Having absorbed the costs to its retail arm of the existence of the National Broadband Network (NBN), coupled with NBN ending its push to directly sign up business customers and looking at how to use existing dark fibre, Vocus now says the NBN gives it opportunities for growth.
In its half-year results announced on Wednesday, the telco said it saw a 52% increase to AU$35 million in NBN sales from its Network Services business compared to the first half of last year, while its retail arm saw NBN-related revenue grow by 20% to AU$150 million for the half year to December 31. The company added it now had 78% of consumer connections, 67% of retail, and 54% of its business connections on the NBN.
For NBN connections, monthly average revenue per user sat at AU$66.40 for Australian retail connections, while the company's market share had dropped from 7% a year before to 5.9% for the first half.
It's a far cry from a year ago when Vocus said the economics of using the NBN did not stack up.
Overall for the half year, Vocus Group's revenue was down 7% to AU$902 million, with underlying earnings before interest, tax, depreciation and amortisation (EBITDA) up 2% to AU$179 million, and net profit after tax steady at AU$54.4 million.
Broken down by its three units, Network Services saw a 5% increase in revenue to AU$306 million, with EBITDA increasing AU$11 million over the half year to AU$111 million. The company also highlighted that the completion of the Coral Sea Cable was ahead of schedule and on budget, a cable contract it received from Conoco Phillips, and its appointment by Canberra to design a cable to Timor Leste.
Retail saw its revenue drop by 12% to AU$382 million, with its EBITDA also falling by 22% to AU$39.5 million. Vocus said its Dodo brand stabilised, growing its customer base during the half year, while its legacy Commander brand continued to shrink without seeing an equivalent uptick in NBN and IP voice services.
The New Zealand business reported revenue increased 6% to NZ$200 million, with EBITDA increasing by the same percentage to NZ$32 million. In New Zealand, the company still has 40% of its 205,000 customers on copper connections.
"Vocus is at the mid-point of our three-year turnaround. Over the last 18 months, we have delivered three steady financial halves and have built the foundations for growth," Vocus CEO Kevin Russell said.
"We have absorbed the impact of NBN in Retail, at the same time as investing in new capability to capitalise on the growing market opportunity for Vocus Network Services."
The company also provided more information on its recent Bureau of Meteorology (BoM) contract win. The former contract was over three years for AU$7 million, while the new one is AU$15.7 million across four years with 115 BoM sites to use Vocus fibre, 65 sites to use NBN satellite services, and the remainder using Telstra fibre.
The old contract handled around 115 sites, while the new deal will be for approximately 200 sites.
During the first half, Vocus settled a class action brought against it in April 2019.