ASX-listed Vocus Group is set to make a fresh attempt to spin off its New Zealand operation, according to a report across the Tasman.
Vocus' NZ assets, which generated close to $400m in revenue last year, include Orcon, Slingshot, Flip, 2Talk, a data centre operation, energy retailer Switch and a fibre network formerly owned by FX Networks.
"Expectations are that Vocus will also embark on an initial public offering for its New Zealand business in a move that would assist in paying down debt," the Australian reported this morning, as part of a broader story about a possible tie-up between Vocus and Amaysim (a mobile virtual network operator in the manner of Kogan Mobile). There was no speculation on which side of the Tasman it would list.
Vocus had no immediate comment on the story, but an investment bank analyst spoken to by the Herald noted that a recent reorganisation had split the company into wholesale/network, Australian retail and New Zealand retail lines - which would make it easier to spin off the latter two.
The company's executives have made a number of comments about the challenges of retail telecommunications in the NBN (National Broadband Network) era, sparking speculation that Vocus might decide to focus on its wholesale business.
The analyst spoken to by the Herald today said this process could involve a tie-up with Amaysim as a way to offload its Australian retail business, with a public listing route for its NZ business, which is heavily retail.
A trade sale route has already been tried.
Vocus put its NZ assets up for sale in late 2017.
Trustpower (50 per cent owned by Infratil, which would later team with Canada's Brookfield Asset Management to buy Vodafone NZ) and 2degrees were said to be on the shortlist of buyers.
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Trustpower chief executive Vince Hawkesworth told this reporter that a buyer would have to "have rocks in their head" to stump up with Vocus' asking price, said to be north of A$400m (NZ$420m).
In any event, Vocus installed a new chairman and CEO, and the NZ assets were pulled from the market in early 2018.
Vocus NZ was said to be back in play in June this year as AGL Energy put in a bid to buy out Vocus Group, only to drop its offer just six days into due diligence - mirroring bids from three private equity outfits, KKR, Affinity Partners and EQT, which were all ultimately pulled. But, once again, it came to nought.
Through all the speculation, Vocus has continued to perform solidly on this side of the Tasman.
Its NZ operation made gains across the board for its financial year to June 30.
Revenue increased 5 per cent to $380m as both its consumer (8 per cent) and enterprise and wholesale (1 per cent) divisions registered gains.
Underlying earnings increased 3 per cent to $62.9m.
The telco's broadband customers increased 5 per cent to 203,000, consolidating its position as our third-largest landline player behind Spark and Vodafone.
Within that, copper broadband customers fell 25 per cent to 92,000, while UFB fibre connections jumped 54 per cent to 111,000 - putting fibre customers in the majority for the first time.
Average revenue per broadband customer per month also edged up to $71.61 from the year-ago $70.05.
Vocus NZ boss Mark Callander said the 8 per cent bump in consumer broadband "was achieved with an increased focus on higher-value customer segments and the bundling of energy and mobile".
Energy customers increased 59 per cent from 17,000 to 27,000.
Mobile customers (under an MVNO or wholesale deal with Spark) jumped 21 per cent from 24,000 to 29,000.
Callander became part of the company's management as M2 bought CallPlus (of which he was CEO) for $250m or roughly 1x revenue in 2015.
M2 subsequently merged with Vocus.
When the latest round of M&A lama-dramas kicked off in 2017, Callander was CEO of Vocus NZ. He has since climbed the greasy pole, joining the Vocus Group board and taking control of the company's wholesale operation in Australia on top of his NZ duties.
"We don't [comment] on speculation," Callander said when asked about today's IPO report.