The Vocus Group Ltd (ASX: VOC) share price is down around 4% in early trading after providing FY20 earnings guidance.
Vocus is a vertically integrated telecommunications service provider, operating in the Australia and New Zealand markets. Thanks to a merger with M2 Group, it is responsible for numerous retail and business telco brands, such as Primus.
Vocus FY20 Earnings Guidance
Vocus is holding a strategy day and gave the presentation to the market this morning.
The company said that it has a strategic plan to drive long term, sustainable growth across the business with the right leadership in place to executive the strategy including a systems modernisation program.
The company’s Network Services business, which includes the cable infrastructure, has an “outstanding market opportunity and strong, profitable growth expected across key markets” according to Vocus. The company also sees opportunities to keep partnering with larger customers in the domestic and international markets, and perhaps partnering with the NBN.
However, Vocus Retail, which includes Dodo, is “facing headwinds in legacy voice and broadband markets but targeting to return to profitable growth” by increasing revenue. The New Zealand business is well positioned for further growth according to Vocus.
In terms of earnings guidance, Vocus reaffirmed FY19 guidance that underlying EBITDA (click here to learn what EBITDA means) will be in the range of $350 million to $370 million.
Vocus also provided FY20 guidance with underlying EBITDA projected to also be between $350 million to $370 million, with EBITDA growth in the core Vocus Network Services business of $20 million to $30 million but offset by a similar decline in Vocus Retail.
Vocus Group Managing Director and CEO Kevin Russell said: “With our executive team, new operating structure and three-year strategic plan in place, we are now squarely focused on execution.”
Is Vocus A Buy?
It is quite amazing that several potential takeover bidders have taken a look at Vocus like AGL Energy Ltd (ASX: AGL) and EQT Infrastructure but then ended the discussions quite quickly.
Vocus’ infrastructure business is definitely worth something, but it’s hard to say how much with technology changing so quickly and so much telecommunications competition.
For growth I would rather think about the two rapidly rising ASX shares in the FREE REPORT below which seem to have better prospects.
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