Vocus Group has revealed it is splitting into a trio of independent business units as it continues to move through its three-year turnaround strategy.
The new businesses, divided into Vocus Network Services, Vocus Retail and Vocus New Zealand, have launched within weeks of both EQT International and AGL backing out of acquisition talks.
Vocus Network Services will focus on its fibre and network solutions, specifically targeting enterprise, government and wholesale market segment opportunities. Vocus Retail will encompass the Dodo, iPrimus and Commander brands. And Vocus New Zealand will stand on its own.
“We’re are simplifying Vocus into three independent business units, each of which has different opportunities,” Vocus Group managing director, Kevin Russell, said. “We are clear that our core business, Vocus Network Services, has untapped growth potential and an outstanding market opportunity. Vocus Retail is in a business turnaround, facing headwinds due to legacy voice products and the transition of customers to lower margin NBN products.
“Vocus New Zealand continues to be a strong performer and is well positioned for future growth. The New Zealand and retail business need to be separate - we want the market to have visibility into the business and what is working well.”
Russell highlighted Vocus Network Services was the most significant growth opportunity for the company.
“We will win market share by playing where we are strong, having a highly targeted approach to market and investing in the right products and people,” Russell explained.
He pointed out its fibre network which runs across Australia and Asia, provided a strong platform to gain market share with compelling customer offers in both domestic and international markets, and will target industry verticals such as enterprise, government and wholesale.
Vocus has about 5300 enterprise customers and more than 200 government customers with more than 70 per cent of its revenue deriving from its fibre and internet play.
“We see opportunities to partner with the NBN to enable us to win complex multi-site businesses in the enterprise and government segments,” he said.
Importance on partnerships
Vocus Group chief executive enterprise and government, Andrew Wildblood highlighted its agenda on building a focused and capable channel network, as it has no intentions itself to turn into a large MSP player.
“We’ve done a big overhaul in the channel with a new channel team, which gives us more reach into customers that we wouldn’t otherwise have traction with,” Wildblood said.
It currently has about 350 partners, which contribute less than 10 per cent revenue in the enterprise and government space, but plans to specifically concentrate on 50 partners, which will carry at least 20 per cent of enterprise and government revenue in the next five years.
“We’ll focus on capable partners with the same cultural ambition that can help us move workloads to the cloud, so we’re looking at cloud, software and managed services partners,” he said.
Wildblood also pointed towards building partnerships with significant tech companies such as Google to help tap into the cloud sector, and relayed its SD WAN partnership with Fortinet.
More work on the retail front
Russell was upfront about its struggling retail business, which since June 2017, has suffered massive customer losses with an erosion of about 187,000 voice customers in the Commander brand; 84,000 in broadband and the loss of 182,000 customers since the migration of the NBN has taken place.
Even though it pointed out the Vocus Retail business was facing headwinds with lower margin NBN products, it was still optimistic on turning the unit around and was working closely with NBN Co in bringing new product opportunities to the market such as NBN Enterprise Ethernet, which is an area that it thinks it can play aggressively in.
As a result, it was refreshing its Dodo and Commander brands that will include a Commander Centre channel re-invigoration and opening new centres.
It also renegotiated its MVNO agreement with Optus, which will see it develop a stronger mobile offering and open up its 5G agenda along with fixed wireless broadband. During FY20 it will roll out new ranges of bundled broadband-led products, and attaching energy with mobile.
“We’ve done a lot of work planning and debating, and we’re now focused on executing,”Russell said.