NZ assets will only be sold if they attract the right price: Vocus

Another possibility has emerged for the sale of Vocus’ New Zealand assets: Nobody gets them.

New management appears to be reconsidering if it should sell its NZ business, which includes Orcon and Slingshot.

Yesterday, NBR and The Australian reported Trustpower is apparently close to $A250 million deal – a price that would be less than 1x revenue.

In an ASX filing titled “response to media speculation,” Vocus says: “The New Zealand business is a strong business and attractive asset that will only be sold if it achieves an appropriate return for shareholders.”

It also says, “Vocus is in discussion with a number of parties and has made no comment on the value of the assets … the sale process is progressing to the planned timeline with target completion by June 2018.”

While Vocus executives have made no public comment on the value of their company’s New Zealand assets, shortly before the sale process began, they were written down by $A199m to $A232m (as recorded in the company’s annual report).

The rumour mill holds that Vocus was originally wanting more than $A500m.

The situation has been coloured by Vocus' chairman and chief executive both being replaced mid-way through the sale process.

New chairman Bob Manfield has promised a "fresh approach," though has yet to detail any strategic changes.

What's on offer
Vocus' New Zealand assets include ISPs Orcon, Slingshot, Flip and CallPlus, 2Talk, bought by M2 for $NZ250 million (or roughly 1x revenue) in 2015 from NBR Rich Listers Malcolm Dick and Annette Presley. M2 was taken over by Vocus shortly after the deal.

The assets also include the old FX Networks fibre network, bought by Vocus in for $NZ116m in 2014.

The New Zealand stable also includes an Auckland data centre inherited (then extensively upgraded) when Vocus bought Maxnet for $10m in 2012.

And its recent half-year report revealed Vocus paid $9.8m for Auckland-based power Switch in late 2016.

Vocus NZ half-year financials
Ebitda for Vocus’ New Zealand division rose 2.1% to $29m for the six months to December 31 (the New Zealand unit reported $31.7m ebitda for the year-ago period but $3.3m has now been reclassified as expenses and deferred subscriber acquisition costs).

New Zealand revenue rose 4.1% to $182.6m for the half-year. Enterprise and wholesale sales increased 10% to $90.8m while consumer market fell 1.1% to $91.8m.

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