Vocus Group Limited (ASX: VOC)
Vocus Group Limited (ASX: VOC) is a specialist fibre network telecom major that operates Australia’s second largest inter-capital network covering 16,400km. The company has embarked upon a 3-year turnaround strategy. As a part of the strategy, the company in the past six months has realigned its business into three distinct businesses. Vocus Network comprises of Enterprise, Government and Wholesale. Vocus Retail comprises of Business and consumer and lastly, Vocus New Zealand comprises of Networks and Retail.
The fibre infrastructure assets are critical to support a 5G enabled and the cloud-connected world. The company has a target to double its revenue in Vocus networks- services (EGW) by 2023. The management believes that the core growth opportunity lies in Vocus networks. Vocus retail is being significantly reset and is a valuable opportunity for the company. The company is focused upon growing cash returns from this vertical and it is operated independently from Vocus networks. The company is focusing on small businesses and sees an opportunity in mobile and 5G path for business applications. Vocus New Zealand had been performing strongly.
Vocus group has undergone a major overhaul of its management since the appointment of the new CEO, Mr Kevin Russel in May of 2018. The company has seen 19 executive departures, and 18 executive appointments. The team engagement has increased by more than 5% as per the company’s report.
The company recently announced its 1HFY19 results, and it reported a flat revenue at A$974.2 million vs. A$967.3 million in 1HFY18. The underlying EBITDA dropped by 7% at A$176.4 million vs. A$189.5 million. The EBITDA margin contracted by 150bps coming in at 18.1% for 1HFY19 vs. 19.6% in 1HFY18. The EBITDA decline was aided by declining performance in business and increased technology costs. The underlying NPAT was down by 29% at A$48.8 million vs. 1HFY18 NPAT at A$68.6 million, primarily due to EBITDA reduction and higher D&A and increased finance cost.
The stock has delivered a YTD return of 14.98%. The share price has remained flat for the past couple of months. It has delivered a return of 15.36% and -0.84% in the past three months and one month, respectively. The shares of the company traded flat during the trading session and stood at A$3.530 as on 22 March 2019.
Telstra Corporation Limited (ASX: TLS)
The 100-year-old Australian company, Telstra Corporation Limited (ASX: TLS) has been at the forefront of connecting Australians. It is the country’s largest telecommunication company with a market capitalisation of ~A$39.01 billion as on 22 March 2019. The company provides close to 17.7 million services, 4.9 million fixed retail services and 3.6 million broadband services.
Today’s digital world is dependent on fast and rich data delivery from the data providers. In this context, 5g plays an important role in meeting the ever-increasing data expectations of the customers. Telstra being the flag bearer of telecommunications in Australia, had been developing its 5g capabilities and is leading into the 5g era. The company has worked closely with key technology partners like Ericsson and Qualcomm and has positioned itself to have first mover advantage. In 2017, the company established the world-first 5G trial data call over mmWave, using production core network.
In early 2018, the company launched its 5G innovation centre, delivering the world’s first 5G- enabled Wi-Fi hotspots, Australia’s first 5G connected automobile and an end-to-end standalone data call on a commercial network. In October 2018, the company rolled out 5G-enabled mobile stations in Canberra, Adelaide, and Perth. In December 2018, the company organised Australia’s first 5G video call. A $386 million was invested to secure the 5G spectrum. The network is ready for the 5G as at the end of 1H19 with 207 5G mobile base stations vs. the compatarget 200. In January 2019, the company entered into partnerships to deliver Telstra customers exclusive access to 5G commercial smartphones.
The company recently announced its 1HFY19 results. It reported a drop of 4.1% in revenue as compared to pcp at $13.8 billion. The reported EBITDA was down by 16.4% coming in at $4.3 billion. The reported NPAT was down by 27.4% and stood at $1.2 billion. TLS declared an interim dividend of 8 cps.
The company’s shares have delivered a healthy 19.54% on a YTD basis. The shares have delivered a return of 5.12%, 20.85% and 2.84% in the past six months, three months and one month respectively. The shares of the company traded flat during the trading session and stood at A$3.280 as on 22 March 2019.
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