Full text below... starting to see why PE walked away 400m v 250m : S Hopefully John Ho working on some master plan in the background to turn this around... lol
Australia-listed telco Vocus is believed to be poised to strike a deal to offload its assets across the Tasman to Trustpower in a sale expected to be worth about $250 million.
The New Zealand arm of Vocus has been up for sale through investment bank Goldman Sachs and it is now understood that a sale is close to being reached, but at far less than the $400m it was earlier estimated to be worth.
Trustpower is a New Zealand-listed power company, which provides gas and electricity. It also has its own telecoms business, providing internet to 76,000 customers and its interest in Vocus indicates an eagerness to expand.
The sale of Vocus’s NZ operations, which generated $29m in earnings before interest, tax, depreciation and amortisation for the half year, as well as some assets in Australia, was to reduce its $1bn debt load at a time its market value is only $1.47bn.
However, it is understood lenders are hesitant about funding Vocus’s Australia-Singapore undersea cable project, and the cable may now also have to be sold down to other parties in order to succeed.
The cable is expected to cost about $226m and in its half-year results, the company said it remained on track to be ready for service in the first quarter of 2019.
The ASC subsea cable, which will run from Singapore to Perth and via Vocus’s terrestrial fibre network to major Australian cities, is crucial to the telco’s long-term prospects.
But it will be interesting to see how they proceed, given the recent departure of chief executive Geoff Horth and chairman Vaughan Bowen. Some market analysts are unconvinced the project was a good idea due to the strong level of competition in the market.
Horth left this year after the company once again disappointed shareholders, with a 21 per cent fall in interim net profit to $37.3m.
Shares last closed at $2.33 after they hit $9.41 in 2016.
Vocus and the company it purchased, M2, entered the NZ telecoms market about four years ago.
Vocus bought FX networks in 2014, then M2 bought CallPlus in 2015 before M2 itself was swallowed by Vocus in a takeover.
After that, Vocus considered expanding further into the market across the Tasman with a purchase of 2 Degrees, but never bought the company, and the latest sale is not thought to be first choice.
Next, Vocus will turn its attention to the sale of its Australian data centres, which are expected to sell for between $150m and $200m.
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