Friday, 16 June 2017 05:39

Vocus denies it has turned down KKR bid


Australian telco Vocus has denied that it has turned down a $3.3 billion takeover from US equity firm Kohlberg Kravis Roberts. 

A Vocus spokesperson told iTWire that the report which claimed the telco had turned down the bid was wrong.

However, the website Channel News reported that chief executive Geoff Horth had revealed that the bid would be rejected.

Horth used an investors' day this week to also apologise to shareholders for recent problems. Horth told the Australian Financial Review: "We have not executed, we have to acknowledge that."

And he added: "The business has gone through a significant period of change. We had a very complex integration and transformation programme afoot and we didn't have the right people in roles.

"Like all shareholders we are very disappointed with the performance of the business over the last 12 months, and we are very committed to setting it right."

The KKR bid, made on 7 June, came after a bad period for the company, Australia's fourth largest telecommunications outfit, with share prices having gone south since August last year.

The KKR bid valued the shares at $3.50 each; the value of the company came to $2.2 billion and including debt that rose to $3.3 billion.

In the last nine months, Vocus has lost almost 70% of its value as it struggles to incorporate a number of acquisitions, most recently the $807 million purchase of Nextgen.

Vocus provides telco, data, cloud and energy services through its Commander, Dodo and iPrimus brands. It also owns Nextgen Networks which it acquired in October 2016.

The Australian quoted Citi analyst David Kaynes as saying in a note to clients: "“The opportunities are significant but none look like easy wins to us, with Vocus needing to fix the cash flow, churn and provisioning issues, automate processes, and boost cross-sell rates.”

Last month Vocus was reported to be contemplating a sale of its data centres to service its debt.

The company was reported have reached a preliminary agreement on the sale, with NEXTDC among those expressing an interest.

Credit Suisse and Goldman Sachs were reported to be around the sale.

Vocus has a fibre network across and in between major cities and 112 of 121 points of NBN interconnect.

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Sam Varghese

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Sam Varghese has been writing for iTWire since 2006, a year after the site came into existence. For nearly a decade thereafter, he wrote mostly about free and open source software, based on his own use of this genre of software. Since May 2016, he has been writing across many areas of technology. He has been a journalist for nearly 40 years in India (Indian Express and Deccan Herald), the UAE (Khaleej Times) and Australia (Daily Commercial News (now defunct) and The Age). His personal blog is titled Irregular Expression.

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