Telecommunications company Vocus Group chief executive Geoff Horth has not ruled out a return to paying dividends in the next financial year after a sale of the New Zealand arm of the business.
This is a critical year for the embattled telco to regain shareholder trust after apologising to shareholders in October for a $1.46 billion full-year loss, which saw it put its dividends on hold.
Vocus chief Geoff Horth has been pushing the business through a transformation process to gain back investor trust. Photo: Jason South JPS
Law firm Slater and Gordon is considering a class action against it on behalf of investors who acquired securities from the end of November 2016 to the beginning of last May.
In November, Vocus provided guidance that the company’s profit after tax would be $205 to $215 million.
This was then cut to $160 to $165 million in May. The price of its shares dropped more than 27 per cent soon after.
Since then, the company has embarked on a significant “transformation” process that will mean its results for the first half of the year will be under significant scrutiny.
“We’ve had a pretty tough period, with hard work over the last six months,” Mr Horth told Fairfax Media.
“We’ve done a lot of hard work to rebuild capability in the business foundation … including organisational changes,” he said.
These changes included a recently announced significant restructuring of the business, that will separate out its wholesale and enterprise divisions into separate operating segments.
This transformation process is likely to refocus its operations, reduce costs, and help it optimise its platforms to increase sales.
A recent Macquarie Wealth Management research note said it was early days in this transformation process, but it would be “a critical driver of future value creation” including reducing the costs of the business.
It mentioned there would be a “keen focus” on the quality of the results given the events of the past.
Another crucial move for Vocus is selling its New Zealand arm, a decision it announced in December, and its Australian data centres.
This process is under way, with plans for it to be completed by the end of this financial year.
The Macquarie note said a successful sale would underpin a return to paying dividends from the second half of fiscal 2018 and to have flexibility to grow the Australian business.
When asked whether this would be a possibility, Mr Horth was not ruling it out, saying the sale “presents an opportunity to look at our options”.
Until then, he said he’d be focusing on presenting value to investors, with the first-half results due out on February 20.
“At the end of the day it doesn’t matter what I say or think, it’s about what I deliver,” he said.