Vocus revenues flat following 'year of significant change'
- 22 August, 2019 10:32
Kevin Russell (Vocus Group)
Vocus has come out a self-described "year of significant change" with a 44 per cent drop in net profit after tax (NPAT) to $34 million.
"This has been a year of significant change and our priority has been to deliver our financial guidance whilst laying the key foundations that will enable Vocus to capitalise on our market opportunities and deliver growth from our core network assets," Vocus CEO and managing director Kevin Russell said. "Our guidance has been met and those foundations solidly set."
The publicly-listed telco told shareholders it met its guidance for the full year ended 30 June, posting flat revenue of $1.9 billion, or a 0.4 per cent increase from the previous reporting period.
Underlying NPAT declined by 17 per cent, or $105.5 million, and underlying earnings before interest, tax, depreciation and amortisation (EBITDA) was down by 1.8 per cent to $360.1 million.
Vocus' core business, Network Services, represented the majority of EBITDA, delivered revenue and earnings growth this year, with recurring revenues up 5 per cent and total revenues up 23 per cent.
Recurring revenue growth was generated primarily through its State and Federal Government business, while demand was generated across the network by the Australia Singapore Cable (ASC).
Vocus' Wholesale business also performed strong, its shareholder update read. Vocus expects the ASC to continue to drive growth in sales.
The Coral Sea Cable project, being built by Vocus on behalf of the Australian Government and connecting the Solomon Islands and Papua New Guinea with Australia, is tracking on time and on budget.
Cable laying commenced in July and is scheduled to land in Sydney by the end of August 2019. The main cable lay is due to be completed in October, which will be followed by a period of configuration and testing.
Although the Retail business saw a 15 per cent decline in revenues, EBITDA margins increased 1.8 per cent attributed to its digital transformation program, operating cost efficiencies, and improved supplier terms.
Revenue headwinds from the reduction in PSTN Voice services and continuing migration to low-margin NBN services are reducing as the NBN roll-out progresses, Vocus stated.
Revenue for Vocus New Zealand increased by 4.5 per cent and EBITDA by 2.5 per cent. Reduction in headcount was one of the reasons for EBITDA's growth.
Revenue growth was driven by an increased focus on higher value customers and bundled services and reducing customer churn. Margins in core telecommunication services have been maintained, but strong growth in energy is changing the product mix.
Russell said that the company will now focus on executing its plans for the next 24 months.
For FY20, Vocus expects underlying EBITDA in the range of $359-$379 million and EBITDA growth in Vocus Network Services of $20-$30 million offset by similar decline in Retail.