The Vocus Group Ltd (ASX: VOC) share price is up 1.3% today and up more than 10% over the past month after The Australian newspaper’s data room column today reported that the online communications business wants to sell its home internet consumer-facing businesses including the Dodo and iPrimus brands.
According to The Australian its new CEO would also like to sell its struggling business-to-business internet services provider Commander.
The paper also reports that “some” estimate it could get $500 million for its consumer business on 5x earrings, and I expect Vocus’s CEO would bite the arm off any bidder offering that much for its Australian home internet operations that are its legacy M2 Group assets facing a margin crunch courtesy of the government’s NBN.
Ever since the original Vocus dark fibre business-to-business fibre optic internet and cloud services (data centre) business merged with M2 Group’s NBN-facing home internet business its been downhill faster than an Austrian skier thanks to its debt load and the overvaluation of the M2 assets as part of the merger.
I expect the chances of a deal to sell its Dodo and iPrimus businesses for a decent multiple are low, but it would be good news for long-suffering Vocus investors as it would allow the telco to pay down debt and retain its high-quality assets.
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You can find Tom on Twitter @tommyr345
The Motley Fool Australia has recommended 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.