Telstra Corporation Ltd

Favorable ruling from ACCC on domestic mobile roaming service: Telstra Corporation Ltd (ASX: TLS) is raising 15 billion euros ($A22.30 billion) through a debt issue in Singapore. TLS has announced an AS$1 billion (S$1.06 billion) bond issue under its Debt Issuance Program. Additionally, the Australian Competition and Consumer Commission (ACCC) has released its draft decision proposing to not declare a wholesale domestic mobile roaming service. The ACCC’s draft decision states that declaration in regional, rural and remote areas would not affect TLS’s retail mobile prices to a significant extent and the ruling can help TLS keep its competitors at bay from the use of TLS’ infrastructure. Meanwhile, TLS stock has fallen 8.87% in the last three months as on May 17, 2017. Challenges such as margin pressure from the NBN and growing mobile competition do prevail but catalysts including mobile network investments and buybacks opportunities can drive the momentum going forward. Trading at attractive levels while fostering great potential for future, we give a “Buy” recommendation on the stock at the current price of $ 4.41

Vocus Group Ltd

Managing challenging conditions: Vocus Group Ltd (ASX: VOC) revised its FY17 guidance with revenue now expected to be over $1.8bn compared to guidance of approximately $1.9bn. FY17 Underlying EBITDA is now expected to be $365-375m compared to guidance of $430-450m. The FY17 underlying NPAT is now expected to be in the range of approximately $160-165m compared to guidance of $205-215m. Moreover, based on the FY17 revised earnings forecast, the net debt at June 30, 2017 is expected to be $1-1.1bn. On the other hand, the net leverage is expected to be ~2.6x compared to the covenant of 3.5x. Further, the cumulative run rate of acquisition synergies expected to reach $57m in line with guidance. VOC continues to expect FY17 core capital expenditure (pre-ASC payments but inclusive of IRU payments) to be ~$182m. VOC also clarified the letter from ASX requesting a response to specified questions in respect of the Revised Guidance released by the company. The group expressed about it realizing the financial metrics’ actual forecast to be lower than earlier guidance on May 02, 2017, based on a review of the trading inputs. On the other hand, the ongoing rollout of the NBN is creating headwinds for many telecommunication providers. The group still seems to hold long-term potential at the back of assets and network infrastructure, though trades on a volatile scenario as of now. VOC stock has fallen 53.6% in the last six months as on May 17, 2017, placing them at lower levels. In the last few days, there has been some upward movement in the stock (4% up on May 18, 2017) with slight improvement in sentiments. We give a “Hold” recommendation on the stock at the current price of $ 2.55

TPG Telecom Ltd

Finished funds raising: TPG Telecom Ltd (ASX: TPM) is emerging as a competitor in the mobile space with the winning of a bid for 2x10MHz of mobile spectrum in the 700MHz band at the recent auction conducted by the Australian Communications and Media Authority (ACMA). Moreover, the company had successfully completed the retail component of its 1 for 11.13 accelerated non-renounceable pro-rata entitlement offer. Through the Retail Entitlement Offer, TPM has raised over A$320.3 million at A$5.25 per share. Together with the institutional component of the Entitlement Offer, the total amount raised under the Entitlement Offer is approximately A$400.3 million. Additionally, TPM expects the underlying EBITDA for FY 17 to be $820 to $830 million, which the company has reaffirmed. Meanwhile, TPM stock has fallen 14.5% in the last six months as on May 17, 2017. We give a “Buy” recommendation on the stock at the current price of $ 5.90 

FY 17 Guidance (Source: Company Reports) 

Amaysim Australia Ltd

Completed the acquisition of Click & FY 17 guidance revised upwards: Amaysim Australia Ltd (ASX: AYS) has finished the acquisition of Click Energy on May 01, 2017. AYS has revised the FY 17 guidance (upwards) to include 2-months contribution from Click. Moreover, AYS expects the dividend for full year to be partially franked with a payout ratio towards the middle of the 60 and 80% underlying NPATA target. Meanwhile, AYS stock has fallen 16.12% in the last six months as on May 17, 2017. Multi-product approach and recent acquisition are expected to drive benefits. We give a “Buy” recommendation on the stock at the current price of $ 1.80 

Guidance (Source: Company Reports) 

Macquarie Telecom Group Ltd

Enhancing trading liquidity: Macquarie Telecom Group Ltd (ASX: MAQ) recently noted that Vocus Group Ltd has sold its interest in 3,358,511 MAQ shares (100% of its interest in those shares and 16% of MAQ’s issued share capital). MAQ has welcomed the release of these shares as it will increase the trading liquidity in MAQ shares and improve the diversity of its shareholder register. MAQ has showcased an EBITDA CAGR of 19.4% over the last 3 years and has high cashflow conversion and zero debt. The group’s full year FY17 EBITDA is expected to be approximately $37 to $39 million. Meanwhile, MAQ stock has risen 20% in the last three months as on May 17, 2017. The stock is trading at a high level with low return on equity. We give an “Expensive” recommendation on the stock at the current price of $ 13.20

Spark New Zealand Ltd

Extending standby facility: Spark New Zealand Ltd (ASX: SPK) has announced that Spark Finance Limited has extended the term of its NZ$200 million committed standby revolving credit facility by one year, to mature on April 30, 2020. The group has recently clarified that it does not endorse the offer made by Zero Commission NZ Ltd to SPK’s shareholders to buy their shares at $3.54 per share (6% lower than SPK’s price at the close of May 12, 2017), and recommends shareholders to seek legal advice regarding the offer. Meanwhile, SPK stock has risen over 9% in the last six months as on May 17, 2017, and has a lucrative dividend yield. We give a “Hold” recommendation on the stock at the current price of $ 3.36

Speedcast International Ltd

Growth via acquisitions: Speedcast International Ltd (ASX: SDA) in FY 16 pounced on the transformational acquisition of Harris CapRock, which got completed in January 2017. SDA completed three additional strategic acquisitions in 2016. The integration activities have been progressing well. Moreover, SDA is on track to deliver $15M of cost synergies in 2017 and at least $24M in 2018. Meanwhile, SDA stock has risen 26.60% in the last six months as on May 17, 2017 but fell close to 4% on May 18, 2017. The stock’s price to earnings ratio seems to be heavily weighed against the peers. The stock looks “Expensive” at the current price of $ 3.81 

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