Vodafone NZ squeezes cheaper deal from Vocus in contract renewal

Tuesday 15th July 2014

Vodafone New Zealand, the country's second-biggest internet service provider, has extended its international internet capacity supply contract with ASX-listed Vocus Communications for another two years at a cheaper rate.

Sydney-based Vocus, which this month agreed to buy local fibre optic cable network operator FX Networks for $115.8 million, renewed its contract with Vodafone NZ, its largest IP transit customer, with an estimated reduction in annual earnings before interest, tax, depreciation and amortisation of A$4.5 million in the 2015 financial year, it said in a statement to the ASX yesterday. From 2015 no customer will account for more than 5 percent of Vocus's revenue, it said.

"Despite the reduced contribution from Vodafone, Vocus continues to expect very strong Ebitda growth for FY 2015," it said.

The FX acquisition is estimated to have more than doubled Vocus's annual revenue to A$136 million and lifted Ebitda to A$36.7 million in calendar 2013.

Vocus describes itself as the leading independent provider of wholesale and telecommunications services in Australia and New Zealand, providing internet, fibre and ethernet, and data centre services.

Last month the Australian company announced the acquisition of a 10 percent interest in the Sea-Me-We 3 undersea cable linking Perth, Australia, with Singapore from Telecom New Zealand for US$2.3 million.

Shares of Vocus dropped 6.6 percent to A$5.14 yesterday, having soared 47 percent this year.

BusinessDesk.co.nz

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