Vocus Slips On New Downgrade
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Another cut in guidance from struggling telco, Vocus Group and another pounding from nervous investors as the shares fell sharply.
The company told the ASX in its interim results yesterday that it now expects full-year underlying profit to come in between $125 million and $135 million, down from between $140 million and $150 million.
The shares slid more than 10% by the close to end the day at $2.57.
Vocus has spent most of the past two years cutting asset values, costs and staff numbers to resize the company after spending more than $5 billion on expansion that in turn boosted costs, strangled profits and exposed it to an unwanted takeover attempt from larger rival, TPG.
Directors blamed higher subscriber costs in its consumer business and weaker than expected sign ups than it had forecast. Expectations for underlying earnings before interest, tax, depreciation and amortisation (EBITDA) were cut from between $370 million and $390 million to between $365 million and $380 million.
"This revision primarily relates to the Australian Consumer division facing headwinds in H2FY18 due to over hedging of its energy portfolio and a change in its go to market strategy, resulting in a reduction in the amount of subscriber acquisition costs that can be deferred," the company said in a statement to the ASX.
For the six months to December 31, net profit fell 21% $37.3 million, compared with $47.1 million the same time last year. EBITDA rose 12% to $188.1 million.
Vocus also announced there would be no interim dividend in light of the competing demands and opportunities for capital investment across the business, especially in the Singapore cable project. “The board of Vocus expects to review future dividend payments in line with the growth of the business, taking into account the capital requirements and accretive infrastructure opportunities available at any point in time,” the company said in yesterday’s statement.
Vocus’ enterprise and wholesale division grew revenue by 2.5%, thanks to growth in its data networks.
The consumer division also delivered revenue growth, of 5.7%, with broadband revenue boosted by the growing number of customers migrating to the national broadband network.
Glenn Dyer has been a finance journalist and TV producer for more than 40 years. He has worked at Maxwell Newton Publications, Queensland Newspapers, AAP, The Australian Financial Review, The Nine Network and Crikey.
At the AFR he was a finance writer, Finance Editor, News Editor and Chief of Staff. At the Nine Network he was supervising producer of Business Sunday for more than 16 years. He has also written for other online and analogue print publications here and overseas.