The Vocus Group Ltd (ASX: VOC) share price has been a very strong performer on Wednesday.
At one stage today the telco company's shares were up as much as 14% to $3.83. In afternoon trade they have eased back a touch, but are still up a sizeable 6% to $3.56
Why is the Vocus share price shooting higher today?
Investors have been buying Vocus' shares today following the release of its half year results this morning.
For the six months ended December 31, the company reported a 7% decline in total revenue to $901.9 million.
This was largely caused by a 12% decline in Retail revenue to $382.2 million. The Retail business was impacted by a loss of NBN market share during the half. Due to churn levels of 4.1% in copper and 1.7% in NBN, Vocus' NBN market share fell to 5.9% from 6.4% at the end of FY 2019.
This ultimately offset solid top line growth in the Vocus Network services and New Zealand businesses.
But thanks to a reduction in both direct costs and overheads, Vocus reported a 2% increase in underlying EBITDA to $179.3 million. Net profit after tax was down slightly on the prior corresponding period to $54.4 million.
Group Managing Director and CEO Kevin Russell, was pleased with the progress the company is making.
He said: "Vocus is at the mid-point of our three-year turnaround. Over the last 18 months, we have delivered three steady financial halves and have built the foundations for growth. We have absorbed the impact of NBN in Retail, at the same time as investing in new capability to capitalise on the growing market opportunity for Vocus Network Services. We are clear on our strategy and have the team to execute."
Outlook.
No changes have been made to its guidance for FY 2020. Management has reiterated its guidance for group underlying EBITDA in the range of $359 million to $379 million (excluding significant items).
This comprises underlying EBITDA growth of $20 million to $30 million in Vocus Network Services, offset by a similar decline in Retail.
Capital expenditures are expected to be in the range of $200 million $210 million, with cash conversion between 90% to 95%.
