saw a 12 per cent revenue decline to $382.2 million.
Vocus reported a 47 per cent reduction in legacy products including copper and traditional voice, which was offset by growth in NBN and IP voice products.
An improved performance in its Dodo brand was offset by declines in its Commander business.
Vocus said strong cost control measures partially mitigated revenue declines.
Despite this, the publicly listed company remained optimistic, particularly as its Network Services business continued to show signs of earnings growth of 11 per cent to $111.2 million in underlying EBITDA.
Vocus New Zealand was also a strong performer in the first half with revenue ($199.6 million) and earnings ($32.3 million) growth of six per cent.
Vocus group managing director and CEO, Kevin Russell, said the company was midway through its three-year turnaround strategy, and the past 18 months has seen three steady financial halves.
“We have absorbed the impact of the NBN in retail, at the same time as investing in new capability to capitalise on the new growing market opportunity for Vocus Network Services,”he said. “We are clear on our strategy and have the team to execute.”
Russell particularly pointed out the growth momentum within its Network Services unit with a strong pipeline ahead.
Vocus was awarded the contract to build for ConocoPhillips and delivering the Coral Sea Cable for the government, which the company said was on budget and ahead of schedule.
Russell pointed out that Vocus stood to benefit from NBN Co’s changed approach in the enterprise market, which will make use of existing fibre infrastructure and re-establish NBN Co within its wholesale only mandate.
“The two changes reaffirm the fundamental role of infrastructure investment and competition in delivering the best outcomes for customers,” he said.
“Our retail operation is showing encouraging signs of revenue stabilising for its core consumer base as we diversify towards mobile and energy. We continue to manage the erosion of revenue and margins as customers transition to the NBN and have made strong inroads in reducing our cost structure."
Vocus recently expanded its relationship with the Bureau of Meteorology, in securing a $15 million contract during the next four years, doubling the size of its business with the agency.
It has retained all of its existing network services to BoM sites, as well as nabbing remaining sites, with some set to use business nbn satellite service.