Vocus sees profit surge after year of ‘significant transformation’
- 23 August, 2016 10:56
Vocus Communications (ASX:VOC) has reported a 222.9 per cent surge in profit to $64.09 million for the financial year ending June 2016, a result bolstered by its merger in February with M2 Group and its acquisition of Amcom Telecommunications last year.
The telecommunications provider also reported a 318.1 per cent boost in underlying earnings (EBITDA) to $215.6 million off the back of $830.8 million in annual revenues, a 454.6 per cent increase on the previous year’s revenues.
While the Australian Securities Exchange (ASX)-listed company has attributed some of its profit boost to organic growth, much of the increase has been fuelled by its merger with fellow telco, M2 Group, valuing the combined entity at more than $3 billion, and the finalisation of its $1.2 billion acquisition of Amcom.
“In the past 12 months, we have gone from being a new entrant in the ASX 200 to securing a strong position in the ASX 100, with a market cap of approximately $5 billion, said Vocus chairman, David Spence, in a statement to shareholders.
“Capitalising on the vision of the management team and planned strategic direction for the business, we completed the acquisition of Amcom against strong competitor tactics, merged with M2, and announced our intention to acquire Nextgen Networks along with the ASC (Australian Singapore Cable) and the North West Cable projects,” he added.
The deal to acquire Nextgen Networks, ASC, and the North West Cable System (NWCS) for $807 million was announced in June.
According to CEO Geoff Horth, who was appointed to the role in February as part of the Vocus merger with M2, the company’s consumer broadband continued to be a strong area of growth, with 55,000 new services added in Australia over the financial year ending 2016.
“We continued to increase our operating leverage from our national fibre network, focusing corporate sales on high-yielding metropolitan locations and diversifying our corporate and small business product ranges,” said Horth.
“Our New Zealand business also demonstrated strong organic growth, the merger with M2 creating a vertically integrated business that it well-positioned to take advantage of the rollout of the national UFB netwtork,” he added.
The company said that its integration of Amcom is nearing completion, with the two companies’ teams and sites now combined, and its product and pricing strategies aligned.
Meanwhile, the company’s merger with M2 is on schedule, with IT and network integration programs proceeding as planned.
Looking forward, Spence said that the company is “well positioned for a seventh year of profitable and sustainable growth”.