MENU

Brokers don’t like Vocus Group Ltd’s debt problems

Shares in telecommunications provider Vocus Group Ltd (ASX: VOC) are down 0.4% to $2.42 in morning trade after Morgans rated the stock as a hold off the back of news the company’s debt is set to peak during the first half of FY19.

The telco sector is mighty fierce at present, but the move by Vocus to discontinue its New Zealand sales process and temporarily extend its debt covenants has not been met by support from Morgans, at least.

Vocus received a number of offers for its NZ businesses, but all failed to entice the board and Morgans agrees the company should hold on to the assets and “create more value” in them rather than flog them off cheaply.

The Morgans hold rating comes with a share price target reduction from $2.78 to $2.39 as the broker believes Vocus should put its energies into de-gearing and de-risking the business as competition hots up in the space as we approach the advent of 5G technology.

Vocus is still small fry in the telco space when compared to TPG Telecom Ltd (ASX: TPG) and Telstra Corporation Ltd (ASX: TLS), but top brokers don’t think you should sell out of the $1.5 billion market cap company just yet, although investors who are uncomfortable with rising debt levels may get cold feet.

The Richest Man Alive probably doesn't have any debt problems anymore.

The richest man in the world has just launched a $100 million investment fund and investors who don't take note could miss out on a massive opportunity.

And it isn't by sheer luck. He did it by looking to the future and investing in the big ideas of tomorrow.

This could be your chance to get in on the ground floor!

Click here to discover more!

Motley Fool contributor Carin Pickworth owns shares of Telstra Limited. The Motley Fool Australia owns shares of and has recommended Telstra Limited, TPG Telecom Limited, and Vocus Communications Limited. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

Two New Stock Picks Every Month!

Not to alarm you, but you’re about to miss a very important event! Chief Investment Advisor Scott Phillips and his team at Motley Fool Share Advisor are about to reveal their latest official stock recommendation. The premium “buy alert” will be unveiled to members and you can be among the first to act on the tip.

Don’t let this opportunity pass you by – this is your chance to get in early!

Simply enter your email now to find out how you can get instant access.

By clicking this button, you agree to our Terms of Service and Privacy Policy. We will use your email address only to keep you informed about updates to our website and about other products and services we think might interest you. You can unsubscribe from Take Stock at anytime. Please refer to our Financial Services Guide (FSG) for more information.