-->
Sharechat Logo

Vocus NZ grabs share of broadband market, boosting first-half revenue 4.1% with skinnier margins

Tuesday 20th February 2018

Text too small?

Vocus Group's New Zealand division, which is up for sale, grabbed market share in the hotly contested domestic broadband space, helping lift first-half revenue albeit on skinnier profit margins. 

Revenue from the New Zealand operations rose 4.1 percent to $182.6 million in the six months ended Dec. 31, with enterprise and wholesale sales climbing 10 percent to $90.8 million and consumer market revenue dipping 1.1 percent to $91.8 million. The telecommunications company's New Zealand broadband customer numbers rose 1.5 percent to 196,000 with a 63 percent gain in fibre customers to 62,000, helping offset a 14 percent drop in copper-service users to 134,000. Vocus has 13 percent of the ultrafast broadband market, up from 12 percent a year earlier. 

Still, the company's New Zealand underlying earnings before interest, tax, depreciation and amortisation fell to $29 million from $31.7 million a year earlier, although Vocus prefers to exclude $3.3 million reclassified expenses and deferred subscriber acquisition costs, which would mean ebitda rose 2.1 percent. Margins shrank 0.3 basis points to 15.9 percent and broadband average revenue per user fell 1.1 percent to $71.10 per month. 

"The New Zealand business continued to perform well, with revenue growth in both enterprise and consumer markets," group chief executive Geoff Horth said in a statement to the ASX. "Effective management of network costs and shared services are driving SG&A (selling, general and administrative) savings across the business and contributing to earnings growth."

Vocus built up the New Zealand business after merging with rival M2 Group in 2016, bringing the CallPlus, 2talk, Orcon, Slingshot and Flip businesses and local fibre line provider previously called FX Networks under one umbrella, and later diversified into electricity with retailer Switch Utilities, which has attracted 12,000 customers. 

However, the Australian group's acquisition binge came during a period of shrinking margins in the sector and the Kiwi business was put on the block with a view to completing a sale by the end of June. 

Horth said that sale process "is progressing in accordance with the planned timeline." Goldman Sachs and Credit Suisse have been appointed advisers and indicative first round bids have been received, with a short list invited to make a second offer. 

Group net profit after minority interests fell 21 percent to A$37.3 million in the six months ended Dec. 31 on a 9 percent gain in revenue to A$967.3 million. No dividend was declared. 

The ASX-listed shares last traded at A$2.87 and have declined 5.3 percent so far this year. 

(BusinessDesk)

  General Finance Advertising    

Comments from our readers

No comments yet

Add your comment:
Your name:
Your email:
Not displayed to the public
Comment:
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:

MARKET CLOSE: NZ shares gain; a2 jumps to 12-month high as earnings outperform
NZ dollar drifts lower following early boost from rising dairy prices
Meridian positions for next generation development
Kiwibank lifts first-half net profit 47.6% amid rekindled growth
John Fellet: Came to Sky TV for 18 months, stayed 28 years
Marsden Maritime net profit down on lower cargo through Northport
Countdown supermarkets 1H earnings dip as digital investment continues
Fletcher open to re-entering high rise construction market
Power price spike put margin squeeze on NZ producers in Dec quarter, stats show
Tilt Renewables to raise A$260m of new equity

IRG See IRG research reports