Vocus Group closes gap on performance turnaround

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Vocus Group closes gap on performance turnaround

Vocus Group could be close to rightsizing its financial performance under a new leadership team after a rough past few years.

The company reported steady revenues of $1.9 billion, up four percent for the 2018 financial year ending 30 June. Statutory EBITDA outpaced revenue growth, up seven percent to $360.4 million for the year.

However underlying net profit was down 16 percent to $127.1 million, which Vocus pinned on increased depreciation and amortisation as the impact of increased capex flows through.

Vocus made the decision in January to spin out its wholesale and enterprise division into two separate business units, dividing the company's operating segments in four: enterprise and government, wholesale and international, consumer and New Zealand. Despite this, Vocus lumped the results of its enterprise, government and wholesale businesses together.

The three business units performed strongly thanks to increased sales on its longhaul network, with revenue up 11 percent to $569 million.

Vocus said its enterprise business was gaining momentum off the back of its new structured sales approach, national business partner program and new account management, and plans to invest in additional sales resource for NSW and Victoria for its enterprise and government segments.

Vocus also said it would focus on developing a new portal for enterprise customers, wholsale partners and deliver a new digital front end for consumers.

The consumer business didn't fare as well. While revenue remained steady at $790 million, Vocus said its SMB brand Commander required "urgent remedial action".

Commander's revenue was down 15 percent to $204 million, which Vocus blamed on poor customer service, lack of investment and mismanaged opportunities with the NBN.

Vocus said its product mix was also highly skewed towards legacy voice and data products. Vocus has decided to carve out Commander from its consumer business in an attempt to address the poor performance and will focus on building out digital end-to-end services for customers and reduce customer churn.

The New Zealand business remained steady despite Vocus' attempts to sell the segment earlier this year. Revenue was up four percent to NZ$364 million thanks to enterprise and wholesale growth on voice and data services. Vocus said it was in talks to sell the New Zealand business earlier this year but pulled the plug in April after failing to find a buyer.

It's been a rough year for Vocus with its share price taking frequent dips, though the company looks to be turning around its fortunes. Shareholders proposed a class action lawsuit earlier this year over allegedly "misleading and deceptive conduct", which centred on claims that the telco overstated its FY17 guidance, however no lawsuit has come to fruition.

Looking ahead, Vocus chief executive Kevin Russell said the company's goal was to double its revenue over the next five years.

"Vocus’ primary focus going forward is growth.  Our market share is low relative to our fibre and network infrastructure assets.  Our priority is to leverage these assets to maximise profitable growth within our core Australian and New Zealand infrastructure focused businesses."

Vocus has seen an influx of new talent join its ranks over the past year. Russell joined Vocus in May, eight months after exiting his role from Telstra as group executive of its retail division. He was followed by two more former Telstra executives; direct business leader Andrew Wildblood jumped ship in July to lead Vocus' enterprise business, followed by former channel chief Charlotte Schraa later that month.

Vocus shares were up 2.4 percent to $2.61 at the time of writing.

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