Telco 2degrees has confirmed its shareholders are exploring a potential listing of the company on the New Zealand Stock Exchange and Australian Securities Exchange in the second half of 2021 or early 2022.
Any such listing, the company said today, would be subject to market conditions and no decision had been made to proceed with an public offer to date. Trilogy also reported 2degrees's annual results overnight.
“Equity markets are strong globally, telecom valuations are attractive, and the New Zealand dollar is at a multi-year high," said Brad Horwitz, chair of the 2degrees board and president and CEO of its owner, Toronto-listed Trilogy. "This compelling macro backdrop, combined with the resilience, scale and growth of the 2degrees business, suggests now is an opportune time for the shareholders of 2degrees to explore a partial listing of the business.”
A listing would raise primary capital to accelerate growth initiatives at 2degrees as well as enable Trilogy to reduce the debt it incurred while building the 2degrees business.
2degrees continued to grow strongly in 2020 despite COVID-19. It now serves more than 1.6 million subscribers, including more than 500,000 pay monthly mobile customers and over 130,000 broadband customers. 2degrees also continued to gain traction in the business market, surpassing 100,000 mobile business customers.
Trilogy reported 2degrees achieved strong service revenues of NZ$549 and adjusted EBITDA of $171 million for the full year 2020, up from $147.5 million in 2019. High margin roaming revenue declined $11 million year-over-year due to border closures resulting from COVID-19.
Service revenues for the fourth quarter increased by 16 per cent over the same quarter last year, inclusive of a foreign currency benefit of 6 per cent. Continued growth saw 2degrees' broadband and postpaid customer subscribers increase by 22 per cent and 7 per cent respectively, over the fourth quarter of last year.
"There continues to be uncertainty for 2degrees regarding the future effect of COVID-19 on the New Zealand economy and related responses by the government, regulators and customers," Trilogy told shareholders.
Specifically, 2degrees faced a risk of increased bad debt expense and continued suppression of roaming revenues as international travel was restricted, although to date it had not observed a significant increase in bad debt expense.
“Since launching in 2009, 2degrees has evolved into a full-service telecommunications provider serving all market segments via its national mobile network, while still retaining its challenger roots and fighting for fair via innovative products kiwis love,” said Mark Aue, chief executive officer of 2degrees.
Aue said 2degrees invested heavily in its mobile network last year, making significant improvements to the service it provided in regional New Zealand.
"We also sharpened our focus on Kiwi businesses and continued growing our broadband customer base, while ensuring that kiwis stayed connected through the pandemic and had great kiwi- based customer care," he said.
2degrees plans to launch 5G services later this year.