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Strong result from NZ unit bolsters ASX-listed Vocus Group

Strong result from NZ unit bolsters ASX-listed Vocus Group

Group performance suffers as Vocus reports lower sales and a $202.1M impairment

Kevin Russell (Vocus Group)

Kevin Russell (Vocus Group)

Credit: Vocus Group

Vocus New Zealand’s revenue rose five per cent to $398.8 million for the 2020 financial year while earnings before interest, tax, depreciation and amortisation (EBITDA) rose 4 per cent, the company reported today.

That marked the fifth consecutive year of organic EBITDA growth for the local Vocus business.

“Key highlights for the year were growth in wholesale and continued increases in consumer and SMB driven by broadband and energy customers, with the acquisition of Stuff Fibre increasing our broadband subscriber base by 10 per cent," Vocus Group managing director and CEO Kevin Russell told the ASX of the New Zealand business.

Growth in wholesale from new partners and increased bandwidth demand during the pandemic were, however, offset somewhat by a decline in the enterprise segment with customer losses through Vocus NZ's partner network.

Group revenue declined year on year from $A$1.89 billion to A$1.78 billion. EBIT was also down, after recognition of a $202.1 million impairment, from A$105.7 million in 2019 to an EBIT loss of A$108.9 million.

Group net profit after tax fell from A$34 million to a loss of A$178.2 million.

Vocus New Zealand would focus on continued organic growth and acquisition opportunities in 2021.

The local business reduced overheads by 4 per cent while delivering the top-line growth, and increased it’s market share in UFB connections to 15 per cent. 

It had 226,000 broadband connections, 41,000 mobile connections and 33,000 energy customers at year end.

Vocus Group said it was making progress on its three-year turnaround, with Vocus Network Services (VNS) established as the company’s core growth engine.

“VNS built momentum in FY20, winning market share in our core markets with growing underlying recurring revenue and an improving customer profile," Russell said.

VNS delivered EBITDA growth of 10 per cent to A$223 million, with recurring revenue up 6 per cent.

Revenue from high-margin data networks grew 3 per ent for the full year, with NBN revenue up 42 per cent year-on-year.

Satellite, wholesale and international also contributed to underlying growth, with continued sales momentum of capacity on the Australia Singapore Cable.

VNS was well-positioned to capitalise on unprecedented demand for bandwidth and diversity resulting from COVID-19, he added. 

"We also launched our new Vocus brand and saw a demonstrable improvement in brand recognition and consideration.”

Record sales in the fourth quarter were recorded across all segments and tender activity remained strong.

Vocus was in a strong position to consider its options regarding capital allocation and longer-term corporate structure, Russell said.

"Revenues have been resilient and cash collections strong across the organisation. We demonstrated a robust operational response throughout the crisis, with no interruption to network operations or customer delivery and record service delivery times achieved."


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