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Vocus failed leadership spill spared CEO Geoff Horth

The resignations of Vocus founder James Spenceley and Amcom founder Tony Grist occurred after their failed coup attempting to oust CEO Geoff Horth from the company.
Written by Corinne Reichert, Contributor on

The resignations of Vocus Communications founder James Spenceley and Amcom founder Tony Grist on Wednesday came as a result of their battle for leadership with Vocus CEO Geoff Horth.

Grist's confidential proposal to the Vocus board to push Horth out by early 2017 was supported by Spenceley, alongside the suggestion that Vocus' board be formally reviewed next year.

The remainder of the Vocus board disagreed with the plan, however, resulting in Grist's resignation and the board's subsequent request for Spenceley's resignation.

"While it is disappointing to see the departing directors leave the board, these resignations are in the best interests of shareholders," Vocus chairman David Spence said on Thursday.

"We can now move forward with a fully cohesive board and executive team."

Horth had been CEO of M2 until its merger with Vocus in February, when he was appointed as chief executive of the combined entity. Former Vocus CEO James Spenceley was given the role of executive director for the new company, while Grist had originally joined the Vocus leadership team following the AU$1.2 billion acquisition of Amcom last June.

Vocus shares fell by 23 cents as a result of the leadership squabble, with IG market strategist Evan Lucas saying the news had unsettled investors, especially considering the need for a cohesive strategy for Vocus' recent and upcoming acquisitions and mergers.

"It doesn't bode well when you have infighting at the top, because it does require a lot of strategy, and a lot of will, and a lot of management's time and effort," Lucas said.

CFO Rick Correll last month also resigned.

Vocus' merger with M2 formed the third-largest telecommunications provider in New Zealand and the fourth-largest in Australia, worth more than AU$3 billion.

Its acquisition of Nextgen Networks for AU$700 million, along with the North West Cable System for AU$134 million and the Australia Singapore Cable project for AU$27 million, was last month approved by the Australian Competition and Consumer Commission (ACCC).

Vocus expects the Nextgen acquisition to complete this month.

"We are extremely pleased with the announcement from the ACCC, and will move as quickly as possible to close the transaction and integrate the business under the Vocus umbrella," Horth said in September.

"We will be working to ensure that we leverage the benefits of our expanded infrastructure platform and increased scale across our customer base."

Vocus in June announced its proposed acquisition of Nextgen Networks, which it said would put it "in a class with Optus" in terms of both fibre infrastructure and access to almost double the National Broadband Network points of presence.

The acquisition will see Vocus expand its extensive fibre footprint in Australia: Nextgen owns a 17,000km fibre backhaul network in Australia, including operating and maintaining more than 6,000km of the federal government's blackspots program.

Vocus' acquisition is being partially funded by AU$652 million that was raised through a retail entitlement offer and an institutional offer.

For FY16, Vocus reported a full-year net profit of AU$64.1 million, up 223 percent from the AU$19.9 million recorded a year earlier thanks largely to the addition of M2 and Amcom to its business.

Statutory earnings before interest, tax, depreciation, and amortisation (EBITDA) were AU$195 million, up 273 percent year on year from AU$52.2 million, while underlying EBITDA -- excluding acquisition, integration, and other costs -- was AU$215.6 million, up 318.1 percent from AU$51.6 million.

Vocus' revenue was AU$830.8 million, up a substantial 454.6 percent from AU$149.8 million.

With AAP

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