Sharechat Logo

Vocus NZ earnings soar with CallPlus acquisition, targets power bundle for growth

Wednesday 22nd February 2017

Text too small?

Vocus Communications' New Zealand earnings soared in the latter half of 2016 as the ASX-listed telecommunications company benefited from the addition of CallPlus when it merged with M2 Group, and it is targeting bundled power package as a means to drive growth on this side of the Tasman. 

The Sydney-based company's New Zealand operations have rapidly expanded, with 654 employees compared to 117 staff a year earlier, through the deal that's joined the CallPlus, 2talk, Orcon, Slingshot and Flip businesses with the local fibre line provider previously called FX Networks. Since then, Vocus added energy retailer Switch Utilities to its stable on Dec. 1, paying $6 million upfront and a further $5.2 million in potential earn-outs. 

Vocus' Kiwi operations generated A$158.3 million of revenue in the six months ended Dec. 31 from just A$27.2 million a year earlier, before the M2 merger. Earnings before interest, tax, depreciation and amortisation jumped to A$26.5 million from A$6.6 million. 

The company had 199,991 broadband customers as at Dec. 31, compared to 186,713 a year earlier when CallPlus was under the M2 umbrella. Fibre customers jumped 84 percent to 37,500, more than offsetting a 7.2 percent decline in copper-line subscribers to 154,491, and helping lift the monthly average revenue per user (ARPU) to $71.88 from $67.68. 

Vocus said it plans to cement its position in New Zealand, which will see it push into the energy market in an effort to increase ARPU and reduce customer losses. 

The Switch Utilities acquisition brought with it 2,299 power customers, still a minnow in New Zealand's electricity retail sector dominated by Genesis Energy, Contact Energy, Mercury NZ, Meridian Energy and Trustpower. 

New Zealand's broadband market has become increasingly competitive as services providers cut prices to attract new customers, something Spark New Zealand has said is frustrating and driving customer churn. 

Vocus sold its 50 percent share of Connect 8 fibre construction business to partner Spark in December, recognising a loss of A$2.6 million on the transaction. 

The Australian company's group profit almost doubled to A$47.2 million with a five-fold gain in revenue to A$888.2 million. Vocus's board declared an interim dividend of 6 Australian cents per share to be paid on April 21. 

The ASX-listed shares gained 5 percent to A$4.62.

  General Finance Advertising    

Comments from our readers

No comments yet

Add your comment:
Your name:
Your email:
Not displayed to the public
Comments to Sharechat go through an approval process. Comments which are defamatory, abusive or in some way deemed inappropriate will not be approved. It is allowable to use some form of non-de-plume for your name, however we recommend real email addresses are used. Comments from free email addresses such as Gmail, Yahoo, Hotmail, etc may not be approved.

Related News:

From dog tucker to top dog: economists ask how Northport can be Auckland’s best replacement
MARKET CLOSE: NZ shares rise; Metlife jumps on takeover talk
NZ dollar eases on technical factors, buoyed by higher dairy prices
RBNZ eyes Westpac Australia money laundering failures
Heritage buys Golden Healthcare; not mystery Metlife suitor
Alliance margins improve as swine fever boosts global meat prices
RBNZ eyes Westpac Australia money laundering failures
Precinct eyes new developments as Commercial Bay keeps to revised schedule
End to Tower's three year dividend drought in sight
Vital Healthcare's manager appoints new independent director

IRG See IRG research reports