The company has announced the discontinuation of the NZ sale process and a temporary extension of its debt covenants. Debt is expected to peak in the first half of FY19 and decline thereafter.
Despite the company receiving multiple offers for its NZ business it appears none came with an appropriate price or certainty to create value for shareholders. The company is not a forced seller, Morgans observes, and should be able to keep the assets and create more value than selling them cheaply.
Morgans would prefer the company to reinvest its operating cash flow in de-gearing and de-risking the business for equity holders. Hold rating maintained. Target reduced to $2.39 from $2.78.
Sector: Telecommunication Services.
Target price is $2.39.Current Price is $2.41. Difference: ($0.02) – (brackets indicate current price is over target). If VOC meets the Morgans target it will return approximately -1% (excluding dividends, fees and charges – negative figures indicate an expected loss).