It certainly hasn't been a great week for telecommunication shares. Yesterday we saw the share price of TPG Telecom Ltd (ASX: TPM) collapse after its earnings guidance failed to live up to the expectations of the market.
Today it has been the turn of industry rival Vocus Communications Limited (ASX: VOC) to take the headlines for all the wrong reasons. As we approach the market close its shares have plummeted 11.5% following the shock announcement of the resignation of its CFO Rick Correll.
The press release has revealed that Mr Correll will remain with the company for a few months whilst they search for a successor, but no reason has been given for his sudden resignation.
Chairman of Vocus David Spence had this to say on the news:
"Rick has been with the Company since the early days and on behalf of the Board I would like to thank him for the enormous contribution he has made to building Vocus into the business it is today. His contribution has been instrumental in creating a strong business platform with significant growth opportunities in its core target markets, well positioned to continue to generate excellent returns to shareholders."
Whilst it is very disappointing for Vocus to lose someone that has been with the company since the early days, the sharp sell off of its shares on the back of this news seems excessive and comes as quite a surprise.
Following this sell off Vocus' shares are now changing hands at just 15x forecast FY 2017 earnings according to the Financial Times. At this level they are actually now a touch cheaper than slow-growing industry behemoth Telstra Corporation Ltd (ASX: TLS).
As long as no skeletons come out of the woodwork following this resignation, in my opinion today's decline makes Vocus an absolute bargain and definitely worth considering as a long-term buy and hold investment.
