Vocus to restructure enterprise and wholesale arms
Vocus has announced that it will be separating its wholesale and enterprise arms as part of what it called its accelerated transformation program.
As a result, Vocus will now have four operating segments: Enterprise and Government; Wholesale and International; Consumer; and New Zealand.
In a statement to the Australian Securities Exchange (ASX), Vocus CEO Geoff Horth said the restructure follows its AU$861 million acquisition of Nextgen Networks in July 2016, which "opened new markets and presented significant growth opportunities".
"The opportunities available in Vocus' domestic wholesale business, combined with our investment in the Australia Singapore Cable, warrants the creation of a dedicated Wholesale and International division and will ensure that we have the focus, products, and service proposition to be the provider of choice to customers in this important market," Horth said.
The current CEO of Enterprise and Wholesale, Michael Simmons, will run the Wholesale and International division; the current CEO of Consumer, Scott Carter, will now lead the Enterprise and Government arm; and Sandra de Castro will run Vocus Australia's Consumer portfolio.
According to Horth, de Castro will bring digital transformation and innovation expertise from her previous strategy and marketing roles at AGL and the National Australia Bank (NAB). She will "help to drive the next phase of growth and customer centricity in our consumer division", he added.
Vocus also announced its intention to release interim results on February 20, though this will be in its current structure of three divisions.
The company had in October announced its decision to sell off the New Zealand arm of its business, with a proposed completion date by the end of FY18.
"The board has now determined that the Vocus New Zealand (VNZ) business will be prepared for sale finalising appointment of advisors," Vocus said at the time.
"The board has also progressed its review of the non-core Australian assets: Advisors appointed to the sale of the Australian datacentre assets [and] other non-core Australian assets will continue to be evaluated with regard to potential divestment or closure."
Despite selling its stake in Macquarie Telecom for AU$41 million in March last year, Vocus' full-year results for FY17 saw a turnaround in its FY16 net profit of AU$64.1 million to a net loss of AU$1.5 billion due to "higher than forecast net finance costs and a higher effective tax rate", along with what Horth called "a more competitive business environment" in both Australia and New Zealand.
Underlying net profit was AU$152.3 million, while underlying earnings before interest, tax, depreciation, and amortisation (EBITDA), not including significant items during the year, was AU$366.4 million, up 70 percent.
Revenue grew by 119 percent year on year to AU$1.8 billion, and the company's net debt increased by 35 percent to AU$1.03 billion and is expected to climb even higher, to up to AU$1.06 billion for FY18.
Last year, law firm Slater and Gordon announced that Vocus would be facing a potential class action from its shareholders over having downgraded its financial guidance in May.
According to Slater and Gordon, the proposed class action alleges that "Vocus engaged in misleading and deceptive conduct because it had no reasonable grounds for the original FY17 guidance issued in November 2016"; and that the telco "breached its obligations of continuous disclosure by failing to disclose that it would not achieve the FY17 guidance".
Vocus' original guidance had relied on assumptions "without proper visibility of profitability" made about growing the business through its AU$1.2 billion acquisition of Amcom in June 2015, its Nextgen acquisition, and its merger with M2 in February 2016 to form the third-largest telecommunications provider in New Zealand and the fourth-largest in Australia worth more than AU$3 billion, Slater and Gordon said.
Vocus' revised guidance saw forecast revenue reduced by AU$100 million, underlying EBITDA reduced by between AU$65 million and AU$75 million, and net profit reduced by between AU$45 million and AU$50 million.
As a result of its downgraded guidance, the company in June received a takeover proposal from Kohlberg Kravis Roberts & Co (KKR) to acquire 100 percent of its shares at a price of AU$3.50 per share via a scheme of arrangement, with Vocus then allowing KKR to conduct due diligence to explore whether a binding transaction could be agreed upon.
Shortly afterwards, Affinity Equity Partners submitted a takeover proposal in July to acquire 100 percent of Vocus for the same amount; however, two days before Vocus was due to announce its FY17 full-year financial results, both takeover proposals were terminated.
Vocus is set to begin laying the Australia Singapore Cable (ASC) next month.
Related Coverage
Kogan.com in a 'brilliant position' for NBN: Ruslan Kogan
Having never undertaken a large fixed-line infrastructure spend, Ruslan Kogan says his company is in a better position than most to offer 'incredibly attractive' services, especially with NBN currently focused on repairing customer experience issues.
Best of CES 2018 for business: ZDNet and TechRepublic journalists weigh in
From connected mannequins to connected mattresses, from hyperloop tubes to roll-up TVs, our journalists scoured CES for the products that matter for professionals and businesses.
Telstra CEO: 2018 will be big for 5G
The rollout of commercial 5G networks could begin in 2019 if standardisation and technologies are set during 2018, Telstra CEO Andy Penn has said, adding that Telstra is a world leader in the space.
Mobile device computing policy
Mobile devices offer convenience and flexibility for the modern workforce-but they also bring associated risks and support issues. This policy establishes guidelines to help ensure safe and productive mobility.
CES 2018: Telstra NB-IoT network now live
Telstra has used CES 2018 to announce the launch of its NB-IoT network across all capital and major regional cities in Australia.