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Vocus profit jumps by more than 200 percent to AU$64m

Vocus reported a net profit of AU$64.1 million on EBITDA of AU$195 million and revenue of AU$830.8 million off the back of its Amcom acquisition and M2 merger.
Written by Corinne Reichert, Contributor

Vocus Communications has announced its full-year results for the 2015-16 financial year, reporting a 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.

As of June 30, 2016, net assets stood at AU$3.2 billion, up 1517.6 percent from AU$196.2 million, while cash and cash equivalents reached AU$128.6 million, up 747.9 percent from AU$15.2 million.

Vocus spent AU$440.4 million on network and service delivery over the year, while acquisition and integration costs in relation to its AU$1.2 billion Amcom acquisition last June and merger with Vocus in February amounted to AU$40.7 million for FY16, up almost four-fold from the AU$10.4 million spent a year earlier.

A breakdown of revenue saw Vocus' Fibre and Ethernet business contribute AU$172.9 million, up 168.1 percent year on year from AU$64.5 million; Internet add AU$88.9 million, up 102.5 percent from AU$43.9 million; Datacentre contribute AU$53.6 million, up 101.5 percent from AU$26.6 million; Voice contribute AU$149.8 million, jumping by 1117.9 percent from AU$12.3 million; Consumer Telecommunications add AU$287.4 million; and Consumer Energy add AU$59.5 million.

"We are very pleased to have delivered in a year of significant transformation for shareholders and to be able to demonstrate strong organic growth across our Corporate and Consumer divisions," said Vocus CEO Geoff Horth.

"We continued to increase our operating leverage from our national fibre network, focusing corporate sales on high-yielding metropolitan locations and diversifying our corporate and small business product ranges.

"Our New Zealand business also demonstrated strong organic growth, the merger with M2 creating a vertically integrated business that is well positioned to take advantage of the rollout of the national UFB network."

For the Corporate Australia segment, Vocus reported having 4,037 on-net buildings as of the end of June, 722 more than last year, and 2,624km of metro fibre, 504km more than at the end of FY15.

In the Australian Consumer segment, Vocus reported having 520,000 broadband services in operation (SIO), 55,000 more than last year, with a monthly average revenue per user (ARPU) of AU$68.30. Of these, 16,000 are on Amnet, 68,000 on the National Broadband Network (NBN), 51,000 on bundled services, and 385,000 on DSL.

Vocus' NBN market share was 6.4 percent, up 1.3 percentage points from last year's 5.1 percent.

Mobile SIOs were down slightly, however, with Vocus losing 3,000 services down to 167,000, and ARPU also falling from AU$37 to AU$34.

Vocus reported having 141,000 consumer energy SIOs in Australia, 28,000 more than the 113,000 reported a year ago, with an ARPU of AU$101.

Rollout of the New Zealand government's Ultra-Fast Broadband (UFB) initiative is also projected to drive growth in Vocus' New Zealand consumer broadband. Vocus had 192,000 consumer broadband SIOs as of June 30, adding 6,000 over the year, with 27,000 of these on UFB, 113,000 on DSL bundled, and 52,000 on naked DSL.

Vocus now has three datacentres in New Zealand, along with more than 4,600km of inter-city fibre optic network, a 14 percent consumer broadband market share, and 100 percent UFB coverage.

The Amcom acquisition is on track to attain between AU$13 million and AU$15 million in "annualised cost synergies" by the end of FY17, Vocus said, while the M2 merger is expected to deliver synergy targets of AU$40 million by the end of FY18.

Upon its merger with M2 to form the third-largest telecommunications provider in New Zealand and the fourth-largest in Australia worth more than AU$3 billion, the companies forecast combined revenues of AU$1.8 billion for FY16, as well as EBITDA of AU$370 million.

In July, Vocus also announced raising a total of AU$652 million through a retail entitlement offer and an institutional offer in order to assist its acquisition of Nextgen Networks for AU$700 million, along with the North West Cable System (NWCS) for AU$134 million and the Australia Singapore Cable (ASC) project for AU$27 million, which was originally a AU$170 million 50-50 joint-venture deal between Vocus and Nextgen Networks to construct a 100Gbps 4,600km subsea cable connecting Perth to Singapore and Indonesia.

In regards to its financial results for next year, Vocus in June announced its 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 points of presence (POIs).

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 Regional Blackspots Program.

The Australian Competition and Consumer Commission (ACCC) is expected to release its statement of issues on September 22.

In February, Vocus reported a half-year net profit of AU$27.37 million on EBITDA of AU$62.25 million and revenue of AU$176.28 million.

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