Vocus Group Limited (ASX: VOC)

Efforts on improving performance: Vocus, vertically integrated telecommunications provider, appointed Mr Bob Mansfield (former Telstra chairman and founding Optus chief executive, and VOC Deputy Chairman and Lead Independent Director), as the Chairman with immediate effect replacing Vaughan Bowen. Mr Bob Mansfield has been a member of the Vocus Board since 1 January 2017. Mr Mansfield’s additional Board experience has been considerable as he has served a number of roles in Australia’s Federal Government. This change was under a mutual agreement while Group CEO Geoff Horth resigned from the company. The Board and Mr Horth have been engaged in CEO succession considerations since earlier this year and the role of Interim Group CEO will be taken up by Michael Simmons, Group’s current Chief Executive of its Wholesale and International Division. Meanwhile, the Group announced its results for the six months ending on 31 December 2017 and revised its earnings guidance for the full year. Underlying EBITDA is now expected to be in the range of $365-380 million (down from previous range of $370-$390 million). This revision has been done primarily due to over hedging of its energy portfolio and due to a change in its go to market strategy.  The Board will review the future dividend payments so that they are in line with the growth of the Business after considering the capital requirements and accretive infrastructure opportunities. The share price rose up by 6.19% on March 06, 2018. Looking at the scenario, we recommend to “Hold” the stock at the current market price of $2.40 
 

Revenue Performance (Source: Company Reports)
 

Telstra Corporation Limited (ASX: TLS)

Foxtel and Fox Sports Australia merger update: Telstra and News Corp have signed a definite agreement to combine Foxtel and Fox Sports Australia to deliver premium and innovative content to Australians with greater quality, variety and efficiency. News Corp will consolidate the combined entity into its financial statements. News Corp will have 65 per cent of shareholding in the combined entity and Telstra will have 35 per cent. The combined company will provide Australian viewers with the best possible experiences by putting greater emphasis on live streaming products and will deliver new and creative products and packages across its devices and platforms. It is expected that the launch of the combined company will mark the dawn of a new era of its Australian businesses and Foxtel and Fox Sports Australia will together be a formidable force. The Group will expand the distribution channels for Foxtel and Fox Sports Australia products and will develop greater operating efficiencies across the combined businesses. Telstra expects to record a one-off accounting gain which is due to the fair value of the combined business as compared to the book value and the current estimate of this gain is around A$263 million while the group is said to maintain its earlier provided guidance as is. The stock with the fall of about 4.49% in the past one week looks appealing, while it was up 2% on March 06, 2018 with the release of the above merger news, and we maintain a “Buy” recommendation at the current market price of $3.37
 

FY 18 Guidance (Source: Company Reports)
 

Amaysim Australia Limited (ASX: AYS)

Continued to grow subscribers’ base: AYS stock price surged up about 6.4% on March 06, 2018, as the recent stock price slump is making many investors grab the shares of the telecom player. For instance, Investmentaktiengesellschaft für langfristige Investoren TGV (The Investment Stock Corporation for Long-Term Investors TGV) also increased its interests in AYS from 11.03% to 12.04%. AYS recently released its first half results for 2018 and it was observed that the number of subscribers increased by 10% over the prior corresponding period. Strong growth continued in 2H18 with over 1.14m of subscribers as on 20 Feb 2018. The group also maintained a high customer referral rate of 89% and won the 2017 Canstar Blue award for its most satisfied customers. It launched the ‘Just What You Need’ marketing campaign in Nov 2017 and focussed on the ‘small but mighty’ $10 phone plan. It launched the amaysim online device store in October 2017 and also launched its flagship devices with Samsung and Huawei. Its 1H18 record statutory net revenue of $294.0 million was up 115.1% as compared to the prior half which was driven by a solid subscriber growth and strong ARPU performance. However, the underlying NPAT drop of 65% led the share price sink by 44.29% in the past one month. Given the potential AYS has for a stock price revival and growth, we have a “Hold” recommendation at the current market price of $1.245
 

Future Vision (Source: Company Reports)

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