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UPDATE 1-Australian telco Vocus cuts dividend to manage debtload

Published 23/08/2017, 10:09 am
UPDATE 1-Australian telco Vocus cuts dividend to manage debtload
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(Adds context and CEO comment)

By Paulina Duran and Tom Westbrook

SYDNEY Aug 23 (Reuters) - Australia's No. 4 internet company Vocus Group Ltd VOC.AX said on Wednesday it would cut its dividend and consider selling assets to manage its debt load as annual underlying profit fell short of the company's guidance.

Vocus reported a full-year underlying profit of A$152.3 million ($120.5 million), above last year's A$101.7 milion as increased financing and integration costs cut into higher revenues. The company flagged earlier this month it would miss its own profit guidance of A$160-A$165 million.

Vocus' share price has halved since November, when the company announced the first of three earnings downgrades.

The Sydney-based company said it was considering selling non-core Australian assets "of material value" after two potential suitors pulled bids valuing the telco at A$2.2 billion ended. has struggled to make the most of acquisitions bought in a three-year A$2.4 billion shopping spree, in anticipation that the rollout of the government-owned broadband network, which is replacing traditional landlines, would shake up a sector dominated by Telstra Corp Ltd TLS.AX .

Chief executive Geoff Horth said the company faced a period of transition in a "competitive environment" which had forced it to take a A$1.53 billion valuation cut to its assets.

Vocus said it expected to report underlying earnings before interest, tax, depreciation and amortisation (EBITDA) in fiscal 2018 of A$370 million to A$390 million, compared with A$366.4 million this year. It forecast revenue of A$1.9 billion to A$2.0 billion, up from A$1.82 billion this year.

The company did not declare a final dividend for the year and said it did not expect to pay dividends in fiscal 2018, as it focuses on funding the "core activities" of the group and managing its A$1.03 billion debt-load.

($1 = 1.2642 Australian dollars)

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