Vocus CEO leaves amid the company's “most challenging chapter”
- 26 February, 2018 09:57
Outgoing Vocus CEO, Geoff Horth
Vocus Group (ASX:VOC) chief executive officer, Geoff Horth, will leave the company after the two came to a “mutual agreement”.
The publicly-listed telco told shareholders on 26 February the company’s board and Horth had been engaged in CEO succession considerations since early 2018, as part of the telco’s ongoing renewal program, however both parties agreed that the process should be brought forward.
Horth has served as Vocus Group CEO since February 2016, when the merger between Vocus Communications and M2 Group was completed.
Before joining Vocus, Horth served as M2 Group CEO for nearly five years.
The decision to expedite Horth’s departure comes less than one-and-a-half years after a failed plan to change the company’s CEO in early 2017 led to the departure of the company’s founder, James Spenceley, and former Amcom chairman, Tony Grist, from the board of directors.
The company told shareholders on 12 October 2016 that Spenceley, an executive director, and Grist, a non-executive director, had resigned from the company’s board following a special meeting held in Melbourne on 11 October.
The resignations followed a “difference of opinion” between the departing directors and majority of the board about the future leadership of the company, with the board voting down a proposed plan to replace Horth as the company’s CEO.
Horth, former CEO of fellow telecommunications player, M2 Group, took on the CEO role after Vocus completed its merger with the fellow telco in 2016.
Vocus Group chairman, Vaughan Bowen said that Horth has served as Vocus CEO during what has been “undoubtedly the most challenging chapter in its journey to date”.
Bowen said that in his leadership role, Horth has been, “wrestling with the simultaneous tasks of integrating several large, complex businesses, combining different corporate cultures and while the Australian telco sector was under substantial structural upheaval, in light of the roll-out of the NBN [National Broadband Network] and the exponential growth in demand for data networks”.
“Geoff leaves the company with the sincere appreciation of the board, for his unrelenting endeavour under the most trying of circumstances and with the wide-reaching respect of our executive and our team, as well our customers, suppliers and other stakeholders,” Bowen said.
Just days ago, Vocus Group downgraded its full-year earnings forecast by between $5-$10 million, citing headwinds faced by its consumer division.
The telco told shareholders on 20 February that the revised earnings guidance, now being placed at $365-380 million (previously $370 - $390 million), primarily stems from its Australian Consumer division facing headwinds in the second half of the 2018 financial year due to “over hedging” of its energy portfolio and a change in its go to market strategy.
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 by law firm, Slater and Gordon, alleging that it misled shareholders over its FY17 financial guidance.
At the time, it was announced that the proposed claim would be brought on behalf of hundreds and, potentially thousands, of people who purchased Vocus shares between 29 November 2016 and 2 May 2017.
Specifically, the proposed class action was expected to allege that Vocus engaged in misleading and deceptive conduct because it had “no reasonable grounds for the original FY17 guidance issued in November 2016”.
It was also expected to allege that Vocus breached its obligations of continuous disclosure by failing to disclose that it would not achieve the FY17 guidance.
The company has also found itself entangled in a legal battle between IBM Australia and Nextgen Networks over its subsidiary’s role in the bungled 2016 eCensus project.
In a legal action filed with the NSW Supreme Court in late 2016, IBM Australia alleged that Nextgen Networks and Vocus Communications were negligent and in breach of contract in relation to their work associated with the 2016 eCensus portal.
While the company searches for a permanent replacement for Horth, the role of interim group CEO will be taken by Vocus current chief executive of wholesale and international division, and previous chief executive of the former Vocus enterprise and wholesale division, Michael Simmons.
The move saw the telecommunications provider claim four reportable operating segments: enterprise and government, wholesale and international, consumer and New Zealand.
The changes came as a result of Vocus’ transformation program and are intended to allow sufficient senior executive focus on the opportunities within these segments, the company told shareholders on 15 January.
Simmons was named as the lead for the wholesale and international segment.