# VOC - Vocus Group



## tonza (23 January 2011)

Founded in 2008 and listed in July 2010, VOC is an independent wholesale telecommunications provider. The company's current market cap is roughly $76 million.

They recently topped the Deloitte 2010 Technology Fast 50 with an 11,306% increase in revenue over the past 3 years. 

VOC's management team appears to be experience with Stephen Baxter, co-founder of PIPE Networks, recently joining the board.

The company has a strong balance sheet with a good cash position and a relatively conservative gearing level. They have managed to successfully maintain a high return on equity over the past couple of years.

The stock is currently trading with a trailing PE of about 9.5. I'm not qualified to assess the company's longer term prospects for growth. However, I believe this may be a growth stock available at a value stock price.


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## robusta (10 March 2011)

Bought a nice chunk of VOC this morning, paid a bit above my calculation of IV but the growth of this baby is unbelievable.
I think we will also be hearing Roger Montgomery talking a fair bit about VOC in the future as he recently added it to his Valueline portfolio.

11.00 today VOC went into a trading halt due to capital raising there must be a aquisition in the works as cashflow is very solid.

Normally companies use the announcement date of spp as the record date, I think that means I will miss out on participation in any spp .


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## Miner (10 March 2011)

robusta said:


> Bought a nice chunk of VOC this morning, paid a bit above my calculation of IV but the growth of this baby is unbelievable.
> I think we will also be hearing Roger Montgomery talking a fair bit about VOC in the future as he recently added it to his Valueline portfolio.
> 
> 11.00 today VOC went into a trading halt due to capital raising there must be a aquisition in the works as cashflow is very solid.
> ...




Interesting coincidence or fluke  and if there was a trading halt today unfortunately your purchase may not qualify. Hold your breadth and see what comes out. 

On another matter with VOC - two postings only and VOC  is at the top of ladder in competition thread.
More strangely our topper in competition has not even made any comment in ASF. Surely Lotto win comes by fluke only and no correlation or regression technique can explain that.
Trading Halt today
Hmm ! Smelling rose with so many coincidences  :


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## VSntchr (10 March 2011)

Only reason it hit $2.90 was Roger Montgomery. Yes its a good company, but its fundamentals are by no means perfect. The best part about this company is the industry growth prospects..

I actually started researching VOC on monday...pitty I didnt buy in before the guru jumped aboard and sent the price rising.

I have to admit it has had a solid appreciation over the last 3 months...but today was a bit ridiculous!
Its funny how Montgomery tends to avoid companies that will require extra funds from shareholders and the day after he includes this company to Valueline...it announces a capital raising


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## Billyb (10 March 2011)

RM really is a self-fulfilling prophecy...


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## Intrinsic Value (11 March 2011)

VSntchr said:


> Only reason it hit $2.90 was Roger Montgomery. Yes its a good company, but its fundamentals are by no means perfect. The best part about this company is the industry growth prospects..
> 
> I actually started researching VOC on monday...pitty I didnt buy in before the guru jumped aboard and sent the price rising.
> 
> ...





RM rates it as a B2 which normally means he wouldn't get involved.

However with little other value investments out there he probably needs to come up with something.

His IV is 2.45 so it is now at a premium to its IV so I will give it a miss.


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## McCoy Pauley (11 March 2011)

At least on the surface, Montgomery's investment in Vocus Communication seems to break at least one of his well-publicised rules.  I seem to recall him saying that he only invests in companies he rates 'A1' or 'A2' by his (hidden) criteria.  He also apparently dislikes companies that raise funds through placements due to their dilutive effect.

I thought it suspicious that the day after Montgomery writes about Vocus Communications, the price shoots through the roof and then the company goes into a trading halt for a placement.


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## Intrinsic Value (11 March 2011)

McCoy Pauley said:


> At least on the surface, Montgomery's investment in Vocus Communication seems to break at least one of his well-publicised rules.  I seem to recall him saying that he only invests in companies he rates 'A1' or 'A2' by his (hidden) criteria.  He also apparently dislikes companies that raise funds through placements due to their dilutive effect.
> 
> I thought it suspicious that the day after Montgomery writes about Vocus Communications, the price shoots through the roof and then the company goes into a trading halt for a placement.




There may be a bit more pressure on him now with his new venture to find opportunities.

His mantra has been in the past that it is better to leave your money in cash and be patient if there are no investments that fit his strict criteria eg A1 or A2 companies trading at a significant discount to IV. 

Not sure that the trading halt had anything to do with him at all.


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## VSntchr (11 March 2011)

Yeah I was suspicous too..I was kind of alluding to that in my first post but I held back slightly.

He did say that he met with management recently..so whether or not he knows something that we don't is up for interpretation...

I think he rates Woolies a B2 and holds that also...


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## Tightwad (11 March 2011)

I haven't seen him mention it before.. until now.  I had a quick look at it the other night but it didn't make the cut, being a b1.. and telecoms.. it ended up in the wait and see what happens pile.


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## ROE (11 March 2011)

VSntchr said:


> Yeah I was suspicous too..I was kind of alluding to that in my first post but I held back slightly.
> 
> He did say that he met with management recently..so whether or not he knows something that we don't is up for interpretation...
> 
> I think he rates Woolies a B2 and holds that also...




Like when he did with CCP and bought in ...then blame them for mis information sold out at 1.20, sue then blame everyone but his bad timing and judgement

Only if he has conviction and hang on -


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## VSntchr (14 March 2011)

robusta said:


> Bought a nice chunk of VOC this morning, paid a bit above my calculation of IV but the growth of this baby is unbelievable.
> Normally companies use the announcement date of spp as the record date, I think that means I will miss out on participation in any spp .




Record date for SPP is last thursday so you will get a chance to buy more Robusta. Will the price be the same as it was for the institutional raising? $2 is a nice discount to IV.

How has your IV changed with the updated equity and shares on issue ??


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## robusta (14 March 2011)

I broke one of my major investing rules with VOC by paying above my calculation of IV, was planning to unload my holding today until I learnt I may be able to participate in the SPP at a discount to IV.



VSntchr said:


> Record date for SPP is last thursday so you will get a chance to buy more Robusta. Will the price be the same as it was for the institutional raising? $2 is a nice discount to IV.




Hope it is $2.00 as I will fill my boots up.



VSntchr said:


> How has your IV changed with the updated equity and shares on issue??.




Have not worked this out yet VSntchr but I imagine the IV will reduce a bit.


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## drlog (18 March 2011)

robusta said:


> Have not worked this out yet VSntchr but I imagine the IV will reduce a bit.




As far as I can tell, the current book value for VOC is around 29c? (I could be wrong?)

They are raising capital at $2 per share.

So for every additional share they sell, the book value of non-participating shareholders will go up a lot. Doesn't that mean that IV will rise IF they can maintain the same ROE with the new capital? Of course, if ROE falls, this would not be the case, just book value increasing a lot with ROE falling. In that case, the intrinsic value may even stay flat. Thoughts?


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## VSntchr (18 March 2011)

drlog said:


> As far as I can tell, the current book value for VOC is around 29c? (I could be wrong?)
> 
> They are raising capital at $2 per share.
> 
> So for every additional share they sell, the book value of non-participating shareholders will go up a lot. Doesn't that mean that IV will rise IF they can maintain the same ROE with the new capital? Of course, if ROE falls, this would not be the case, just book value increasing a lot with ROE falling. In that case, the intrinsic value may even stay flat. Thoughts?




I have the business valued around $2.80 for FY11..so in my mind issuing shares at $2 is counterproductive as it is below IV...but in saying that...a company positioned in an industry that is expecting 95%p.a growth for the next 5 years is going to want to have as much money as possible to ensure they can keep up with changing needs of the industry...(which are also added to by the NBN).

Im still forming an opinion on this business, but in reply to your question on the IV and the capital raising - the main things for me are
 1) it is conducted at below IV - which is bad

 2) the company may stand to benefit with very high returns from the capital and as such the cap. raising may be certainly justified..

I suspect by the end of the FY we may know a lot more in relation to this...


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## robusta (28 March 2011)

Another data centre bought, this time PerthIX.

http://www.asx.com.au/asxpdf/20110328/pdf/41xpg30bvdbs32.pdf

PerthIX has according to the announcement a significant number of carriers and ISP's as customers.


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## VSntchr (28 March 2011)

robusta said:


> Another data centre bought, this time PerthIX.
> 
> http://www.asx.com.au/asxpdf/20110328/pdf/41xpg30bvdbs32.pdf
> 
> PerthIX has according to the announcement a significant number of carriers and ISP's as customers.




Interesting that they have agreed to pay an extra $750k should the acquired business exceed FY12 forecasts. The price paid is more than 4 x EBITDA, which tells me that they did not get an absolute bargain - however the price is reasonable. Should the performance only slightly exceed forecasts (and thus the bonus payment have to be paid) the price paid will look more expensive.

Regardless of the price paid, I feel that this is a positive direction for Vocus to be heading in. They are diversifying their income streams, which I feel is very important for a company which _may_ be heavily relying upon one specific lease agreement...


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## tonza (29 March 2011)

VSntchr said:


> Interesting that they have agreed to pay an extra $750k should the acquired business exceed FY12 forecasts. The price paid is more than 4 x EBITDA, which tells me that they did not get an absolute bargain - however the price is reasonable. Should the performance only slightly exceed forecasts (and thus the bonus payment have to be paid) the price paid will look more expensive.
> 
> Regardless of the price paid, I feel that this is a positive direction for Vocus to be heading in. They are diversifying their income streams, which I feel is very important for a company which _may_ be heavily relying upon one specific lease agreement...




Don't forget that this is a smoking hot industry at the moment. We have no opportunities to make purchases cheaper than this on our own. Respectable purchase.


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## robusta (29 March 2011)

tonza said:


> Founded in 2008 and listed in July 2010, VOC is an independent wholesale telecommunications provider. The company's current market cap is roughly $76 million.
> 
> They recently topped the Deloitte 2010 Technology Fast 50 with an 11,306% increase in revenue over the past 3 years.
> 
> ...




Hey tonza, I wish I took a good look at your post in January


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## tonza (30 March 2011)

robusta said:


> Hey tonza, I wish I took a good look at your post in January




I actually purchased into this company in the later months of last year. Unfortunately I didn't have the conviction to pull the trigger and load up. I started the thread in an effort to find someone who might be able support my views but was greeted with the sound of crickets. I, foolishly, sold down some of my holdings shortly after. I will be looking to get some of this holding back in the cap raising but I won't be getting my hopes up.

I have made this mistake a few times and I believe it to be the most important lesson in investing: Get every bit of information you can about a company. Research, research and then establish a value. Make a decision and back your judgement always!


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## VSntchr (27 April 2011)

Flying over $3.00 this morning.
No news out for a while but this one is running up hard. Interesting to see if an announcement pops up soon, or if it is simply more people discovering VOC...


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## zac (13 May 2011)

Anyone have any comments on Vocus?
I had an alert set for when it reached under 2.50 and it did today.
In the last 12 mths it has shot up in price but im sceptical of the 2011 EPS and without any 2012/13 forecast figures yet im not sure what to make.

The business model and the field its in is certainly good however.


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## skip9 (5 June 2011)

Zac,

Long term outlook on this company is very strong in my opinion. Without going into significant details, Broadband, 4G etc will be expanding enormously in the coming years. With things such as a NBN, iPads, Internet Access on mobile phones etc etc which all contribute to increasing internet traffic then i can only see this company increasing in value and growing.

Have a look at Ciscos forecast study

http://www.cisco.com/en/US/solution...0_ns827_Networking_Solutions_White_Paper.html

I think this does relate to VOC in a big way


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## VSntchr (24 August 2011)

Profit of $8.1m. Better than what I had expected..will be interesting to see what the market does this morning....


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## YouAgainstMe (1 September 2011)

Anyone know why VOC has been down this week?


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## VSntchr (22 September 2011)

VOC had roughly 3m of its NPAT as an FX gain I think..will have a look later today.

None the less, the market is now valuing it at less than half of its peak only a few months ago.

Regardless of what the economy does here or anywhere for that matter...I cant see me using the internet any less....might have to re-read the report and possibly take a dip at todays price..


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## robusta (23 November 2011)

Vocus expands into Singapore

http://www.asx.com.au/asxpdf/20111123/pdf/422qwytnn8ftgw.pdf

The Perth to Singapore cable system caught my eye, it is called - SeaMeWe-3  

Anyhow growth from VOC seems to be on target.

http://www.computerworld.com.au/article/408359/vocus_guns_us_cloud_providers/


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## McLovin (8 December 2011)

Got into VOC this week. SP has been pretty weak and I haven't filled right up on VOC yet. With data rates increasing exponentially at 9x earnings this looks like a pretty good buy. Time will tell.


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## zac (8 December 2011)

McLovin said:


> Got into VOC this week. SP has been pretty weak and I haven't filled right up on VOC yet. With data rates increasing exponentially at 9x earnings this looks like a pretty good buy. Time will tell.




Thats why Im surprised by how much its dropped and especially this week.


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## McLovin (8 December 2011)

McLovin said:


> Got into VOC this week. SP has been pretty weak *so* I haven't filled right up on VOC yet. With data rates increasing exponentially a*nd the stock on* 9x earnings this looks like a pretty good buy. Time will tell.




I typed that post in a rush, so I adjusted it so it makes a bit more sense!


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## skc (9 December 2011)

VSntchr said:


> VOC had roughly 3m of its NPAT as an FX gain I think..will have a look later today.






McLovin said:


> Got into VOC this week. SP has been pretty weak and I haven't filled right up on VOC yet. With data rates increasing exponentially at 9x earnings this looks like a pretty good buy. Time will tell.




$3.67m FX income before tax so ~$2.57m after tax. Strip that out and the NPAT ~$7.82m. On an enlarged shares on issue of 61m, that's 12.8cps. So current share price is ~PE 10.4 - a bit higher than 9x but isn't expensive for the growth that VOC can potentially achieve.

A free report here but you do need to register. 
http://www.microequities.com.au/admin/reports/VOC26092011.pdf

I do think this chart is interesting.


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## McLovin (10 December 2011)

skc said:


> $3.67m FX income before tax so ~$2.57m after tax. Strip that out and the NPAT ~$7.82m. On an enlarged shares on issue of 61m, that's 12.8cps. So current share price is ~PE 10.4 - a bit higher than 9x but isn't expensive for the growth that VOC can potentially achieve.




True that. Ultimately though, as you say, anything around this PE isn't expensive if they can live up to their potential.



			
				skc said:
			
		

> I do think this chart is interesting.




The companies on there (with the exception of AMM and BGL, which I think is overhyped considering what they are offering) are at more mature stages than VOC, wouldn't you say?


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## McLovin (2 February 2012)

Good first half guidance guidance out today. EBITDA and excluding FX gains and losses up 63%, revenue up 57%. No debt.


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## skc (2 February 2012)

McLovin said:


> Good first half guidance guidance out today. EBITDA and excluding FX gains and losses up 63%, revenue up 57%. No debt.




Last year they had NPAT/EBITDA ~60%, so the guidance extrapolates to a full year EPS ~15c. But with growth like these you think a PE of 14+ wouldn't be unwarranted in the right market.

Bought some at $1.53 today. $1.8 might offer some resistance/consolidation, while $2.2 is the next major level on the chart imo.


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## McLovin (2 February 2012)

skc said:


> Last year they had NPAT/EBITDA ~60%, so the guidance extrapolates to a full year EPS ~15c. But with growth like these you think a PE of 14+ wouldn't be unwarranted in the right market.




The year before NPAT/EBITDA was 45%. IMO, a company like VOC has fairly high fixed costs (relative to their own costs), ie they buy/build/lease the network and then have to sell bandwidth on it. Whether they have 1 customer or 1000 their network costs remain fairly static. It's possible that because they haven't started to earn on their dark fibre network in this half NPAT/EBITDA will be similar (or may have regressed) but as they fill out their capacity marginal cost of delivery should fall.

IMO, anyway.

After last year, 14x earnings seems like the Wonderful World of Oz!


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## skc (2 February 2012)

McLovin said:


> The year before NPAT/EBITDA was 45%. IMO, a company like VOC has fairly high fixed costs (relative to their own costs), ie they buy/build/lease the network and then have to sell bandwidth on it. Whether they have 1 customer or 1000 their network costs remain fairly static. It's possible that because they haven't started to earn on their dark fibre network in this half NPAT/EBITDA will be similar (or may have regressed) but as they fill out their capacity marginal cost of delivery should fall.
> 
> IMO, anyway.
> 
> After last year, 14x earnings seems like the Wonderful World of Oz!




I took the full year figures... NPAT = $8.11m, EBITDA = $13.48m. NPAT/EBITDA ~60%.
Agree with the operational leverage for VOC's earning. So I hope the 60% can be replicated and is conservative.

Agree that PE ~14 is pretty rare for a small cap like VOC. So I probably just have to trade the chart and wider market after $2.


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## McLovin (2 February 2012)

skc said:


> I took the full year figures... NPAT = $8.11m, EBITDA = $13.48m. NPAT/EBITDA ~60%.
> Agree with the operational leverage for VOC's earning. So I hope the 60% can be replicated and is conservative.




Sorry, I was a bit unclear, I meant the 2010 year was 45%. Hopefully the trend continues up.


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## skc (16 February 2012)

McLovin said:


> Sorry, I was a bit unclear, I meant the 2010 year was 45%. Hopefully the trend continues up.




Well... the account says NPAT/EBITDA was only 46%. If you use the underlying NPAT it's 52.7%. I don't really fully understand their account entry known as 

EPS is ~5.5c so not quite the number I was hoping for... and full year EPS of 15c is definitely not going to happen. 

Might still be a decent longer term hold for those with the patience. But a breakeven trade for me just trying to ride the upgrade..


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## McLovin (16 February 2012)

skc said:


> Well... the account says NPAT/EBITDA was only 46%. If you use the underlying NPAT it's 52.7%. I don't really fully understand their account entry known as




Known as...?? 



skc said:


> EPS is ~5.5c so not quite the number I was hoping for... and full year EPS of 15c is definitely not going to happen.
> 
> Might still be a decent longer term hold for those with the patience. But a breakeven trade for me just trying to ride the upgrade..




I agree, 15c looks pretty tough from now. It would be nice if they could reduce their FX exposure at the moment it's running at ~$65k/$0.01 move in the FX rate.

I'm going to stick with it, I think there is a lot of growth left in this company.


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## skc (16 February 2012)

McLovin said:


> Known as...??




Net foreign exchange gain/loss, note 5 of the accounts. For some resason they report it under revenue rather than separate it out after PBT.


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## McLovin (16 February 2012)

skc said:


> Net foreign exchange gain/loss, note 5 of the accounts. For some resason they report it under revenue rather than separate it out after PBT.




It's unhedged. Different accounting standard 121 v 139. That also explains why the number jumps around so much.

It would be interesting to ask management why they are unhedged, especially with the AUD so high. That being said, the $22m USD liability at December 30 is probably looking a fair bit smaller now!


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## prawn_86 (16 February 2012)

McLovin said:


> It would be interesting to ask management why they are unhedged, especially with the AUD so high. That being said, the $22m USD liability at December 30 is probably looking a fair bit smaller now!




I have actually talked to the CFO about this on a professional level. They only deal with banks (i work for a broker) but it seems the advice they are getting from their banks may be a bit off the mark...


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## McLovin (16 February 2012)

prawn_86 said:


> I have actually talked to the CFO about this on a professional level. They only deal with banks (i work for a broker) but it seems the advice they are getting from their banks may be a bit off the mark...




Speak to him again. Tell him the purpose of financial statements is to give the company the lowest cost of capital. A P&L that jumps around all the time because of unhedged FX positions is not conducive to that end.

He'll either hang up on you or give you the FX work!


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## Nutmeg (22 February 2012)

McLovin said:


> It's unhedged. Different accounting standard 121 v 139. That also explains why the number jumps around so much.
> 
> It would be interesting to ask management why they are unhedged, especially with the AUD so high. That being said, the $22m USD liability at December 30 is probably looking a fair bit smaller now!




I understand that VOC now has no debt.


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## McLovin (22 February 2012)

Nutmeg said:


> I understand that VOC now has no debt.




Correct. However, debt is a form of liability, specifically interest bearing. The company still has non-interest bearing USD and AUD liabilities.


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## craft (22 February 2012)

Nutmeg said:


> I understand that VOC now has no debt.




VOC have no Bank Debt - The debt obligation on the balance sheet is the contractual payments for the IRU's. These obligations run through to Aug 2016 and are denominated in US$




McLovin said:


> It's unhedged. Different accounting standard 121 v 139. That also explains why the number jumps around so much.
> 
> It would be interesting to ask management why they are unhedged, especially with the AUD so high. That being said, the $22m USD liability at December 30 is probably looking a fair bit smaller now!




It is my understanding that they are hedged. (refer note 32 from the annual). I cant see that they would have any foreign income. so the FX movements could only be from hedging their IRU commitments.


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## McLovin (22 February 2012)

craft said:


> It is my understanding that they are hedged. (refer note 32 from the annual). I cant see that they would have any foreign income. so the FX movements could only be from hedging their IRU commitments.




The change in the value of those hedging contracts is shown as other comprehensive income. My understanding is that the revenue item relating to FX contracts represents the change in AUD value of the unhedged portion of foreign currency denominated monetary assets and liabilities. Once an item is hedged then there is no need to account for changes in the prevailing FX rate because the rate is already locked in, hence it's accounted for below the line. Maybe I am wrong.

Wouldn't those IRU contracts need to be M-t-M each reporting period?


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## craft (22 February 2012)

McLovin said:


> The change in the value of those hedging contracts is shown as other comprehensive income. My understanding is that the revenue item relating to FX contracts represents the change in AUD value of the unhedged portion of foreign currency denominated monetary assets and liabilities. Once an item is hedged then there is no need to account for changes in the prevailing FX rate because the rate is already locked in, hence it's accounted for below the line. Maybe I am wrong.
> 
> Wouldn't those IRU contracts need to be M-t-M each reporting period?




The most that I can make of things is that the FX amounts included in the P&L must have been designated as ineffective hedges. All a bit hard to follow really. Looking at the FX contracts in the annual report, I don't see a lot of risk arising from them- seems like a legitimate attempt to hedge the IRU commitments. Best to look through the accounting treatment of FX me thinks for a fuller picture.


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## Nutmeg (24 February 2012)

craft said:


> VOC have no Bank Debt - The debt obligation on the balance sheet is the contractual payments for the IRU's. These obligations run through to Aug 2016 and are denominated in US$
> 
> 
> 
> ...




What's an IRU commitment?  And how does it impact on the balance sheet beyond being a non-interest bearing debt?


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## craft (24 February 2012)

Nutmeg said:


> What's an IRU commitment?  And how does it impact on the balance sheet beyond being a non-interest bearing debt?




Go here
http://www.asx.com.au/asx/statistics/announcements.do
read the presentations and reports for VOC – all will be revealed.


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## Nutmeg (24 February 2012)

Anyone know what's going on with VOC today?  It's share price as I write is up over 11%.


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## skc (24 February 2012)

Nutmeg said:


> Anyone know what's going on with VOC today?  It's share price as I write is up over 11%.




I am reasonably certain it is purely due to me having sold them last week.


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## craft (24 February 2012)

skc said:


> I am reasonably certain it is purely due to me having sold them last week.




What are you selling today?


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## Nutmeg (24 February 2012)

Of course, the surge in VOC's share price needn't be due to anything meaningful.  It remains seriously undervalued in my view.


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## skc (24 February 2012)

craft said:


> What are you selling today?




Lol. Sold some RQL today...


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## VSntchr (24 February 2012)

Just put an order in for 1,000,000 RQL.

LOL.

SP now up 17%!!!


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## craft (24 February 2012)

Nutmeg said:


> It remains seriously undervalued in my view.








Nutmeg said:


> What's an IRU commitment?  And how does it impact on the balance sheet beyond being a non-interest bearing debt?





? ? ?


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## Joe Blow (24 February 2012)

Nutmeg said:


> Of course, the surge in VOC's share price needn't be due to anything meaningful.  It remains seriously undervalued in my view.




Hi Nutmeg, can you please outline why you believe VOC to be undervalued?



craft said:


> What are you selling today?






skc said:


> Lol. Sold some RQL today...






VSntchr said:


> Just put an order in for 1,000,000 RQL.
> 
> LOL.
> 
> SP now up 17%!!!




Back on topic please everyone! Discussion of VOC only in this thread.


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## Nutmeg (24 February 2012)

craft said:


> ? ? ?




Perhaps my question would have been better phrased had I written: how does the IRU commitment impact on VOC's valuation.  As far as I can tell, VOC's IRU commitment is really merely the rent that it pays for the capacity on the cable that it then on-sells.  At that same time, VOC's business is precisely this renting and on-selling of capacity to end-users like Vodaphone.  In that context, it is not really a balance sheet liability capable of giving rise to a liquidity event like bank debt is - and that was the context in which this issue first arose.  My original point was simply that VOC is a stronger company now because it has no bank debt than it was when it was trading at over $3.00.


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## Nutmeg (24 February 2012)

Joe Blow said:


> Hi Nutmeg, can you please outline why you believe VOC to be undervalued?




If investors were prepared to own VOC at over $3.00 last April, are VOC's business fundamentals and prospects any less favourable now that it's trading on a P/E of 11.5, reported a 66% half year rise in NPAT, has no bank debt, has a top management team and its future prospects for growth have improved even further than they were back in April?  Of course not.  The investment case for VOC's worth at $3 last April remains just as valid then as it is now that it is trading at $1.93.  In fact, it is more so.

Of course, that is not to say that I would have bought VOC at $3.00.  At that level, it didn't then and doesn't now offer any margin of safety.  Still, if I had, I am reasonably confident that, providing I held on to it, I wouldn't lose money.


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## craft (24 February 2012)

Nutmeg said:


> Perhaps my question would have been better phrased had I written: how does the IRU commitment impact on VOC's valuation.  As far as I can tell, VOC's IRU commitment is really merely the rent that it pays for the capacity on the cable that it then on-sells.  At that same time, VOC's business is precisely this renting and on-selling of capacity to end-users like Vodaphone.  In that context, it is not really a balance sheet liability capable of giving rise to a liquidity event like bank debt is - and that was the context in which this issue first arose.  My original point was simply that VOC is a stronger company now because it has no bank debt than it was when it was trading at over $3.00.




Hi Nutmeg, The ??? were because it appeared as though you were making valuation calls without an understanding of IRU's - a pretty simple and integral part of VOC's business.

I don't think VOC has ever had much bank debt to speak of.

The IRU's are a fixed commitment and could indeed lead to a liquidity event if VOC’s revenue drops. Interestingly the same can be said about any lease and there are a lot of companies with significant lease commitments that never see anything more then a brief mention in an obscure note. You could say VOC is pretty transparent in having the IRU commitments on the balance sheet.

Ps. heard a rumour that one of the tip sheets has recently been giving it a pump, might explain why it’s having a spurt today.


----------



## McLovin (24 February 2012)

Nutmeg said:


> If investors were prepared to own VOC at over $3.00 last April, are VOC's business fundamentals and prospects any less favourable now that it's trading on a P/E of 11.5, reported a 66% half year rise in NPAT, has no bank debt, has a top management team and its future prospects for growth have improved even further than they were back in April?  Of course not.  The investment case for VOC's worth at $3 last April remains just as valid then as it is now that it is trading at $1.93.  In fact, it is more so.
> 
> Of course, that is not to say that I would have bought VOC at $3.00.  At that level, it didn't then and doesn't now offer any margin of safety.  Still, if I had, I am reasonably confident that, providing I held on to it, I wouldn't lose money.




That's fairy specious reasoning. If I follow your argument, the value of anything is what someone else is willing to pay for it. It seems as though you're confusing price with value.


----------



## Nutmeg (24 February 2012)

craft said:


> ... The IRU's are a fixed commitment and could indeed lead to a liquidity event if VOC’s revenue drops. Interestingly the same can be said about any lease and there are a lot of companies with significant lease commitments that never see anything more then a brief mention in an obscure note.




But isn't that precisely the point?  Woolworths' has significant lease commitments but the prospect that they might become liabilities capable of triggering a liquidity event is probably pretty remote, to say the least.


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## Nutmeg (24 February 2012)

McLovin said:


> That's fairy specious reasoning. If I follow your argument, the value of anything is what someone else is willing to pay for it. It seems as though you're confusing price with value.




Price is what you pay and value is what you get.  No, I appreciate the distinction.  I didn't mean to imply that VOC is worth over $3.00 because people were once prepared to pay that much for it.  I meant that VOC IS worth $3.00 on a valuation basis which encompasses some of the characteristics that I referred to earlier.  

That's my call on this stock, at any rate.    Only time will tell if I am right.


----------



## McLovin (24 February 2012)

Nutmeg said:


> But isn't that precisely the point?  Woolworths' has significant lease commitments but the prospect that they might become liabilities capable of triggering a liquidity event is probably pretty remote, to say the least.




Yeah but Woolworths doesn't have a single customer who accounts for 25% of their revenues. Apples and oranges to compare the two really.


----------



## McLovin (24 February 2012)

Nutmeg said:


> Price is what you pay and value is what you get.  No, I appreciate the distinction.  I didn't mean to imply that VOC is worth over $3.00 because people were once prepared to pay that much for it.  I meant that VOC IS worth $3.00 on a valuation basis which encompasses some of characteristics that I referred to earlier.  That's my call, at any rate.    Only time will tell if I am right.




I'm confused, is it worth over $3 or not?

Your assertion seems to be that it was changing hands at $3 on the same fundamentals in April last year it is therefore worth $3. That makes some fairly large assumption about who was buying at $3. They were largely Roger Montgomery blog readers who pushed the price up to those highs.


----------



## Nutmeg (24 February 2012)

McLovin said:


> Yeah but Woolworths doesn't have a single customer who accounts for 25% of their revenues. Apples and oranges to compare the two really.




Maybe.  But don't confuse the wood for the trees - to mix metaphors.  The point is whether VOC's IRUs constitute a real business risk.  The fact is that if you're still in the stock at a time when its IRUs look like posing a liquidity event, you've already been in the stock longer than you should.


----------



## McLovin (24 February 2012)

Nutmeg said:


> Maybe.  But don't confuse the wood for the trees - to mix metaphors.  The point is whether VOC's IRUs constitute a real business risk.  The fact is that if you're still in the stock at a time when its IRUs look like posing a liquidity event, you've already been in the stock longer than you should.




You could make that argument about any liability. 

I don't think the IRU's pose an imminent risk, even if there was sme loss of custom but I wouldn't dismiss it as not posing a liquidity risk at all.


----------



## Nutmeg (24 February 2012)

McLovin said:


> You could make that argument about any liability.
> 
> I don't think the IRU's pose an imminent risk, even if there was sme loss of custom but I wouldn't dismiss it as not posing a liquidity risk at all.




Agree.


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## robusta (15 June 2012)

Nice profit guidance and presentation.

http://www.asx.com.au/asx/research/companyInfo.do?by=asxCode&allinfo=&asxCode=voc#headlines

I still hold in mu SMSF is now my largest holding in that portfolio having taken some profits on FGE @ $6.50


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## herzy (15 June 2012)

hey I'm new to this stock and have two (quite dumb) questions - what will the effect of the recent slump in the AUD to USD have on VOC's IRU? And why is the NBN not a threat to VOC?

Thanks in advance!


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## zac (15 June 2012)

herzy said:


> hey I'm new to this stock and have two (quite dumb) questions - what will the effect of the recent slump in the AUD to USD have on VOC's IRU? And why is the NBN not a threat to VOC?
> 
> Thanks in advance!




The AUD has slumped in large due to fear in the market. Same as last September so the $AUD will definitely bounce back. Given the RBA rate cut that certainly devalued the currency a little but AUD will get back above parity.

Im not sure on Vocus but a large reason why the ASX in general isnt taking off like other markets around the world is due to the high value of the AUD. This makes Aussie goods less competitive and expensive, hence limited growth and upwards movement in the ASX.

If Vocus is a net exporter then a slump in AUD will be good for it, if its a net Importer then it will be bad. Excuse my ignorance on VOC.


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## robusta (15 June 2012)

herzy said:


> hey I'm new to this stock and have two (quite dumb) questions - what will the effect of the recent slump in the AUD to USD have on VOC's IRU? And why is the NBN not a threat to VOC?
> 
> Thanks in advance!




Will have to check but I think the US exposure is hedged anyway data centres and dark fibre networks are becoming a larger part of the business.

The NBN should be a boon for VOC; increased data centre, dark fibre and international data usage.


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## VSntchr (15 June 2012)

The new fiber that Vocus laid under the Sydney Harbor this week is sure to excite some of the HFT's, as it directly links up the ASX liquidity center!

Apparantly up to 600 customers can use the line, with most of the cost being covered after the first customer...


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## robusta (5 July 2012)

Placement and spp announced, sp off around 10% at the moment I would become interested if the sp falls below $1.70. The growth from these guys is fantastic, just need to keep a eye on cash flow and working capital.


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## robusta (12 July 2012)

Telstra have sold NZ operations to Vodafone, VOC have the data contract with Vodafone, I wonder if this will change.


----------



## herzy (12 July 2012)

robusta said:


> Telstra have sold NZ operations to Vodafone, VOC have the data contract with Vodafone, I wonder if this will change.




Sorry could you explain this in more depth?


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## robusta (12 July 2012)

herzy said:


> Sorry could you explain this in more depth?




Vocus has a contract with Vodafone NZ to supply international fibre optic data until 2014

I am not sure if the Telstra sale will result in increased traffic and revenue for Vocus. I think Vodafone NZ is still their largest customer.


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## herzy (12 July 2012)

Good point - I suppose it would. If Vodafone (including Telstra NZ) has increased demand for Vocus' services, it would make sense they service this using Vocus. Depending of course on what Telstra NZ was doing before it was sold...?


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## robusta (12 July 2012)

herzy said:


> Good point - I suppose it would. If Vodafone (including Telstra NZ) has increased demand for Vocus' services, it would make sense they service this using Vocus. Depending of course on what Telstra NZ was doing before it was sold...?




That is the problem, maybe there is a clause in the contract to use the existing provider. I have been close to buying VOC at these prices, looks like I have a bit to think about. Vodafone did extend the contract in April.


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## robusta (13 July 2012)

The bottom line for me with VOC is I need to be convinced the recent explosion in revenue is going to translate to the bottom line and fund future growth. At the moment they seem to be raising capital with some regularity.

Still thinking....


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## herzy (13 July 2012)

Worst case scenario there is a clause (seems likely imo), and vodafone needs to wait till that expires. In any case it's not bad for VOC, it's just not good in the short term per se.


----------



## ParleVouFrancois (13 July 2012)

Robusta does it matter how much capital you raise, as long as you can keep up big returns on equity (20%+). If you have a large premium being paid for your shares (say x3 equity) due to the large returns on equity on offer, then it makes sense to raise capital which will actually reduce the gap between equity and market cap cetrus paribus, presuming of course that high return of equity is maintained. 

The main bit about VOC is the dark fibre at a less than 5% utilization making big profits and revenues, still plenty of juice in the tank for increased revenues and profits from this area while they continue making cheap acquisitions in the data centre side.


----------



## robusta (16 July 2012)

ParleVouFrancois said:


> Robusta does it matter how much capital you raise, as long as you can keep up big returns on equity (20%+). If you have a large premium being paid for your shares (say x3 equity) due to the large returns on equity on offer, then it makes sense to raise capital which will actually reduce the gap between equity and market cap cetrus paribus, presuming of course that high return of equity is maintained.
> 
> The main bit about VOC is the dark fibre at a less than 5% utilization making big profits and revenues, still plenty of juice in the tank for increased revenues and profits from this area while they continue making cheap acquisitions in the data centre side.




You do make a good point I had not previously looked at capital raising that way in a growth business like this, instead I have focused on the dilution of existing shareholders.

I would still like to see signs of them generating sufficient cash flow to fund growth at a high ROE


----------



## robusta (5 September 2012)

Must admit to having a bit of trouble getting my head around the results for this business. The investor presentations show massive growth in EBITDA and underlying net profit but when I look at the cash flow it is negative. Ok then they are investing within the business for growth but the cash flow from operations is up but not by enough in my opinion. Am I missing something or is there accounting smoke and mirrors going on here?


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## McLovin (5 September 2012)

robusta said:


> Must admit to having a bit of trouble getting my head around the results for this business. The investor presentations show massive growth in EBITDA and underlying net profit but when I look at the cash flow it is negative. Ok then they are investing within the business for growth but the cash flow from operations is up but not by enough in my opinion. Am I missing something or is there accounting smoke and mirrors going on here?




Check out the change in tax paid between the two periods in OCF.


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## robusta (5 September 2012)

McLovin said:


> Check out the change in tax paid between the two periods in OCF.




Ok that looks good when you go to the cash flow buried on page 34 but when you look at the EBITDA on page one and they add back the income tax expense 2011 is a bit more than 2012. 

This should be a fantastic growth story I am just trying to work out how much growth is being translated to the bottom line. Must admit I am almost ready to throw it in the too hard basket admid the acquisitions, capital raising, and EBITDA talk muddying the waters.


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## RottenValue (5 September 2012)

My view is that you only hold this if you believe that they will be an acquisition target - the financials are not exciting and going nowhere over the past few years.  However, highly likely to be swallowed so hopefully they get a good price for shareholders!


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## McLovin (5 September 2012)

robusta said:


> Ok that looks good when you go to the cash flow buried on page 34 but when you look at the EBITDA on page one and they add back the income tax expense 2011 is a bit more than 2012.




There's a non-cash gain on FX included in last years number but a non-cash loss is included in this year's.

I tend to look through it to the underlying number.

On the surface the numbers do jump around a fair bit, but the underlying trend is pretty clear. The rest is just accounting doing it's thing.


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## robusta (18 February 2013)

Funny I thought VOC were slated to report today?


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## Tattiebinger (24 February 2013)

robusta said:


> Funny I thought VOC were slated to report today?




Hi Robusta,

They're reporting on the 28th Feb.

cheers,

T


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## VSntchr (12 April 2013)

Someone has been very excited over the last two days.
Price breaching $2.

I lost a TON on this as an investment a while back (got caught up in the data growth hype), subsequently making back a small amount through a few swing trades.

Not holding at the moment but still have it on one of my watchlists - expecting some news soon!


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## piggybank (16 September 2013)

Daily P&F update..


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## Country Lad (16 September 2013)

This one came up in a scan Friday when it broke out from a triangle in the bar chart.  I was watching it today - strong market sentiment and a fair bit of buying.  

I wasn't tempted as I need to look at its business a bit more closely to see whether it is more than more just data centres and I would also like to see a break out to a 2 year high close.

Cheers
Country Lad


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## Country Lad (19 September 2013)

Country Lad said:


> I wasn't tempted as I need to look at its business a bit more closely to see whether it is more than more just data centres and I would also like to see a break out to a 2 year high close.




I looked and it did, so I did.

I see Bell Potter has a buy recommendation in their daily report today.

Cheers
Country Lad


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## pavilion103 (19 September 2013)

My trade. Pink = trailing stop


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## McLovin (21 October 2013)

McLovin said:


> Got into VOC this week. SP has been pretty weak and I haven't filled right up on VOC yet. With data rates increasing exponentially at 9x earnings this looks like a pretty good buy. Time will tell.




And I'm out. I'm not really a believer in this, although I'm just as likely to be proven wrong! It seems like there's not much competitive advantage to these telco businesses. Still I bought at $1.40 in December 2011, so I've done almost 85% in 22 months. I can live with that. Better opportunities elsewhere. The accounts have been OK but not spectacular.


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## Country Lad (21 October 2013)

McLovin said:


> I'm not really a believer in this.................




I am ambivalent myself, so it is really a technical trade.  Still in there after nearly being stopped out and it now has one of those patterns I am partial about so we will see if it breaks up.

Cheers
Country Lad


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## McLovin (22 October 2013)

Country Lad said:


> I am ambivalent myself, so it is really a technical trade.  Still in there after nearly being stopped out and it now has one of those patterns I am partial about so we will see if it breaks up.
> 
> Cheers
> Country Lad
> ...




Good luck with it, CL.

I think I got lucky, all these junior telcos seem to be going up.


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## piggybank (12 November 2013)

Chart says it all - well nearly!!


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## piggybank (15 November 2013)

Still going north (up), closed at an ATH of $3.27. No wonder Country Lad is spending so much time on holiday with most of his recent purchases doing so well - good on him

Out of curiosity does anyone else buy the stocks he highlights on breakouts?


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## piggybank (27 November 2013)

No wonder Country Lad hasn't been around for a few days he must have gone travelling with his profit so far.... or Vocus has stuffed up his lines of communication.


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## piggybank (2 January 2014)

P&F Update:-


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## piggybank (27 February 2014)

*2014 Half Year Results Investor Presentation*:- http://stocknessmonster.com/news-item?S=VOC&E=ASX&N=785139

They look pretty good to me, but then I'm no expert.

​


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## piggybank (17 March 2014)

Vocus announces a successful completion of it's placement:- http://stocknessmonster.com/news-item?S=VOC&E=ASX&N=787901

​


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## qldfrog (18 March 2014)

which see the shareholding diluted by 13%: what you had last week, today you only got 87% of it..
And no you can not be part of it
Highway robbery IMHO..


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## rnr (7 July 2014)

News Release

Taking a break before advancing further OR is it about to trend down?


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## piggybank (28 October 2014)

Up 8.5% today to close at $5.90, having hit an ATH of $6.00 during the session. This most likely would have been attributed to the release of the Annual Report 2014 today.

The link to the report is here:- http://www.stocknessmonster.com/news-item?S=VOC&E=ASX&N=825596


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## skc (28 October 2014)

piggybank said:


> Up 8.5% today to close at $5.90, having hit an ATH of $6.00 during the session. This most likely would have been attributed to the release of the Annual Report 2014 today.




Nah. The report contains nothing new. The jump is on the back of it's proposal to merge with AMM. While VOC is the acquirer in the potential deal, it has probably put itself on the radar as well.


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## Nortorious (25 November 2014)

Hi all,

Some of you may have seen, I jumped into VOC recently with an average purchase price at $5.90. 

All the entry criteria I trade on were being hit so will be watching this with interest and hopefully adding some commentary from a technical point of view (well the technical I use and how I interpret action).

Hitting a nice intraday high at $6.29 this morning, it didn't really go on with the reach upwards. Looking at the weekly, already beating the last three weeks from a volume point of view and we are only 2 out of the 5 sessions in. I'd be expecting this to pull away from it's current price and head North but that's an expectation of mine and not a promise...

Wait and see folks


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## DocK (4 February 2015)

I've had this one on my watch list for a while, waiting/hoping for a dip.  I only have enough available capital to purchase either VOC or BOQ (which is running up to a div).  Totally different stocks, I know.  

I note that today Vocus had dropped on an overall "up" day, perhaps due to an announcement of a joint venture with Spark NZ?  I don't know if the speculated merger with AMM (which I hold) is still on the cards or not.

I'd be interested to hear a fundamentalist's opinion on this company.  

Thanks,

DocK


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## So_Cynical (6 August 2015)

Share price holding steady after the Amcom merger was all wrapped up, always good to see a little post merger rally...i imagine thats about it for telco mergers now that the Amcom and iiNet mergers are done.?


----------



## So_Cynical (14 December 2015)

Sold a few today, 330% profit ~ Amcom shares that i have held since 2011 ($1.53) the dividends just can't compate with the open profit...the whole sector bar telstra is due for a pull back, perhaps TLS as well when they announce details of the Philippines adventure.


----------



## So_Cynical (16 May 2016)

VOC through 9 dollars today, the all time highs just keep coming, one can only hope the yield follows the share price up.


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## craft (21 September 2016)

Just had myself a capitulation sandwich - hope I don't get indigestion.


Some of the factors I think influencing price and should be transient. 

A lot of VOC holders really never recognised the merger was really a MTU takeover if you looked at how the proportional ownership worked out.

MTU is not well understood generally, so VOC holders probably don’t fully recognise the value.

TPM results from yesterday

VOC directors and management selling and leaving.

Happy for MTU to be in control and happy to take a punt at this price.  Clarity over long-term management and earnings power of the combined business should clarify over the next 12 months.  

Longer term – there are still question marks for me over intensity of industry competition and hence profitability. Maybe that’s already starting to be factored in and I’m buying into the start of it????


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## skc (21 September 2016)

craft said:


> Just had myself a capitulation sandwich - hope I don't get indigestion.




Lol... is that better or worse than premature accumulation?



craft said:


> Longer term – there are still question marks for me over intensity of industry competition and hence profitability. Maybe that’s already starting to be factored in and I’m buying into the start of it????




Morgans floated a piece today that TPM gross margin could half when customers migrate from TPG's network to the NBN. It also mentioned that VOC is not actually impacted because it's already a reseller (I am not sure how correct this is).

Network access under the old Telstra copper wires was priced by ACCC on operating costs mostly, while the NBN access charges are priced to recover the capital costs. Assuming end customers can't/won't wear all the cost increases, the likes of TPG / IIN of the world will experience lower margins.

Re: competition. I am guessing the one-off NBN switch event will mean intense competition for the transition period. Providers may have to offer discounts and other incentives to sign up someone, with the hope that they'd be long term customers. I hope we won't evolve to a stage where door knockers come and try to sell me internet plans.


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## Ves (21 September 2016)

craft said:


> Just had myself a capitulation sandwich - hope I don't get indigestion.



I've got a fairly similar understanding of what has happened as yourself.   Although wasn't really as switched on about the effective takeover by MTU.

I think you'll find that most of the selling started after the big on-market sales by two of the directors.  Keen observers noticed that they were using these funds as start-up capital for another venture.

However,  the CFO resigning today was interesting.  

It could be linked to MTU cleaning the floors with their new found control...   or there could be a bit of friction after the merger....   or it could be just people using it as a good time for a clean slate now the integration is underway.   I am sure there is a story,  and there has definitely been a lot of rumours around,  but like all good speculation,  unless you are an insider,  the truth won't come out.

My view is the company can move on pretty easily from the board related events.  Shouldn't have an economic impact.

BUT -  the TPG report is very interesting.  Not so much for the 2016 numbers,  but for the 2017 forecasts.  The market had TPM/VOC on pretty hefty multiples and obviously expected heavy growth.  Clearly 7% isn't enough.  Talk of NBN margin compression etc. However,  I note that both VOC and TPM are ploughing funds into growth capex still,  and I think the market is under-stating this.   The NBN isn't any where near their whole business.  They both have extensive infrastructure. I'm seeing a bit of the old short-term pain for long-term gain,  especially in terms of TPG.  Teoh who runs the show is very well known for this and is more than happy to heavily re-invest profits into growth capex and use the depreciation as a tax-shield even if it takes years for the ROIC to ramp-up.

I can't buy any VOC at the moment,  I don't have any investible funds unless I sell something.  Life gets in the way sometimes.


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## craft (21 September 2016)

skc said:


> Morgans floated a piece today that TPM gross margin could half when customers migrate from TPG's network to the NBN. It also mentioned that VOC is not actually impacted because it's already a reseller (I am not sure how correct this is).



My thesis for my MTU investment has always been that they are the lowest cost reseller and will have a clear first mover experience in the NBN reselling world. Some of the recent purchases/mergers brought with it infrastructure which I'm not totally sure will be complementary, in competition or stranded by NBN. BUT the core lowest cost most experienced reseller thesis still holds as far as I'm currently concerned.


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## craft (21 September 2016)

Ves said:


> I've got a fairly similar understanding of what has happened as yourself.   Although wasn't really as switched on about the effective takeover by MTU.
> 
> I think you'll find that most of the selling started after the big on-market sales by two of the directors.  Keen observers noticed that they were using these funds as start-up capital for another venture.
> 
> ...




Prior to the M2 Merger, Vocus merged with Amcom. The proportional ownership out of that was Vocus 46% & Amcom 54%

The proportional ownership following the M2 Merger was M2 56% and Vocus 44%. Splitting between Original Vocus and Amcom the relevant ownership proportions are *M2 56% Amcom 24% Vocus 20%*.

Spenceley (Vocus main shareholder)  has now sold 76% of his holdings and Girst (Amcom main shareholder ) 35%. No material sales from M2 directors.


This is the makeup of the new board

David Spence: Non-Executive Chairman: Vocus origin
Craig Farrow: Non-Executive Deputy Chairman:M2 origin
Vaugh Bowan: Executive Director:M2 origin
James Spenceley: Executive Director: Vocus origin
Jon Bret: Non-Executive Director: Vocus origin
Tony Girst: Non-Executive Director: Amcom origin
Michael Simmons: Non-Executive Director: M2 origin
Rhoda Phillipo: Non-Executive Director: M2 origin


This is the make up of what I consider to be the key named Managers

*Geoff Horth: CEO: 	M2 origin*
Rick Correll: CFO: Vocus origin (resigned today)
M Callander: Chief Executive NZ: M2 origin				
S Carter: COO: M2 origin
A Jegathesan: Secretary: M2 origin


Basically it seems to me M2 are firmly in control and the CFO resignation at this point if he doesn't fit the M2 culture doesn't surprise. How much more price pressure remains as the company finds its natural shareholding base remains to be seen. Spenceley did seem to have some ardent supporters, however personally I think Bowen/Horth increasing control is a positive hence why I see this as an opportunity. Spenceley, Teoh and Bowan I think have all done a great jobs for their relevant companies as entrepreneurs in the Telco industry, but Horth as an operational CEO is an unsung hero - If he resigns I'd get nervous.


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## galumay (21 September 2016)

Just comments in general - RSP's like VOC & TPG will be under intense pressure with dropping margins with the NBN, the cost of supplying the service are much greater than the amount consumers will bear, so two things happen, firstly the RSP's grossly oversell the service, which causes congestion and consumer fury at not getting what they are paying for and of course margins drop. 

To give you an idea of the scale of the problem, the CSV charges for a 100mbps connection are over $1500 per month - so if my RSP were to provide a continuous 100mbps service to me - which is what I am paying for - they would make a massive loss! (there are other smaller costs as well.)

So RSP's run very low contention ratios, hoping like hell that not all the customers are trying to use all of the speed and date at the same time of day.

The double wammy is that at the same time users habits are changing with lots of users signing up to streaming services like Netflix which means the load on the infrastructure is quite different to when people just browsed the web and checked their email.

Its not a sector I have any interest in being invested in.


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## Ves (22 September 2016)

galumay said:


> Just comments in general - RSP's like VOC & TPG will be under intense pressure with dropping margins with the NBN, the cost of supplying the service are much greater than the amount consumers will bear, so two things happen, firstly the RSP's grossly oversell the service, which causes congestion and consumer fury at not getting what they are paying for and of course margins drop.
> 
> To give you an idea of the scale of the problem, the CSV charges for a 100mbps connection are over $1500 per month - so if my RSP were to provide a continuous 100mbps service to me - which is what I am paying for - they would make a massive loss! (there are other smaller costs as well.)
> 
> ...



Hi galumay

I think we've got a fairly similar understanding but we're coming at it from different angles.

The higher costs actually favour the big players because of their much larger customer bases.  My understanding is that because the Gov decided to make 121 Points of Interconnectivity (POIs) instead of 14 it means an ISP would need a much greater amount of connections to the network to service a client base across all areas.   As you alluded to the costs of access to each POI are very prohibitive because the data blocks are sold in large amounts  (NBN Co itself does not seem to split them into small chunks).   An ISP with a small amount of customers will simply not be profitable at some POIs because of this.   What will happen is the big players will buy the data blocks and on-sell any excess to the smaller players  (which is how "reselling" works now, it's just that there is only one wholesaler (NBN Co) and larger "middle men").

By default the cost bases of the bigger players who can buy data blocks direct from NBN Co must be cheaper than a smaller player who has to buy them from said bigger players.

Now re access:  I actually think you've got it around the wrong way.   The bigger players will split the speed up however they see fit, and at the end of the day the retail customer basically has no choice.  The bigger players will get the margins they want,  and if you want faster speeds you'll pay through the teeth for them.  The only way margins come down is through competition IMO.

The bigger players all conveniently have their own high speed networks.  For instance Amcom sits in Vocus.  Why does this matter?  Because businesses who actually need higher speeds and reliable connections will pay for it.  And they're more likely (just IMO) to go for a private player over NBN. Arguably there's probably also privacy/security benefits too.

Then there's the overseas data cables...  TPG and Vocus seem very interesting in expanding these.   Again outside the NBN network,  but necessary by default for Australia to access anything outside of its borders.  They're cash cows once you've got the scale too.

That's how I think it will play out.


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## So_Cynical (22 September 2016)

Im surprised at the sell off, VOC has significant network infrastructure that allows them to provide secure stand alone networks to business, this will compliment the NBN offering, provide what the NBN cannot - security and always on redundancy.

Holders participating in the dividend reinvestment plan will get some cheap shares, i only re entered the plan 2 weeks ago due to the SP weakness.  love cheap shares.


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## craft (22 September 2016)

galumay & Ves

The combination of your two posts are gold. 

Good discussion of industry situation. I've got nothing to add -other than to say my 'key' valuation driver now consolidation for all intents and purposes has completed is industry competition between the major four. Will it resembles bank competition or something more fierce.

I don't doubt that society will bare a profitable industry - and if it really won't NBN Co (govt) is likely to wear the subsidy because it is vital Infrastructure. Besides have you tried to get a phone out of the hands of kids - They would buy credit before they would pay for food.


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## craft (22 September 2016)

So_Cynical said:


> Im surprised at the sell off, VOC has significant network infrastructure that allows them to provide secure stand alone networks to business, this will compliment the NBN offering, provide what the NBN cannot - security and always on redundancy.
> 
> Holders participating in the dividend reinvestment plan will get some cheap shares, i only re entered the plan 2 weeks ago due to the SP weakness.  love cheap shares.




The DRP pricing period runs from 21 - 27th - no doubt it is part of the current market price dynamics. Depending on how things work out I might have to puke up a little of my capitulation sandwich to bring portfolio risk allocation to VOC back into line however based on my perception of how the DRP pricing period normally unfolds my aim will be to wait until a little after the DRP pricing period.


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## craft (22 September 2016)

craft said:


> my perception of how the DRP pricing period normally unfolds.





To expand this thinking a bit. If you wish to maintain your allocation to a company that has a DRP with a discount and your holding is large enough that your dividend allocation is big enough to sustain a VWAP Algo across the pricing period, then you can be a price insensitive seller. Its just arbitraging to lock in the DRP discount and refresh the cost base.  How much of this price insensitive selling is responsible for the spike on the CFO news? how much will it supress price over the DRP period?


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## galumay (22 September 2016)

Ves said:


> Hi galumay
> 
> I think we've got a fairly similar understanding but we're coming at it from different angles.
> 
> ...




Sort of, they are two separate issues, the mandating of 121 POI's was a disaster, and anyone in the industry knew it, but Telstra lobbied very hard on that and won the day at a cost to consumers that is yet to be fully realised. It was a disgrace. It led to the sale of Internode, (australia's best ISP), to iiNet and then the takeover of iiNet by one of the worst ISP's, TPG. Its caused a massive consolidation of the industry and its not healthy for competition.

But its quite a separate issue to the CVC charges, this is i think what you mean by 'data blocks', essentially its a charge for the bandwidth on the NBN network - and its the very high price of CVC that makes it impossible for RSP's to provide the service they are selling, to all of their customers, all of the time. Hence they run low contention ratios and customers suffer severe congestion at peak times. This effects all RSPs regardless of size, sure a bigger RSP may be able to operate with some profitibility on much lower margins, but it will affect profits significantly.



> Now re access:  I actually think you've got it around the wrong way.   The bigger players will split the speed up however they see fit, and at the end of the day the retail customer basically has no choice.  The bigger players will get the margins they want,  and if you want faster speeds you'll pay through the teeth for them.  The only way margins come down is through competition IMO.




You may be right, consumers may be the losers, but more likely it will be the RSP's, the ACCC is already looking closely at the effect of severe congestion and RSP's simply not providing what consumers are paying for, so I dont think there will be much wiggle room to increase margins. It simply wont be allowed, NBN Co and hence the Gov need the consumer take up rate to be high and for that pricing needs to be comparable with ADSL.



> The bigger players all conveniently have their own high speed networks.  For instance Amcom sits in Vocus.  Why does this matter?  Because businesses who actually need higher speeds and reliable connections will pay for it.  And they're more likely (just IMO) to go for a private player over NBN. Arguably there's probably also privacy/security benefits too.
> 
> Then there's the overseas data cables...  TPG and Vocus seem very interesting in expanding these.   Again outside the NBN network,  but necessary by default for Australia to access anything outside of its borders.  They're cash cows once you've got the scale too.
> 
> That's how I think it will play out.




I think all the existing players have some network infrastructure, the number of businesses they can supply that network to directly is small though and the NBN will be the default connection for a lot of business, to the extent that RSP's can sell their own network and infrastructure into the business and enterprise market, the margins will no doubt be better, but it still leaves a big impact from the retail consumer market. The international data pipes are a valuable cash cow, TPG must be rubbing their hands together with the network they inherited from Internode via iiNet, it was the best international network in Australia. 

All in all, interesting times in the sector, considering I am not invested in the sector, hopefully I am wrong and you see good growth in these companies!


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## craft (22 September 2016)

Wow missed this, this morning.

Only read the price sensitive flagged announcement from ACCC re next gen. Didn't bother opening the other announcement which I thought would just be a rehash of the ACCC statement yet it had an update on NBN subscription and margins in addition but wasn't marked sensitive and didn't have anything in the heading about the update???? 



> Update
> The Vocus Corporate and Wholesale business continues to perform strongly, exceeding new sales targets in Q1 FY17 and will be further strengthened with the ability to target new customer segments and markets following the integration of the Nextgen assets.
> As the roll out of the NBN gathers pace, Vocus’ Australian Consumer business will also benefit from the fibre network that the Nextgen acquisition delivers, providing connectivity to the vast majority of NBN Points of Interconnect. The Company’s NBN subscriber base has continued to grow strongly since fiscal year end with a 21.7% increase in active consumer subscribers since 30 June. The average gross margin per subscriber in dollar terms has remained constant, with NBN margins in line with bundled copper broadband margins.
> A comprehensive business performance update will be provided at or prior to the 2016 AGM following the completion of the Nextgen acquisition.


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## VSntchr (22 September 2016)

craft said:


> Wow missed this, this morning.
> 
> Only read the price sensitive flagged announcement from ACCC re next gen. Didn't bother opening the other announcement which I thought would just be a rehash of the ACCC statement yet it had an update on NBN subscription and margins in addition but wasn't marked sensitive and didn't have anything in the heading about the update????



I got lucky and only clicked the top one. Almost missed it too as I was half way to closing the ann before I noticed the trading update below.


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## Ves (23 September 2016)

galumay said:


> Sort of, they are two separate issues, the mandating of 121 POI's was a disaster, and anyone in the industry knew it, but Telstra lobbied very hard on that and won the day at a cost to consumers that is yet to be fully realised. It was a disgrace. It led to the sale of Internode, (australia's best ISP), to iiNet and then the takeover of iiNet by one of the worst ISP's, TPG. Its caused a massive consolidation of the industry and its not healthy for competition.
> 
> But its quite a separate issue to the CVC charges, this is i think what you mean by 'data blocks', essentially its a charge for the bandwidth on the NBN network - and its the very high price of CVC that makes it impossible for RSP's to provide the service they are selling, to all of their customers, all of the time. Hence they run low contention ratios and customers suffer severe congestion at peak times. This effects all RSPs regardless of size, sure a bigger RSP may be able to operate with some profitibility on much lower margins, but it will affect profits significantly.



Thanks Gal,  that's really helpful.   Looks like I have got some gaps in my understanding and I appreciate that you have pointed them out.  

Do you think the backhaul requirements for each POI would have a big impact on the viability of the smaller guys?  Surely this stuff isn't cheap?



> You may be right, consumers may be the losers, but more likely it will be the RSP's, the ACCC is already looking closely at the effect of severe congestion and RSP's simply not providing what consumers are paying for, so I dont think there will be much wiggle room to increase margins. It simply wont be allowed, NBN Co and hence the Gov need the consumer take up rate to be high and for that pricing needs to be comparable with ADSL.



Very big mess indeed.  The big telcos here are pretty powerful and seem pretty good at grabbing the politicians by the nuts (to put it crudely).  They definitely have got a lot of things they've wanted so far.  



> I think all the existing players have some network infrastructure, the number of businesses they can supply that network to directly is small though and the NBN will be the default connection for a lot of business, to the extent that RSP's can sell their own network and infrastructure into the business and enterprise market, the margins will no doubt be better, but it still leaves a big impact from the retail consumer market. The international data pipes are a valuable cash cow, TPG must be rubbing their hands together with the network they inherited from Internode via iiNet, it was the best international network in Australia.




That's possible but I'm thinking long-term that as technology improves reliable, fast internet will become more and more essential for business.  If NBN Co cannot provide it,  business has to look elsewhere IMO.  



> All in all, interesting times in the sector, considering I am not invested in the sector, hopefully I am wrong and you see good growth in these companies!



Thanks mate,  reasonably small bet for me at this point.   But I am learning heaps.


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## Gringotts Bank (23 September 2016)

Seems a bit weak technically and I don't follow the fundamentals described here.  I'm out for a loss.


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## Gringotts Bank (23 September 2016)

Gringotts Bank said:


> Seems a bit weak technically and I don't follow the fundamentals described here.  I'm out for a loss.




fkn hell.  What happens when I override my rules.


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## Klogg (28 September 2016)

I'm still playing catch up on this one. But for anyone interested in the basic structure of NBN pricing, see the following:
http://tektel.com.au/wp-content/uploads/TekTel-Report-NBN-Pricing-Explained.pdf

It's a little old, but I think the structure still applies - just the numbers may have changed.


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## galumay (28 September 2016)

Klogg said:


> I'm still playing catch up on this one. But for anyone interested in the basic structure of NBN pricing, see the following:
> http://tektel.com.au/wp-content/uploads/TekTel-Report-NBN-Pricing-Explained.pdf
> 
> It's a little old, but I think the structure still applies - just the numbers may have changed.




Yes, the structure basically remains, the pricing has changed - no RSP would make any money on those rates! (or else no one would get anything like the speed they were paying for due to horrendous congestion from the excessive contention ratios.)


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## VSntchr (6 October 2016)

craft said:


> To expand this thinking a bit. If you wish to maintain your allocation to a company that has a DRP with a discount and your holding is large enough that your dividend allocation is big enough to sustain a VWAP Algo across the pricing period, then you can be a price insensitive seller. Its just arbitraging to lock in the DRP discount and refresh the cost base.  How much of this price insensitive selling is responsible for the spike on the CFO news? how much will it supress price over the DRP period?



Interesting post Craft.
Are these kinds of intricacies something that you built into a part of your approach when you started as a trader? Or something that has become more relevant overtime with an increase in size in the investment portfolio?


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## Ves (6 October 2016)

galumay said:


> Yes, the structure basically remains, the pricing has changed - no RSP would make any money on those rates! (or else no one would get anything like the speed they were paying for due to horrendous congestion from the excessive contention ratios.)



Saw an Article in the AFR last week that the pricing will be changed again some time in 2017.  Industry consultations will be starting shortly  (that's the official line,  my view is the government has had its arm twisted for a long time).

Interesting to see how significant the changes will be,  but there has been a lot of talk that the current pricing model will put a lot of smaller ISPs out of business!  (which fits in with your comments, I think?).


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## So_Cynical (6 October 2016)

Ves said:


> Saw an Article in the AFR last week that the pricing will be changed again some time in 2017.  Industry consultations will be starting shortly  (that's the official line,  my view is the government has had its arm twisted for a long time).
> 
> Interesting to see how significant the changes will be,  but there has been a lot of talk that the current pricing model will put a lot of smaller ISPs out of business!  (which fits in with your comments, I think?).




Uncertainty = opportunity.


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## craft (6 October 2016)

VSntchr said:


> Interesting post Craft.
> Are these kinds of intricacies something that you built into a part of your approach when you started as a trader? Or something that has become more relevant overtime with an increase in size in the investment portfolio?




Just observations. I should have been selling every day to keep under the portfolio risk limits and knowing I had signed up for the DRP you soon realise the two are pretty much going to negate each other which then gets you to thinking what the big funds might be doing.

Probably got hurt a bit breaking the rules and not balancing daily because it wasn't as strong on the 28th as I thought. So above theory is not proven by this example but I've made many observations of Discount DRP pricing periods acting interestingly.

TPM gap filled to perfection today and VOC has revisited lows on low volume and then had a pretty good bounce. I'm back loaded to the brim .... Think I'm playing with fire though.


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## craft (8 October 2016)

craft said:


> TPM gap filled to perfection today and VOC has revisited lows on low volume and then had a pretty good bounce. I'm back loaded to the brim .... Think I'm playing with fire though.




VOC is not feeling right. Spent most of yesterday spewing up the previous days ‘low volume retest’ purchases.
The value I ascribe to VOC is $7.50 at the moment. But the market doesn’t give a crap about what I think especially in the short run even if I happen to be within the ball park.  Restoration of the price closer to ‘value’ doesn’t look so imminent to me anymore. I was looking for the Novemeber AGM to restore some clarity to the fundamentals and hence some early traction to appear from technical signals – but with some analysts now questioning the accounting methods and potential synergies (possibly as an excuse to bridge the gap between previous price targets and actual price) I don’t think the company guidance is going to carry a lot of weight and will largely be ignored until things are delivered.  Add Industry Competition uncertainty, NBN wholesale pricing (politics as to whether NBN has to generate a profit as a standalone accounting unit), Integration risk of recent purchases and potential market pressure to clear all ex VOC and AMM shareholder that may not be natural holders of a more retail oriented telco.

I think an extended consolidation is more likely than quick recovery. No idea of what shape that consolidation will be, so I’m trimming back to the original core holding, which I will continue to carry through – because that original investment thesis is not negated by a long term consolidation. 

I would still like to re-build the position which had been trimmed on the way up because of portfolio risk limits whilst the stock is below what I view it to be worth – but it doesn’t feel right at the moment- so at this stage I’m more happy to get it wrong and miss out than get it wrong and have to persevere through a potential extended consolidation with newly acquired high cost parcels. 

Last glimmer of hope for this being the low of the consolidation is if it can bounce again real soon, but even if it does I think we are in for a decent duration consolidation that’s probably going to have quite a few swings and some lower time frame trends. Maybe one more try here but I can imagine better opportunities to try again later – But it’s all guessing!!!!!


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## Klogg (12 October 2016)

craft said:


> Integration risk of recent purchases and potential market pressure to *clear all ex VOC and AMM shareholder* that may not be natural holders of a more retail oriented telco.




That, in combination with your previous post on M2 reverse takeover are spot-on. Grist, Spenceley and Correll all leaving, which makes the M2 takeover official.

The only thing that doesn't add up - why would Grist add 250,000 to his holdings (August 30 notification) if he was going to reliquish his board position?


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## craft (12 October 2016)

Klogg said:


> That, in combination with your previous post on M2 reverse takeover are spot-on. Grist, Spenceley and Correll all leaving, which makes the M2 takeover official.
> 
> The only thing that doesn't add up - why would Grist add 250,000 to his holdings (August 30 notification) if he was going to reliquish his board position?




That explains the weakness I felt whilst transacting in the shares. Guess where my attention is going to be today...everything should be clearer now.

Wouldn't even like to guess Girst's motivation, manoeuvring, value, trading, personal, tax who knows, and at the end of the day its not really important to the business performance.


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## ROE (12 October 2016)

http://www.afr.com/street-talk/vocu...owing-failed-leadership-spill-20161011-gs068r

Been following the stock but haven't bought just observing for now


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## craft (12 October 2016)

Good to see that Spence is on board – I suspected this allegiance because of his background (Ozemail, Commander etc) but he has spent some time in VOC so wasn’t sure.

Spence is also a director in another company I have an interest in so its pleasing to see him making what I think is appropriate moves.

Interesting that Spencely was requested to resign. For me it’s good that this is now definitive.

The merger of equals was very unequal; Effectively Spencely and Grist failed to get minority VOC shareholders a control premium for VOC. But they timed their personal sales prior to the dawning of lack of control pretty well.  Interestingly no damage to their reputations from the faithful who are jumping ship in fear of MTU management. Reality - MTU management is far smarter!! Yep we will have to endure some market weakness (opportunity) whilst VOC/AMM faithful depart but MTU shareholders got control of VOC without paying a single cent of control premium - If MTU had launched a takeover of VOC we would have had to pay a lot more.


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## craft (12 October 2016)

Hers some details traditional VOC and AMM should maybe consider before selling. 

MTU listed 29/10/2004 at 25 cents. Until they delisted as part of the VOC deal, the share price increased at a compound rate of more than 40% p.a. for 11 Years

They paid out ~$1.40 in fully franked dividends.

They got VOC/AMM without having to pay a control premium.

Yes it is different management you will have to get used to but the VOC/AMM assets are still the same and the operational leverage is increased by the combination of MTU assets and sales force.

Proven (longish term) wealth creative management team for shareholders with vast experience in business combination implementation. Actually Bowan the entrepreneur passing the CEO reigns to Horth for operational implementation was the makings of MTU. VOC doesn’t need three entrepreneurs in the form of Grist, Spenceley and Bowan as industry consolidation has just about run its course - It does need a good operational CEO.

Actually second thoughts – VOC/AMM management are jumping a sinking ship – you had better follow straight away at any price before you lose the lot! Sell Sell Sell.  The technical are down down down, Just a matter of time before its added to Bogo's list of failed stocks.

Not to mention potential industry competition and profitability developments are a real risk.


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## dpgrubesic (12 October 2016)

Never a good sign when the top level is jumping ship


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## Klogg (13 October 2016)

craft said:


> H
> Yes it is different management you will have to get used to but the VOC/AMM assets are still the same and the operational leverage is increased by the combination of MTU assets and sales force.




On this point - I'm looking for utilisation rates on their fibre network, but can't seem to find it. They reported a 76% utilisation rate for data centers in the FY16 1H presentation, but nothing on the network recently.

The most recent I can find is a 14.5% utilisation rate (ridiculously low) in FY15 1H on their australian fibre network. With these assets, they could essentially JUST focus on selling/maintaining the network and really crank up the operational leverage. Pair this with the Monthly Recurring Revenue figures quoted in the recent Investor Presentation in Corporate sales and one can understand why the sales team is increasing by ~35%...

It seems whilst Vocus were building/acquiring their network, they weren't making the most out of it... (or I'm mis-reading something). The M2 team must be licking their lips.


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## craft (13 October 2016)

Klogg said:


> On this point - I'm looking for utilisation rates on their fibre network, but can't seem to find it. They reported a 76% utilisation rate for data centers in the FY16 1H presentation, but nothing on the network recently.
> 
> The most recent I can find is a 14.5% utilisation rate (ridiculously low) in FY15 1H on their australian fibre network. With these assets, they could essentially JUST focus on selling/maintaining the network and really crank up the operational leverage. Pair this with the Monthly Recurring Revenue figures quoted in the recent Investor Presentation in Corporate sales and one can understand why the sales team is increasing by ~35%...
> 
> It seems whilst Vocus were building/acquiring their network, they weren't making the most out of it... (or I'm mis-reading something). The M2 team must be licking their lips.




Klogg you point is too close to the key driver for public discussion NIMBI

Lets talk about implementation risks instead or better still conspiracy theories!


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## Ves (13 October 2016)

Klogg said:


> The most recent I can find is a 14.5% utilisation rate (ridiculously low) in FY15 1H on their australian fibre network. *With these assets, they could essentially JUST focus on selling/maintaining the network and really crank up the operational leverage*. Pair this with the Monthly Recurring Revenue figures quoted in the recent Investor Presentation in Corporate sales and one can understand why the sales team is increasing by ~35%...



Yep,  very long-term this is what will happen.  But since there is a big shortage of government funding for vital infrastructure companies like Vocus will keep building additional networks under cities and cable connections under the sea.  Once they're built they cost bugger all to maintain.  I assume because interest rates are so low they're very easy to finance,  and the cheap capital will let these companies ride out the ramp up period until the operational leverage starts kicking in.   Also having the retail cash cows from the MTU tie-up will definitely help servicing the balance sheet.

The big question for me is -  since the old Vocus / AMM board members are not going to be as big a part going forward,   how does this impact the infrastructure side of the business?   I assume they see this as their major growth avenue, especially after doubling down with the NextGen acquisition.  Do the MTU board members agree with this or has the focus changed again?


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## craft (13 October 2016)

Ves said:


> The big question for me is -  since the old Vocus / AMM board members are not going to be as big a part going forward,   how does this impact the infrastructure side of the business?   I assume they see this as their major growth avenue, especially after doubling down with the NextGen acquisition.  Do the MTU board members agree with this or has the focus changed again?




NextGen filled a missing link cheaper than it could be built for.  I hope they don't continue to build excessively, Fill the gaps and niches yes but beyond that the chance of building eventual uneconomic infrastructure has got to be high from this point.

Bit of a problem of the commons though because if others continue to build it will still impact margins even if you don't play, but at least you wont have the eventual write offs as well.


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## Ves (13 October 2016)

craft said:


> NextGen filled a missing link cheaper than it could be built for.  I hope they don't continue to build excessively, Fill the gaps and niches yes but beyond that the chance of building eventual uneconomic infrastructure has got to be high from this point.
> 
> Bit of a problem of the commons though because if others continue to build it will still impact margins even if you don't play, but at least you wont have the eventual write offs as well.



Also good points - there is always the potential for over-stretching their networks.

Whether it be MTU, AMM or VOC,  these guys have always been super-active either building something or buying something.   I don't see it as being in their nature to sit on their hands waiting years for their network utilisation to grow  (as much as this might be a decent option).   Eyes wide open in that respect.


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## craft (13 October 2016)

Ves said:


> Whether it be MTU, AMM or VOC,  these guys have always been super-active either building something or buying something.   I don't see it as being in their nature to sit on their hands waiting years for their network utilisation to grow  (as much as this might be a decent option).   *Eyes wide open in that respect*.




Yep - two of the main drivers have now gone though. Hopefully this was the issue!


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## Klogg (13 October 2016)

Ves said:


> Yep,  very long-term this is what will happen.  But since there is a big shortage of government funding for vital infrastructure companies like Vocus will keep building additional networks under cities and cable connections under the sea.  Once they're built they cost bugger all to maintain.  I assume because interest rates are so low they're very easy to finance,  and the cheap capital will let these companies ride out the ramp up period until the operational leverage starts kicking in.   Also having the retail cash cows from the MTU tie-up will definitely help servicing the balance sheet.
> 
> The big question for me is -  since the old Vocus / AMM board members are not going to be as big a part going forward,   how does this impact the infrastructure side of the business?   I assume they see this as their major growth avenue, especially after doubling down with the NextGen acquisition.  _Do the MTU board members agree with this or has the focus changed again?_






> _Yep - two of the main drivers have now gone though. Hopefully this was the issue!_




Exactly my thoughts on the subject - I'm just a little slower than the two of you :
Sifting through some media noise, I read this today:
"On the available evidence, the schism doesn’t suggest a strategic difference of opinion between the Vocus/Amcom and M2 camps. The former was oriented to fixed infrastructure, the latter towards the retail (consumer and small business) segments."

Not sure how reliable this is, but it would seem the infrastructure vs retail/sales was the problem, as suggested. Also backed up by this.


IIRC, the NextGen acquisition was quoted to cost over $1bn in capex, yet they bought it for $800m odd, with roughly $20m options on other projects (Darwin to Port Headland and Perth to Singapore). Seems like a no-brainer if you can wrap it up in the services Vocus offer.


Finally on the private fibre network - I really feel that most underestimate how critical data transfer is becoming. What was initially housed in company-owned Data Centers (DCs) is being farmed out to AWS/Microsoft DCs at an insanely fast pace (or at a minimum to 3rd party DCs that are leased, due to economies of scale) - the growth in cloud services shows this (see ASZ, DTL, RHP, etc.). The second level impacts then move out to telecommunications and data transfer requirements. 
What's more, this gets coupled with software development that evolves quite easily to allow for the increased limits in data transfer, memory availability and load-balancing between multiple sites with ease (basic AWS/Azure JSON templates allow for this).

Of the clients I've worked with, none would even consider putting up with the contention rates proposed by the current NBN pricing (if RSPs are to make a profit, that is). They'll gladly pay up thousands extra to have the right connection - it hits productivity too hard otherwise.


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## Ves (13 October 2016)

Klogg said:


> Finally on the private fibre network - I really feel that most underestimate how critical data transfer is becoming. What was initially housed in company-owned Data Centers (DCs) is being farmed out to AWS/Microsoft DCs at an insanely fast pace - the growth in cloud services shows this (see ASZ, DTL, RHP, etc.). The second level impacts then move out to telecommunications and data transfer requirements.
> What's more, this gets coupled with software development that evolves quite easily to allow for the increased limits in data transfer, memory availability and load-balancing between multiple sites with ease (basic AWS/Azure JSON templates allow for this).
> 
> Of the clients I've worked with, none would even consider putting up with the contention rates proposed by the current NBN pricing (if RSPs are to make a profit, that is). They'll gladly pay up thousands extra to have the right connection - it hits productivity too hard otherwise..



Thanks!   This is essentially my thesis for the infrastructure stuff.  It's sad that we live in a world where the Government infrastructure that isn't already finished (NBN) is basically redundant for a lot of corporations. It is what it is I guess.


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## Klogg (13 October 2016)

Ves said:


> Thanks!   This is essentially my thesis for the infrastructure stuff.  It's sad that we live in a world where the Government infrastructure that isn't already finished (NBN) is basically redundant for a lot of corporations. It is what it is I guess.




Very true - although if they're willing to take a hit on pricing, it will definitely be usable.

On a completely separate note, I do wonder what the 5G rollout will do once it's ready to go. Telstra released a note stating they achieved *20Gbps* on their testing. (Running a speedtest on my phone, I just got 19.5Mbps... That's 1000 times the speed! Also a lot of Netflix.

It's a while away, but the backhaul for that also needs to come from somewhere.


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## Klogg (14 October 2016)

Klogg said:


> IIRC, the NextGen acquisition was quoted to cost over $1bn in capex, yet they bought it for $800m odd, with roughly *$20m options* on other projects (Darwin to Port Headland and Perth to Singapore). Seems like a no-brainer if you can wrap it up in the services Vocus offer.




Just clarifying my previous mistake. They're not optional, but conditional payments. NWCS payments come to $54m AUD, ASC to 27m AUD


----------



## andy777 (14 October 2016)

Hi fellow VOC holders/watchers and more,

I just wanted to introduce myself and I hope you don’t mind if I post on here occasionally (after reading your posts for a couple of weeks I feel like I have some understanding of each of your investment philosophies).  I have been posting a little under the same user name on HotCopper and put a couple of ideas on Shareidea under my email andrew.mason115@gmail.com .  I have found some conversations I have had with other posters to be incredibly useful.  Posters I listen to on HC include: Madamswer, Klogg, Travelightor, MarsC and Eternalgrowth.  Klogg has been very helpful and suggested I come and have a look at ASF.  In particular he commended a few posters to me and I have found your little group to be incredibly insightful (craft, Klogg, Ves, McLovin, galumay, skc and more).  A big thanks to Klogg for suggesting this group of excellent posters!

A bit about myself…….. I would label myself a ‘value investor’ in that I am attempting to buy with a margin of safety and aim to hold for a number of years.  I have been closely investigating TPG over a number of weeks.  However, the valuation differential became too great for me to ignore so I bought VOC a couple of days ago (did post on HC with a brief summary of my hypothesis after the purchase).  There may be other stocks we overlap on and if anyone is interested in a complete list of my holdings just flick me an email.

Lastly, I realise my experience is but a fraction of the many great posters on here.  Hopefully I can add some small value – I do spend inordinate amounts of time reading announcements/reports.  At 34 years of age there may be a few tricks I can learn yet! 

Again thanks for the time and effort you all put into your posts, I have been able to take significant value away from this forum.

PS. I have been investing for about 3.5 years now and only recently have HC and ASF come to my attention.  Many posts were contrary to my own investing practice and if I hadn’t found the group mentioned on HC and your group on ASF I would have given up on these forums.

Andrew


----------



## Ves (14 October 2016)

Hi Andy

Welcome aboard.   We seem to follow the same group of posters on hotcopper  (I post there infrequently as 'vesupria') but I do lurk quite a lot.

Whilst the conversation probably doesn't move nearly as fast over here on ASF,  the platform I find is very good for posters who like to make more detailed contributions without having them buried under mountains of speculation / gossip about intra-day movements  (the kind that has nothing to do with robust technical analysis).


----------



## andy777 (16 October 2016)

Ves said:


> Hi Andy
> 
> Welcome aboard.   We seem to follow the same group of posters on hotcopper  (I post there infrequently as 'vesupria') but I do lurk quite a lot.
> 
> Whilst the conversation probably doesn't move nearly as fast over here on ASF,  the platform I find is very good for posters who like to make more detailed contributions without having them buried under mountains of speculation / gossip about intra-day movements  (the kind that has nothing to do with robust technical analysis).




Thanks Ves, looking at your holdings (or past holdings) it seems that although we probably only overlap on a couple, our target companies and what we consider investable seem similar.  I mainly lurk on HC as well!  Yep not too worried about intra-day movements either, well unless they are 30% or more.  Purely FA myself, but I am interested in how you guys use TA as I know some of you have had success here.

Just wondering if you have been looking at TPG* as well.  It doesn't seem to have much of a following amongst this group but does seem attractive on an operational cash flow basis.  Just running some numbers but as is typical of a SOL related company, earnings seem rather understated (i.e. strong operational cash flows and high capex that makes earnings look significantly lower when really that money is going towards building future profitability). 

* Only own VOC at this stage, but may look at adding TPG depending on price


----------



## dpgrubesic (18 October 2016)

Anyone else think now is a good time to whilst the price is below 6$? 

ASX podcast seem to rate it and it is probably due for a rebound? 

David out...


----------



## So_Cynical (18 October 2016)

dpgrubesic said:


> Anyone else think now is a good time to whilst the price is below 6$?
> 
> ASX podcast seem to rate it and it is probably due for a rebound?
> 
> David out...




Yep but 5.50 was better, may never see that again though, a few days makes such a difference sometimes.


----------



## Klogg (21 October 2016)

Interesting piece on the repricing of CVC charges for the NBN (at the end of the article):
http://www.theaustralian.com.au/bus...s/news-story/323f3e476c91c45a495c2ae8d8059f8d



> NBN Co boss Bill Morrow telling a senate estimates committee on Tuesday that the current model will be revised next year and CVC prices could drop as low as *$10 per unit* as data usage ramps up. Retail service providers on the NBN have been paying as high as *$17.50 per megabits per second* under the current pricing structure.


----------



## So_Cynical (3 November 2016)

So_Cynical said:


> Yep but 5.50 was better, may never see that again though, a few days makes such a difference sometimes.




3 Weeks can make even more difference  down to 5.24 today, back to where we were in mid 2015 during the Amcom Merger, so the market is basically saying that AMM & MTU are worthless? i know some new shares were issued to fund the mergers but this price level seems a little over done..

FY15 revenue 149m ~ FY16 revenue 830m yet the SP is the same, dude thats crazy.
~


----------



## skc (3 November 2016)

So_Cynical said:


> 3 Weeks can make even more difference  down to 5.24 today, back to where we are in mid 2015 during the Amcom Merger, so the market is basically saying that AMM & MTU are worthless? i know *some new shares *were issued to fund the mergers but this price level seems a little over done..
> 
> FY15 revenue 149m ~ FY16 revenue 830m yet the SP is the same, dude thats crazy.
> ~




They issued a few more new shares than just "some".

AMM was taken over by issuing ~125m new shares.
MTU was taken over by issuing 300m new shares.
And with NextGen they issued ~60m new shares.

Today's quoted shares on issue = ~620m. Before AMM it would be ~135m. There are probably small issuance along the way (like executive bonus), but going to ignore them for now.

So AMM and MTU are still worth quite a lot...


----------



## So_Cynical (3 November 2016)

skc said:


> They issued a few more new shares than just "some".
> 
> Today's quoted shares on issue = ~620m. Before AMM it would be ~135m.
> 
> So AMM and MTU are still worth quite a lot...




Ok thanks, the 2014 Annual report says about 110 million shares on issue..

Shares on issue up 555% pre Amcom, revenues up 885% from same (2014) 

Interesting.


----------



## Klogg (29 November 2016)

It seems the market has taken this at face value and assumed, given the EBITDA guidance of $430-450m, that there has been no growth in the business.

Not so sure that's the case... the share of NBN subscribers for the quarter is impressive.

Will take a look at the announcement in more detail.


----------



## McLovin (29 November 2016)

Klogg said:


> It seems the market has taken this at face value and assumed, given the EBITDA guidance of $430-450m, that there has been no growth in the business.
> 
> Not so sure that's the case... the share of NBN subscribers for the quarter is impressive.
> 
> Will take a look at the announcement in more detail.




It doesn't look that bad to me. Maybe expectations running ahead of reality, but the long view hasn't really changed. I've been sitting on the sidelines waiting for a chance to get in and never thought I'd be able to with a price beginning with 4.

Of course I first got in this at $1.40 and then out at $2.20, but we won't mention that.


----------



## Klogg (29 November 2016)

McLovin said:


> It doesn't look that bad to me. Maybe expectations running ahead of reality, but* the long view hasn't really changed.* I've been sitting on the sidelines waiting for a chance to get in and never thought I'd be able to with a price beginning with 4.
> 
> Of course I first got in this at $1.40 and then out at $2.20, but we won't mention that.




I'm averaging about $5.35ish... but very comfortable with the holding.

There are some minor concerns, for example the NextGen customer cancellations. But it's rare you a compay with this sort of operating leverage and ability to reinvest in itself, at this price. 

It's interesting that they released the average margin per user for NBN (34%) and copper (39%). I haven't seen them call it out in previous presentations.


----------



## galumay (29 November 2016)

Klogg said:


> I'm averaging about $5.35ish... but very comfortable with the holding.
> 
> There are some minor concerns, for example the NextGen customer cancellations. But it's rare you a compay with this sort of operating leverage and ability to reinvest in itself, at this price.
> 
> It's interesting that they released the average margin per user for NBN (34%) and copper (39%). I haven't seen them call it out in previous presentations.




The margin on NBN is hard to believe, knowing what the fixed wholesale costs are! I guess it shows just how hard they oversell the product, contention ratios must be shocking to achieve that. 

I am probably going to strongly regret not taking a position at current prices, but I cant get past my concerns with profitibility in the sector and the very poor business management of some of the businesses they have accumulated.

In the end I would rather stick with my strategy and conviction and miss some opportunities, and I think this whole sector falls into that category for me!


----------



## So_Cynical (29 November 2016)

In with super fund @ $4.81 ~ hold in all portfolios now, average price of $1.38 in my main portfolio 

UBS rate VOC as a BUY with a target of $6.80
~


----------



## Miner (29 November 2016)

So_Cynical said:


> In with super fund @ $4.81 ~ hold in all portfolios now, average price of $1.38 in my main portfolio
> 
> UBS rate VOC as a BUY with a target of $6.80
> ~




SC
It is a great day indeed for VOC buyers.
UBS prediction was before today's trading update.
I am sure all fund managers are first advising their existing clients what to do before correcting their stands in public.
What do you reckon ?

Extract from Motley Fool (much before today's announcement, however) was VOC SELL.
(Joe - I am within copyright provision here so don't flog me with infraction !!) 

Foolish Bottom Line

Both Vocus and TPG are high-quality businesses. But the industry is showing signs of maturity. We like the management teams. We think the companies are built to last. We’re parting company regretfully, but we’re doing so because we just don’t think the valuations make sense at the current price. These are companies we’d happily add back to the Share Advisor scorecard should the market become seriously pessimistic. But Mr. Market is offering us a price that we’d be silly to refuse. So, we recommend you Sell both Vocus and TPG.


----------



## So_Cynical (29 November 2016)

Miner said:


> SC
> It is a great day indeed for VOC buyers.
> UBS prediction was before today's trading update.
> I am sure all fund managers are first advising their existing clients what to do before correcting their stands in public.
> What do you reckon ?




UBS BUY is dated today with the heading AGM trading update, tomorrow may be another story - i generally couldn't give a toss about ratings just noticed it when logged into the super account trading page and thought it worth sharing considering the plunging SP.


----------



## Klogg (29 November 2016)

galumay said:


> The margin on NBN is hard to believe, knowing what the fixed wholesale costs are! I guess it shows just how hard they oversell the product, contention ratios must be shocking to achieve that.
> 
> I am probably going to strongly regret not taking a position at current prices, but I cant get past my concerns with profitibility in the sector and the very poor business management of some of the businesses they have accumulated.
> 
> In the end I would rather stick with my strategy and conviction and miss some opportunities, and I think this whole sector falls into that category for me!




Surprisingly, they're reporting 'improving' customer satisfaction on NBN (see slide about the churn rate). 

More surprisingly, the margins on UFI vs Copper (NZ) are virtually the same... ~41% each.  ARPU is also 10% higher on UFI vs copper


I must say, I'm a little surprised by the NextGen EBITDA hit.


----------



## JTLP (29 November 2016)

Plumbing the days low now on some intense selling: $4.41. Broker news starting to filter out? 

Also, they didn't mention anything on the dividend side...

Make that $4.35


----------



## Klogg (29 November 2016)

FWIW - I just listened to the AGM, and the overall tone from Shareholders during question time was hugely negative. 
The three main items, which I considered short-term(ish) were:

- Outage on the Telstra provisioning platform for copper broadband connections. It slowed on-boarding of customers and impacted performance
- NextGen is under-performing relative to what their due diligence showed, $60m actual compared to $90m estimated annualized EBITDA (never mind they bought the entire network for replacement cost). However, a nice to know - it is sitting with 90% of its capacity still available. Huge room for growth.
- Amortization of customer contracts and software worth ~$100m  (Somewhat expected?)


----------



## galumay (29 November 2016)

NVM


----------



## Klogg (29 November 2016)

galumay said:


> NVM




The operating leverage and reinvestment opportunities are attractive to me. Network is very under-utilised, fixed cost base and the demand to sell into. It does assume growth which is not always wise, but the demand definitely exists.

I agree, the accounts are very messy.

EDIT: Edited my quote to match galumay's post lol


----------



## galumay (29 November 2016)

Klogg said:


> The operating leverage and reinvestment opportunities are attractive to me. Network is very under-utilised, fixed cost base and the demand to sell into. It does assume growth which is not always wise, but the demand definitely exists.
> 
> I agree, the accounts are very messy.




Thanks for your thoughts Klogg, I deleted the post because the more I tried to crunch the combination of last years reported results and the figures from the update, the less confidence I had in them being in any way meaningful!

Now I am stepping back and taking a really big picture view and it just seems a lot would have to go horribly wrong for the underlying value of this company to be truly represented by a price sub $4.50.

So in summary I am swing back to a view of taking a position at the current price!


----------



## Klogg (29 November 2016)

galumay said:


> Thanks for your thoughts Klogg, I deleted the post because the more I tried to crunch the combination of last years reported results and the figures from the update, the less confidence I had in them being in any way meaningful!
> 
> Now I am stepping back and taking a really big picture view and it just seems a lot would have to go horribly wrong for the underlying value of this company to be truly represented by a price sub $4.50.
> 
> So in summary I am swing back to a view of taking a position at the current price!




Remember in last year's reports that:
- M2 came into play in Feb
- Amcom merger was still in the process of settling down
- Nextgen networks wasn't in the picture

Makes it very messy


----------



## Miner (30 November 2016)

So_Cynical said:


> UBS BUY is dated today with the heading AGM trading update, tomorrow may be another story - i generally couldn't give a toss about ratings just noticed it when logged into the super account trading page and thought it worth sharing considering the plunging SP.




Thanks SC for the time line of UBS post. I sold out VOC from my super fortunately at a good margin few months back. 
Did some gamble to buy VOC today to  trade . But if the price comes to $4 tomorrow I will be in deep xxxx


----------



## So_Cynical (30 November 2016)

Miner said:


> Did some gamble to buy VOC today to  trade . But if the price comes to $4 tomorrow I will be in deep xxxx




Give it a few weeks/months to settle, will be fine...or not.


----------



## Triathlete (30 November 2016)

Maybe Vocus will become a good turnaround story in the next 12 months...time will tell though....


Last updated 29/11/2016.

We retain a high conviction view that the business will meet our Star Growth Stock criteria in the coming twelve months, although we have slightly reduced our forecasts in the current year to reflect its most recent update. 

We have also updated our future year forecasts as the business has provided guidance for the merged entity for the first time, giving an insight into the dynamics and economics of the merged entity. 

We continue to cover VOC as a Borderline Star Growth Stock with an adjusted Lincoln Valuation of $9.36.

 We reiterate the attractive opportunity presented by its current price volatility, as the company navigates a period of negative sentiment against it, in spite of guiding for a sound set of fundamentals.

 14 day free membership... www.lincolnindicators.com.au


----------



## galumay (30 November 2016)

Triathlete said:


> Maybe Vocus will become a good turnaround story in the next 12 months...time will tell though....
> 
> 
> Last updated 29/11/2016.
> ...




Its the kiss of death when the professional spruikers are putting their spin on it so strongly!


----------



## Triathlete (30 November 2016)

galumay said:


> Its the kiss of death when the professional spruikers are putting their spin on it so strongly!




Yes, you have a point..!

That is why in my case anyway I always wait until the technical's support that view currently it does not.


----------



## JTLP (30 November 2016)

Smashed again today. Anyone dipping in again?


----------



## notting (30 November 2016)

JTLP said:


> Smashed again today. Anyone dipping in again?




Goldman thinks it's a buying opportunity. 
However, you'd want to wait for a turn at least.
further, it's still running at a somewhat confident PE of 23 ish.  
So not cheap if it's becoming an infrastructure from a growth much sooner than speculated.
Every one loved it! Not now


----------



## McLovin (30 November 2016)

notting said:


> Goldman thinks it's a buying opportunity.
> However, you'd want to wait for a turn at least.
> further, it's still running at a somewhat confident PE of 23 ish.
> So not cheap if it's becoming an infrastructure from a growth much sooner than speculated.
> Every one loved it! Not now




That's an historical PE that doesn't take in to account the acquisitions of NextGen or MTU. It's pretty meaningless given the transformation of the company in the last 12 months. Underlying NPAT for FY17 is forecast at $205m-$215m.


----------



## Klogg (30 November 2016)

McLovin said:


> That's an historical PE that doesn't take in to account the acquisitions of NextGen or MTU. It's pretty meaningless given the transformation of the company in the last 12 months. Underlying NPAT for FY17 is forecast at $205m-$215m.




I have to ask - am I missing something here?

I understand the forecast disappointed, as did NextGen and the fact that its skewed to the 2H... but this seems well and truly overdone.

At current price of $4.10, that's a MC of $2.54bn, with underlying earnings about $210m. That's just over 12 times for a company that has ample opportunity to reinvest its earnings, not to mention the underutilisation of current networks.


----------



## notting (30 November 2016)

Klogg said:


> I have to ask - am I missing something here?
> 
> I understand the forecast disappointed, as did NextGen and the fact that its skewed to the 2H... but this seems well and truly overdone.
> 
> At current price of $4.10, that's a MC of $2.54bn, with underlying earnings about $210m. That's just over 12 times for a company that has ample opportunity to reinvest its earnings, not to mention the underutilisation of current networks.




How much have they increased their debt in order to buy all this growth givin capital raisings will be priced into that I supose?


----------



## Klogg (30 November 2016)

notting said:


> How much have they increased their debt in order to buy all this growth givin capital raisings will be priced into that I supose?




Fair question. But debt is sitting at just under 2* EBITDA. They even go through covenants on the AGM recording and none of them are near being breached.

It's on the higher end of what I prefer, but they could cover that with their eyes closed.


----------



## McLovin (30 November 2016)

Klogg said:


> I have to ask - am I missing something here?
> 
> I understand the forecast disappointed, as did NextGen and the fact that its skewed to the 2H... but this seems well and truly overdone.
> 
> At current price of $4.10, that's a MC of $2.54bn, with underlying earnings about $210m. That's just over 12 times for a company that has ample opportunity to reinvest its earnings, not to mention the underutilisation of current networks.




I'm scratching my head too, Klogg. OK NG is disappointing, but EBITDA is forecast to be $20m lower and MC has fallen $1.1b. Even if the company stood still, synergies (yes, yes I know!) alone would give it 10%+ NPAT uplift in FY18 from FY17. The debt is serviceable, no problems there and the underlying business is growing. Even looking at the CAPEX profile, it's pretty light and the bulk of it is growth capex which is driven by customer demand, not build it and they will come demand.

The accounts are a bit of a mess because of all the corp activity, but still...


----------



## McLovin (30 November 2016)

Klogg said:


> Fair question. But debt is sitting at just under 2* EBITDA. They even go through covenants on the AGM recording and none of them are near being breached.
> 
> It's on the higher end of what I prefer, but they could cover that with their eyes closed.




The revenue profile for this business is pretty stable too. No one is canceling their internet subscription because the economy is tanking.


----------



## Klogg (30 November 2016)

McLovin said:


> I'm scratching my head too, Klogg. OK NG is disappointing, but EBITDA is forecast to be $20m lower and MC has fallen $1.1b. Even if the company stood still, synergies (yes, yes I know!) alone would give it 10%+ NPAT uplift in FY18 from FY17. The debt is serviceable, no problems there and the underlying business is growing. Even looking at the CAPEX profile, it's pretty light _and the bulk of it is growth capex which is driven by customer demand, not build it and they will come demand._
> 
> The accounts are a bit of a mess because of all the corp activity, but still...




OK, so it's not just me.

Although, on your point (in italics) - in the AGM, management didn't really seem keen on emphasizing that point. They had a bunch of angry shareholders (I don't know why, but they seemed upset...), but they kept to the presentation. They only mentioned this when it came to the Darwin>Port Headland cable project (NWCS?)

I guess I'll just file it away for now and come back later. I've done all I can to find any mistakes I may have made.





> The revenue profile for this business is pretty stable too. No one is canceling their internet subscription because the economy is tanking.




My thoughts exactly. There might be some corporate customers reducing the size of the internet plan and/or data center footprint, but nothing drastic.



As an aside - I'm sure the Teaminvest staff just ask questions so they can announce they're from TeamInvest. Shameless self-promotion in question time, but it made me laugh

Thanks again, McLovin


----------



## McLovin (30 November 2016)

Klogg said:


> OK, so it's not just me.
> 
> Although, on your point (in italics)




When you quote a post it's all in italics, so you'll need to be a little more specific.




Klogg said:


> As an aside - I'm sure the Teaminvest staff just ask questions so they can announce they're from TeamInvest. Shameless self-promotion in question time, but it made me laugh




Was that the South African bloke who wouldn't shut up? Talk about grandstanding.


----------



## Klogg (30 November 2016)

McLovin said:


> When you quote a post it's all in italics, so you'll need to be a little more specific.



Haha, wow... So much fail - sorry. 

I meant this:
_Even looking at the CAPEX profile, it's pretty light and the bulk of it is growth capex which is driven by customer demand, not build it and they will come demand._





McLovin said:


> Was that the South African bloke who wouldn't shut up? Talk about grandstanding.




That's the guy!


----------



## galumay (30 November 2016)

I pulled the pin this morning, after going thru a lot of internal discussions overnight along the lines of you guys (McLovin & Klogg), I have some other concerns from an operational and management point of view, M2 is the WORST company to deal with, they almost make Telstra look competent, and as discussed previously the NBN margins are pure creative accounting - in the sense that they are calculated by specifically not delivering the service paid for - and the shadow of the ACCC hangs over that problem for all telcos in our market.

In the end I just couldn't make a compelling argument for VOC remaining at a price of low $4 for long, so I took a position even though its not a sector I had any great interest in being invested in. 

Its interesting the sort of reactions to the slightest bad news in the current markets, not sure if its a function of the volatility, or the general world uncertainty, but we have seen it a bit recently. The reaction to the update from SDI recently was similar - I think Mr Market is very nervous and flighty at the moment, this does create some interesting opportunities like VOC this week!


----------



## Klogg (30 November 2016)

galumay said:


> I pulled the pin this morning, after going thru a lot of internal discussions overnight along the lines of you guys (McLovin & Klogg), I have some other concerns from an operational and management point of view, M2 is the WORST company to deal with, they almost make Telstra look competent, and as discussed previously the NBN margins are pure creative accounting - in the sense that they are calculated by specifically not delivering the service paid for - and the shadow of the ACCC hangs over that problem for all telcos in our market.
> 
> In the end I just couldn't make a compelling argument for VOC remaining at a price of low $4 for long, so I took a position even though its not a sector I had any great interest in being invested in.
> 
> Its interesting the sort of reactions to the slightest bad news in the current markets, not sure if its a function of the volatility, or the general world uncertainty, but we have seen it a bit recently. The reaction to the update from SDI recently was similar - I think Mr Market is very nervous and flighty at the moment, this does create some interesting opportunities like VOC this week!




VTG also comes to mind.


On the NBN margins - I agree they're technically not delivering a service of 100/100 (for example) all the time, otherwise the CVC costs would send them bankrupt. But no telcos are...
If the government (or otherwise) were to go after them for that, nobody would sell an NBN subscription. While nothing is certain, it's highly unlikely this will happen. In fact, I'd be surprised if the ACCC didn't nudge the government further to reduce CVC charges so an adequate service is delivered.


----------



## galumay (30 November 2016)

Klogg said:


> VTG also comes to mind.
> 
> 
> On the NBN margins - I agree they're technically not delivering a service of 100/100 (for example) all the time, otherwise the CVC costs would send them bankrupt. But no telcos are...
> If the government (or otherwise) were to go after them for that, nobody would sell an NBN subscription. While nothing is certain, it's highly unlikely this will happen. In fact, I'd be surprised if the ACCC didn't nudge the government further to reduce CVC charges so an adequate service is delivered.




In general I agree with you, there is a range of how badly consumers are being ripped off though, and on the margins VOC published they must be running really awful contention ratios. The risk is that the ACCC moves in 2 directions, I agree they are likely to 'encourage' the NBN/Government to reduce the CVC charges, but I expect focus will also come on RSP's clearly gouging by massively overselling services.

The problem for the Government is that they are idealogically locked on to trying to make a return on a massive infrastructure project in a totally unrealistic timeframe. Australia's internet infrastructure has already been terminally damaged by Turnbull's ignorance of tech (despite his undeserved reputation), and it wont be easy to make progress with the luddites from the far right that control the Government.

Regardless of my concerns about the industry - I still think that while running a business in this sector will prove to be more problematic than many expect - the current price of VOC leaves a significant margin of error that offsets the risks I perceive.


----------



## mcgrath111 (30 November 2016)

Had a dig in yesterday at 4.60, thinking what a bargain!...had another dig today to bring down my net avg to 4.46.
Underlying infrastructure + as mentioned P/E is no longer that of a "growth" stock. Shorters appear to have dumped it to new levels.

I might just ignore my pnl for the time being and not get caught up in the hysteria that sites such as hotcopper propogate.


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## Klogg (30 November 2016)

galumay said:


> The problem for the Government is that they are idealogically locked on to trying to make a return on a massive infrastructure project in a totally unrealistic timeframe. Australia's internet infrastructure has already been terminally damaged by Turnbull's ignorance of tech (despite his undeserved reputation), and it wont be easy to make progress with the luddites from the far right that control the Government..




I totally agree on the unrealistic timeframe. The benefits of this don't even need to show as returns on the network. Just recovering most of the costs would make it successful, given all the other benefits.


----------



## skc (30 November 2016)

Klogg said:


> At current price of $4.10, that's a MC of $2.54bn, with underlying earnings about $210m. That's just over 12 times for a company that has ample opportunity to reinvest its earnings, not to mention the underutilisation of current networks.




I think the market is questioning the quality of the "underlying". The underlying number strips out some $105m in "one off" below the line expense. That's a big number and I've seen a few analysts being not too sure about it. 

The other issue is the forecast of capex of $186m vs FY17 D&A of only $98m. VOC did explain how where the growth capex is growing, but again I have seen a few analysts questioning whether the D&A is too light in their model going forward.

Takeout $15-20m in each of these, the $210m underlying earnings quickly becomes $170-180m. The PE becomes 14.5-15x which isn't crazy low if the company is viewed as ex-growth. Throw into the mix the known unknowns of NBN disruption (was anyone aware of the risks and costs of switching a customer from DSL to NBN?) and ongoing economics in the post NBN world, the boardroom drama, insider selling, plus a market that tends to overshoot... that's how you can get VOC @ low $4.

Obviously it could turn out that none of these are that bad... underlying is truely $210m and there's plenty of growth left, then yes I'd have to say it's a bargain.



McLovin said:


> I'm scratching my head too, Klogg. OK NG is disappointing, but EBITDA is forecast to be $20m lower and MC has fallen $1.1b. Even if the company stood still, synergies (yes, yes I know!) alone would give it 10%+ NPAT uplift in FY18 from FY17. The debt is serviceable, no problems there and the underlying business is growing. Even looking at the CAPEX profile, it's pretty light and the bulk of it is growth capex which is driven by customer demand, not build it and they will come demand.




The NextGen hole seems really odd... esp for a business that is supposed to have stable revenue. I am guessing NBN is a competitor of NextGen's fibre? Is that why contracts are resigned on lower margins?


----------



## galumay (30 November 2016)

skc said:


> ... I am guessing NBN is a competitor of NextGen's fibre? Is that why contracts are resigned on lower margins?




I dont think so, NBN isnt in the business of backhaul & dark fibre. There is a lot of excess fibre capacity on various major backhaul routes. It may be a reflection of that.


----------



## So_Cynical (30 November 2016)

JTLP said:


> Smashed again today. Anyone dipping in again?




A small parcel to add to my main portfolio, $4.24.


----------



## notting (1 December 2016)

galumay said:


> In general
> The problem for the Government is that they are idealogically locked on to trying to make a return on a massive infrastructure project in a totally unrealistic timeframe. Australia's internet infrastructure has already been terminally damaged by Turnbull's ignorance of tech (despite his undeserved reputation), and it wont be easy to make progress with the luddites from the far right that control the Government.




That is the biggest load of BS.

Turnbull has been handed the most disgusting and monstrously stupid infrustructure spend (NBN) & waist of money the country has ever seen.

Rudds demented NBN plan was lampooned from every corner of the room by anybody who understood the Telco set up in Australia.  It is seen as a joke that came out of the then idiot Prime Minister Rudd maddness and that was even before the massive blow outs in how much it was really going to cost came to the for when the Liberals had to manage it.

Turnbull is trying to make it work which is simply not possible.  

Rudd has recreated the grossly inefficient monopoly, that Telstra was, at huge expense.  The NBN will never make a return and continue to haemorrhage until it is surpassed by wireless tech.  

All the administration can do is squeeze as much out of the Telco’s as possible to try to minimise the haemorrhaging. 
You are just starting to see the damage and then you will see the cost to the consumer that you and the country, with it's now massive debt, has paid a huge cost to achieve this terrible setup. All the idiots that agreed by voting labor should be made to pay for it and own it.


----------



## skc (1 December 2016)

McLovin said:


> The debt is serviceable, no problems there and *the underlying business is growing. *




Here's UBS' take on underlying organic growth.


----------



## Klogg (1 December 2016)

skc said:


> Here's UBS' take on underlying organic growth.
> [ x ]




Thanks. I had read that earlier, but really didn't feel comfortable with using the Q4 run-rate to assume things would grow from that base, especially given the answer to an analyst question (from FY16 call) regarding estimated FY17 earnings.

What I would add to that list of items is the allocation of costs to achieve synergies. You can't just merge two businesses (or four in this case) together and expect to save costs without some initial increased expenditure.
Some of it would be capex, but surely not all of it. Where has this been mentioned/allocated?


----------



## galumay (1 December 2016)

notting said:


> That is the biggest load of BS.




And your post is typical of the RWNJ spin that has been promoted about the most important infrastructure project in modern times. In the end you are just taking a viewpoint based purely on your political predjudices with an obvious ignorance of the technology. 

Turnbull's failure to understand the technology and the importance of the infrastructure upgrade will be a significant handicap to Australia going forward as we fall further behind the rest of the world in this crucial aspect of modern society.

BTW, wireless is not going to 'surpass' fibre. 

This point is really not relevant to the topic of VOC, other than informing of the difficulties RSP face because of the  Government's unrealistic timeframes for a profitable return from the NBN, so lets leave the vitriol towards those who hold different political views to yours for another place.


----------



## McLovin (1 December 2016)

skc said:


> Here's UBS' take on underlying organic growth.
> 
> View attachment 68978




The old target was $380m-$400m. From the AGM...

- Additional investment of $4m-$5m in corporate and wholesale sales and marketing

- The loss of a fibre build contract. The amount isn't stated but it was $14m EBITDA in FY16 (weighted $10m/$4m).

Those two items probably explain a fair chunk of the difference.

If NBN connections are running ahead of where they were forecast to be, then there will be an increase in upfront expense for existing subscribers transitioning to NBN. 

There was also an investment in consumer sales and marketing which has not borne fruit because of the platform outage issues. Which will weight earnings to 2H17 assuming the platform issues and associated churn are indeed temporary and behind them now. 

The big prize is the NBN. At the moment they are creaming NBN subscriptions, with $ margins virtually the same as what they're getting in copper broadband. So UBS is probably right that earnings in consumer are declining, but it's hard to see it as much more than a short term issue and subscriptions, especially in NBN, are growing very quickly.

Worth noting that UBS has a $6 PT as well.


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## Klogg (1 December 2016)

McLovin said:


> The amount isn't stated but it was $14m EBITDA in FY16 (weighted $10m/$4m)




Just out of curiousity, where did you find the split?


----------



## McLovin (1 December 2016)

Klogg said:


> Just out of curiousity, where did you find the split?




The slide 15 commentary in the AGM notes.


----------



## Klogg (1 December 2016)

McLovin said:


> The slide 15 commentary in the AGM notes.
> 
> View attachment 68981




Well that should have been obvious. Thank you


----------



## notting (1 December 2016)

galumay said:


> AIn the end you are just taking a viewpoint based purely on your political predjudices with an obvious ignorance of the technology.




The opinion I expressed is based purely on the economics of it. 

Anyone with half a brain can see that. Why do you think no private sector company, not even Telstra would touch it with a 10-foot pole even with some government assistance?

I was and am close and was then to the smartest people in Telstra who were actually writing the contracts for Telstra and the government!!!! 
Apart from having a brain of my own, it was very clear how costly and insane this idea was.
Telstra was laughing all the way to their bank and it naturally set them off on the biggest bull run in the stock since the float. Gee can't imagine why.:silly:

Meanwhile, how's the new lumbering monopoly rollout going?

Your position is profoundly stupid perhaps analysis isn't your thing.

For God's sake don't you invest without advice -
Here's a link to assist you to find a more suitable arena for your contemplations - Like minded investers

PS I didn't vote for Turnbull.:bonk:


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## Klogg (1 December 2016)

notting said:


> Why do you think no private sector company, not even Telstra would touch it with a 10-foot pole even with some government assistance?




I would have thought the ACCC wouldn't have wanted a private company to have such a monopoly, so the regulation around owning the asset wouldn't have been worthwhile.

Also, I have to ask - how will wireless overtake the NBN? The cost of wireless towers is very high, and it all requires a backhaul...


----------



## So_Cynical (1 December 2016)

notting said:


> The NBN will never make a return and continue to hemorrhage until it is surpassed by wireless tech.




^Fantasy - did you vote for Hanson?


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## notting (1 December 2016)

The driveling little dweed (Rudd) in his original plan had us up for 20 billion more until Turnbull adjusted it with these devastating consequences -



> nbn is also working to deliver high speed broadband to Australia up to eight years sooner and for $20 billion less of taxpayers’ money than if we rolled out a full fibre network from this point in time.
> 
> Often the argument boils down to anecdotal evidence about the state of the existing copper lines in the street.
> 
> ...




What Turnbull is doing is far more tenable. 

As an aside regarding benefits and fantasy - Now all our promising and brightest young minds will be able to whatch 3D pr0n with less interruptions and for even longer making for huge leaps in the suffocation of productivity, inovation and development of the most intelligent and even ordinary minds in our community.


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## galumay (1 December 2016)

notting said:


> Your position is profoundly stupid perhaps analysis isn't your thing.
> 
> For God's sake don't you invest without advice -
> Here's a link to assist you to find a more suitable arena for your contemplations - Like minded investers




Notting, people who resort to personal attacks in the absence of an ability to articulate discussion in defence of their world view, usually end up having a very distorted and inaccurate world view. That would appear to be the case with you.

You are not adding anything to the discussion about VOC, and to be honest its largely just a spray of vitriol. 

I am not going to drag it further off topic by giving you a lesson from someone whose company actually works in the sector, but trust me you are quite incorrect about the unholy mess that Turnbull has created with MTM and FTTN. Probably not a good idea to use Telstra employees as a source of wisdom on this space either!

Lets move on and leave this thread to its intent, and please do try to challenge the argument in future rather than engaging in ad hominem attacks.

It does seem VOC has found support at around the $4.20 mark, I will be quite chuffed if I have accidently managed to enter so near the bottom of the dip!


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## Klogg (1 December 2016)

notting said:


> As an aside regarding benefits and fantasy - Now all our promising and brightest young minds will be able to whatch 3D pr0n with less interruptions and for even longer making for huge leaps in the suffocation of productivity, inovation and development of the most intelligent and even ordinary minds in our community.




This is a very wrong way of thinking. Yes, there will be many users streaming QHD videos and the like, but there are many positive effects. 
- What about the home business that can run more effectively because their cloud backups are seamless? 
- What about the aspiring developer moving virtual hard disks around from their machine to the Cloud environments without the 10hour wait time because upload speeds are horrible?
- What about the productivity improvements of those working from home?

I can go on, but there are definitely benefits to a faster internet. Data is becoming increasingly critical, and the ability to transfer it faster shouldn't be overlooked.

Additionally, you'll find new software that takes advantage of the better hardware (fibre) is developed very very quickly. The effect is compounding.


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## mcgrath111 (1 December 2016)

CGF have upped there substantial holding  (may not be worth noting, but may spur some confidence to give it a little push in the right direction; I was waiting for it to happen sooner or later.)

Could anyone provide me some insight into the technicals atm, or is it too soon die to volatility?


(On a random side note and adding to the nature of derailing this thread ...I noticed someone in a brief sense comparing vocus to arrium hahaha)


Cheers,


----------



## notting (1 December 2016)

Klogg said:


> This is a very wrong way of thinking. Yes, there will be many users streaming QHD videos and the like, but there are many positive effects.
> - What about the home business that can run more effectively because their cloud backups are seamless?
> - What about the aspiring developer moving virtual hard disks around from their machine to the Cloud environments without the 10hour wait time because upload speeds are horrible?
> - What about the productivity improvements of those working from home?




I was being a bit mischievous with that but also making a point. 
Of course, the internet has many benefits. It's odd that the working from home thing has not been embraced by the internet already and schooling.

The current tech is well capable, as it is, to provide all that as well as remote diagnosis and skyping which is about the only thing Labor could site as one of the foreseeable revolutionary benefits of its 47 Billion questionable binge on fiber to the house in the face of the most rapidly developing and technology that is superseding itself in very short time periods.

In the same way that Labor argued the 'NBN will bring benefits we haven't even thought of' you can argue that 'the NBN technology will be superseded by mobile capabilities with technology not even thought of' that will develop organically.

It's a two-sided coin, especially when not born of free market forces. It tends to be more distorted when big government spending is behind such.

On a more serious note, however, I do think the pr0n thing is hugely problematic and its consequences could be quite devastating on our society as a whole and even our liberty. 

The free speech democracies have always had an advantage with creative thinking and subsequent innovation that has kept us one step ahead militarily and more generally of propaganda manipulated countries.
I feel the flourishing of easy access pr0n could limit creativity and innovation and give countries that limit the easy access and control of their internet an unforeseen advantage. It's a huge counterproductive and counter-creative distraction.

The words *Fiddling while Rome burns * are never more evident than now - global warming, reefs dying, forests disappearing whilst everyone's on their phone/computer.
Innovative solutions have never before been more necessary, however, the conditions for it have become almost impossible. The internet allows for it but also allows for the opposite and if you look at the search statistics it's pretty clear to see where all the energy is going!

The world could be in for a tough time!


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## Klogg (2 December 2016)

notting said:


> I was being a bit mischievous with that but also making a point.
> Of course, the internet has many benefits. It's odd that the working from home thing has not been embraced by the internet already and schooling.
> 
> The current tech is well capable, as it is, to provide all that as well as remote diagnosis and skyping which is about the only thing Labor could site as one of the foreseeable revolutionary benefits of its 47 Billion questionable binge on fiber to the house in the face of the most rapidly developing and technology that is superseding itself in very short time periods.
> ...




I agree we don't know all the benefits, but that doesn't mean a thing. When the internet was created, who could have known it would lead to this. Similarly, a huge increase in bandwidth could result in new technologies we have not thought of just yet.
I know that's not much of an argument because it can apply to almost anything, but the exponential growth in technology really should make use of this in no time.



notting said:


> On a more serious note, however, I do think the pr0n thing is hugely problematic and its consequences could be quite devastating on our society as a whole and even our liberty.




It's a problem, but not as big as one might think. The endless distraction from FB, Twitter, arguably these forums are all potentially devastating. But there are consequences to everything we introduce, and we deal with it. Increasing access to pr0n is no different.




notting said:


> The words *Fiddling while Rome burns * are never more evident than now - global warming, reefs dying, forests disappearing whilst everyone's on their phone/computer.
> Innovative solutions have never before been more necessary, however, the conditions for it have become almost impossible. The internet allows for it but also allows for the opposite and if you look at the search statistics it's pretty clear to see where all the energy is going!
> 
> The world could be in for a tough time!




Very true, and I agree. And whilst this is WAY off topic, I'll ask it anyway. How do you make the right people care for something that could happen 50 or 100 years out, when the most influential people will be long gone by then?


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## mcgrath111 (6 December 2016)

News came out regarding the Singapore cable. Not really big news as previously already outlined in there plans.

Stock price seems to be under pressure, hoping that it doesn't drop below the $4 mark. If it does, I think I'll just turn a blind eye to my holding for the time being and check back in a few months, after the hype goes down.

Being contrarian in nature, a buy & hold shouldn't hurt for the time being.


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## MrChow (7 December 2016)

What sort of ROI does Vocus expect for the $227m spend?


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## Klogg (8 December 2016)

MrChow said:


> What sort of ROI does Vocus expect for the $227m spend?




I assume you mean the US170m (AUD226.6m) spend on the Aus-Singapore cable?

Well, they don't answer it outright, but they do mention the following items:


> - Vocus currently expects to receive IRU pre-payments of approximately $US100m during
> the build period. (see note 4)
> 
> -  The report estimates ASC has the opportunity to capture a minimum of 15.5Tbps of capacity sales by year-end 2029, resulting in expected revenues of at least US$550m over this period, by which time ASC will have been  operating for only 40% of its effective life
> ...




So there's no definite answer, but spending US$170m to get US$100m upfront (net US$70m), along with another US550m revenues from that net 70m over 10 years.

If you assume those figures are correct (I think the revenues are quite low), then you know your capex (US$70m), you know your revenues (US$550m). All you need to do is:
1) Figure out costs for running it
2) Figure out the revenue profile - how much of the US550m of received every year up to 2029
3) Allow for depreciation of the asset over 25years
4) DCF it - discount future cash flows to the net present value

To be honest, there wouldn't be much value in it (for me), as the revenue numbers wouldn't be accurate and running costs are an unknown (I can't imagine they're large, but it's likely I'll get them wrong)

That said, it would be hard to see how they don't make 20%+ ROC, if you assume a cash outlay of US$70m (because of the prepayments) - even though P&L figures would look different as revenue isn't recognised. (i.e. the prepayments would like be shown as a Deferred Revenue liability, offset by cash on the balance sheet.)


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## ROE (8 December 2016)

Just to throw devil advocate, would TPM be a better stock to buy 
I was close to buy TPM under $7 but still hesitance and want cheaper price closer to $6 so I missed the rally heheh, was hoping AGM wasnt upbeat so it get closer to $6

TMP has all the infrastructure and similar grow profile without the head ache and stable management and David Teoh is in charge and steady the ship, he is knowned to run a very tight ship and keep good people close

plus his family fortune is link with TPM success much like Graham Turner at FLT so what is good for him is good for you


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## galumay (8 December 2016)

ROE said:


> Just to throw devil advocate, would TPM be a better stock to buy
> I was close to buy TPM under $7 but still hesitance and want cheaper price closer to $6 so I missed the rally heheh, was hoping AGM wasnt upbeat so it get closer to $6
> 
> TMP has all the infrastructure and similar grow profile without the head ache and stable management and David Teoh is in charge and steady the ship, he is knowned to run a very tight ship and keep good people close
> ...




Maybe, maybe not! I don't have the same admiration for Tech, although my dislike for him is borne of his disdain for customers and customer service and the business model employs. Cheap and nasty! I am probably letting my bias cloud my judgement, in a sense I am too close to the business being directly involved in IT & the NBN in my own business. 

I wouldn't have owned shares in any of the businesses in this sector based on my knowledge of them, the good ones have all been swallowed up by the big 4 or 5 players as a result of poor government policy. As posted previously I reluctantly bought into VOC only because at the low $4 mark I felt there was almost certainly value to be found.


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## Klogg (8 December 2016)

ROE said:


> Just to throw devil advocate, would TPM be a better stock to buy
> I was close to buy TPM under $7 but still hesitance and want cheaper price closer to $6 so I missed the rally heheh, was hoping AGM wasnt upbeat so it get closer to $6
> 
> TMP has all the infrastructure and similar grow profile without the head ache and stable management and David Teoh is in charge and steady the ship, he is knowned to run a very tight ship and keep good people close
> ...




Vaughan Bowen (founder of M2) owns a decent amount of M2 stock - and he installed Geoff Horth as CEO of M2 a while back (he was COO previously).

TPM is a great business, and Teoh one of the best managers around. And to be completely honest, I see opportunities in both companies. However, it is because of the potential for huge operating leverage and greater opportunity set to reinvest in the business that I'm attracted to Vocus.

A network utilised at ~30% (at most) along with the NextGen asset at 10% means very similar fixed costs, but the ability to double, if not triple revenues longer term.

Great question though - I did ask myself this a few times.


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## ROE (8 December 2016)

galumay said:


> Maybe, maybe not! I don't have the same admiration for Tech, although my dislike for him is borne of his disdain for customers and customer service and the business model employs. Cheap and nasty! I am probably letting my bias cloud my judgement, in a sense I am too close to the business being directly involved in IT & the NBN in my own business.
> 
> I wouldn't have owned shares in any of the businesses in this sector based on my knowledge of them, the good ones have all been swallowed up by the big 4 or 5 players as a result of poor government policy. As posted previously I reluctantly bought into VOC only because at the low $4 mark I felt there was almost certainly value to be found.




Fair enough  I dont have holding in either and havent been following it for a while 
Last Telco play was TLS $2 ish and out $4 ish

I been with iinet internet  for last 11 years and dont have an issue with them why I never bother buying iinet share is another sorry story 

but there are so many oppotunities in the market you cant capture everything


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## MrChow (8 December 2016)

Big thank you for the posts in reply to and since my question.

I have been doing some preliminary research on VOC and didn't realise how complicated telecommunications businesses are.

Planning to listen to the AGM webcast in full (2 hours).


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## JTLP (8 December 2016)

Last of a big seller getting out? Ceasing to be a substantial holder submitted a few days ago. Just a thought.


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## MrChow (9 December 2016)

Anyone have a breakdown of Earnings by Division going forward?

My extremely rough estimate is a pretty even 3 way split between infrastructure / corporate / residential but any more accurate info would be appreciated (How $430m EBITDA is divided for example).


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## mcgrath111 (14 December 2016)

Didnt like seeing that $4 mark get broken, as it leads the door open to how low can you go.

Net avg price now at $4.25; might have to wait until Feb for the results and shut my eyes and tryst in the fundamentals until then.


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## JTLP (15 December 2016)

If you thought in the $4s was cheap, you can grab some at $3.85! TPM also had a rough day...not a great deal of love for these 2nd tier players.


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## Triathlete (15 December 2016)

JTLP said:


> If you thought in the $4s was cheap, you can grab some at $3.85! TPM also had a rough day...not a great deal of love for these 2nd tier players.




It might even get to $3  yet..from a quick glance....time will tell though..!!


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## mcgrath111 (3 January 2017)

Would anyone be able to provide me a  brief synopsis into the expected 5g by 2020 and the potential impacts that this would play one VOC, particularly given 5g would be substantially quicker than NBN.
How would this play out for VOC's infrastructure?


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## So_Cynical (3 January 2017)

mcgrath111 said:


> particularly given 5g would be substantially quicker than NBN. How would this play out for VOC's infrastructure?



5G will be faster than the speed of light and offer unlimited capacity....amazing.


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## galumay (3 January 2017)

mcgrath111 said:


> particularly given 5g would be substantially quicker than NBN.
> How would this play out for VOC's infrastructure?




See above! I think you might have fallen for Telstra's spin, or the propaganda of the luddites that support the disaster that is the Turnbull mix of 19th C & 21st C technology!

Wireless has its place, and better wireless is good, but its not replacing fibre anytime in the forseeable future. All the backhaul is still fibre too.


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## mcgrath111 (9 January 2017)

Sold out today, for a minuscule profit. 

Nothing to do with VOC, I had just been looking at the $ amount of my holding and it was far too much in regards to too many eggs in one basket - due to averaging down during the dip.
Ah well, maybe's it's a question to chuck on the beginners thread.
Lesson learned, and cash thankfully not burned.


----------



## galumay (10 January 2017)

mcgrath111 said:


> Sold out today, for a minuscule profit.
> 
> Nothing to do with VOC, I had just been looking at the $ amount of my holding and it was far too much in regards to too many eggs in one basket - due to averaging down during the dip.
> Ah well, maybe's it's a question to chuck on the beginners thread.
> Lesson learned, and cash thankfully not burned.





What was the lesson learned?! (Not being smart, genuinely interested.) Averaging down into VOC seems a sensible thing to do if you were holder with available capital when it dropped so hard recently. It certainly prompted me to take a position at around $4.20. 

I get that you might be concerned with the position size as the share price recovered, but why not just sell down again to your original position size, or one that you were comfortable with?


----------



## So_Cynical (10 January 2017)

galumay said:


> Averaging down into VOC seems a sensible thing to do if you were holder with available capital when it dropped so hard recently. It certainly prompted me to take a position at around $4.20.




My average holding price is $2.11, i averaged up - and happy i did.


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## mcgrath111 (10 January 2017)

galumay said:


> What was the lesson learned?! (Not being smart, genuinely interested.) Averaging down into VOC seems a sensible thing to do if you were holder with available capital when it dropped so hard recently. It certainly prompted me to take a position at around $4.20.
> 
> I get that you might be concerned with the position size as the share price recovered, but why not just sell down again to your original position size, or one that you were comfortable with?




Lesson learned well to a cetain extent, that I should have a certain amount of capital allocated and not go beyond that point.

If im honest, at one stage therr I had about 90% of my cash in VOC.
I could have just lowered my position, yet didnt feel that a holding @4.24 was a true bargain. Also it was more of a trigger pulled quickly situation, in which I thought I had some understanding into telco, yet the deeper I got; the less I realised I knew about the industry  / yet was already invested.

I guess theres no science to averaging down, just whatever you feel comfortable with, yet this pushed my comfort levels.

Thought / feedback on how you Galumay and contrarian deal with averaging down would be appreciated.

Sent from phone / excuse more poor grammar than usual.


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## galumay (10 January 2017)

mcgrath111 said:


> Thought / feedback on how you Galumay and contrarian deal with averaging down would be appreciated.




Ok, 90% invested in one company puts some perspective on your comments! I think I would agree there is a lesson to be learnt there, although if you were certain enough of something then it might be a single path to great wealth creation!! 

So far I have only averaged down where I was convinced the business was investible when I made the initial entry, and where I considered the drop in price was an over-reaction to changed circumstances. (my involvement in the CR for SGH was an exception.) I have done very well out of averaging down into businesses like NWH & CDA. I guess there might come a point where I felt I was over invested if the price recovered strongly and made the business a big % of my portfolio - but it would be very dependent on my analysis of the business, size of the position alone wouldnt make me sell down.

CCP, UOS and DDR have become much bigger positions than my average, but I have no interest in selling down to reduce size. (and they are not businesses I averaged down into, just businesses I accumulated where ever Mr Market priced them lower than I valued them and I had capital available.)

Where I have resized the position I did so because I wanted to free up capital for another opportunity.


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## mcgrath111 (10 January 2017)

galumay said:


> Ok, 90% invested in one company puts some perspective on your comments! I think I would agree there is a lesson to be learnt there, although if you were certain enough of something then it might be a single path to great wealth creation!!
> 
> So far I have only averaged down where I was convinced the business was investible when I made the initial entry, and where I considered the drop in price was an over-reaction to changed circumstances. (my involvement in the CR for SGH was an exception.) I have done very well out of averaging down into businesses like NWH & CDA. I guess there might come a point where I felt I was over invested if the price recovered strongly and made the business a big % of my portfolio - but it would be very dependent on my analysis of the business, size of the position alone wouldnt make me sell down.
> 
> ...



My initial thinking was what you outlined, but I should look at writting out my own '10 not so stringent commandments for investing'.
Appreciate your feedback.


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## galumay (10 January 2017)

mcgrath111 said:


> My initial thinking was what you outlined, but I should look at writting out my own '10 not so stringent commandments for investing'.
> Appreciate your feedback.




Start a decision journal, get disciplined about wrint down what you are thinking of doing, what the alternatives are, what the risks and rewards may be and document an expected outcome. What this does is slow down the human impulse to action and puts some time between the impulse and the action! Revisit to check your thinking on a regular basis. This has been a very powerful tool for me.


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## JTLP (11 January 2017)

galumay said:


> Ok, 90% invested in one company puts some perspective on your comments! I think I would agree there is a lesson to be learnt there, although if you were certain enough of something then it might be a single path to great wealth creation!!
> 
> So far I have only averaged down where I was convinced the business was investible when I made the initial entry, and where I considered the drop in price was an over-reaction to changed circumstances. (my involvement in the CR for SGH was an exception.) I have done very well out of averaging down into businesses like NWH & CDA. I guess there might come a point where I felt I was over invested if the price recovered strongly and made the business a big % of my portfolio - but it would be very dependent on my analysis of the business, size of the position alone wouldnt make me sell down.
> 
> ...




Oh how I wish I took a bigger position in CCP.


----------



## So_Cynical (11 January 2017)

mcgrath111 said:


> Lesson learned well to a certain extent, that I should have a certain amount of capital allocated and not go beyond that point.
> I guess theres no science to averaging down, just whatever you feel comfortable with, yet this pushed my comfort levels.
> 
> Thought / feedback on how you Galumay and contrarian deal with averaging down would be appreciated.




Rules are needed, its all good to see something cheap and take a position, to see it fall further and take a smaller bite, discipline is important as one never knows - as a knife catcher you have to be prepared for zero, to lose the lot therefore you cant bet the lot or anywhere near it, my maximum is like 6 - 7K or there abouts, 5% of the account.

Truth be told im not really comfortable with 5% thats the extreme end of the scale, like to keep it less than that...but sometimes it just has to be done.


----------



## MrChow (6 April 2017)

Any thoughts on recent happenings?

More key management resignations and competition for the NextGen Cable.


----------



## mcgrath111 (6 April 2017)

I think it's more noise. 
Vocus will finish the cable first and the management issue is old v new.
I jumped in today, less capital this time though haha. 
Im comfortable riding it the storm for a while


----------



## Triathlete (11 April 2017)

Triathlete said:


> It might even get to $3  yet..from a quick glance....time will tell though..!!




Just broke support at $3.69 today to close at $3.57....we might finally get the move down to $3.00.......any thoughts..!!


----------



## MrChow (11 April 2017)

Vocus wouldn't want to announce a downgrade or there'll be a class action discussed.

It's in the top 1% of shorted stocks and had a 4 fold increase in volume the past 4 days.


----------



## JTLP (11 April 2017)

MrChow said:


> Vocus wouldn't want to announce a downgrade or there'll be a class action discussed.
> 
> It's in the top 1% of shorted stocks and had a 4 fold increase in volume the past 4 days.




I can't see a downgrade but potentially they may need capital for their Perth to Singapore line? But thought this would have been covered. Maybe people don't believe the story.


----------



## Triathlete (12 April 2017)

MrChow said:


> Vocus wouldn't want to announce a downgrade or there'll be a class action discussed.
> 
> It's in the top 1% of shorted stocks and had a 4 fold increase in volume the past 4 days.




All I know is from a technical view the stock is weak and it has further to fall at this point in time in my opinion.

I base this on the fact that the 50% level of the all time high is $4.56 and 50% level of the all time range $4.83 have both been broken back in December 2016.

The move back up from the low week ending 23 Dec 2016 $3.69 to the previous high of $5.89 of $4.58 week ending 24 Feb 2017 is less than a 50% retracement which indicates the stock continues to be weak and now it has broken down to a new low on the down move of $3.57.

For long term holders I would be just expecting further falls at this time and for traders the shorts look the best option at the moment.....Let us see how this one plays out...!!


----------



## JTLP (12 April 2017)

There you go. Slammed with Telstra on news of TPG building their own mobile network. Does this really affect VOC though as they aren't in this space?


----------



## Ves (12 April 2017)

JTLP said:


> Does this really affect VOC though as they aren't in this space?



Iprimus and Dodo are both resellers of mobile phone plans.

Also don't forget the SuperLoop (SLC) acquisition last week.  The bit about the submarine cable is a potential competitive issue for VOC.


----------



## JTLP (12 April 2017)

Ves said:


> Iprimus and Dodo are both resellers of mobile phone plans.
> 
> Also don't forget the SuperLoop (SLC) acquisition last week.  The bit about the submarine cable is a potential competitive issue for VOC.




But a reseller is a bit different to an owner. And it's not like it's entirely new competition?


----------



## galumay (12 April 2017)

The news about TPG and their mobile network was well known prior to the official release so not sure how much impact the release of the 'news' really had. I think the negative sentiment around telcos generally is pretty strong, I took a position in VOC at the low 4's and am not surprised its fallen further. It will take a couple of positive reporting sessions to see a real turn around IMO. 

Dealing every day with the structural dysfunction and incompetence of TLS and TPG makes me think there is plenty more bad news for the major telcos in the future!


----------



## skc (12 April 2017)

galumay said:


> The news about TPG and their mobile network was well known prior to the official release so not sure how much impact the release of the 'news' really had. I think the negative sentiment around telcos generally is pretty strong, I took a position in VOC at the low 4's and am not surprised its fallen further. It will take a couple of positive reporting sessions to see a real turn around IMO.




I think the market wasn't sure if TPM was going to bid... and certainly wasn't sure that TPM was going to win the spectrum auction. Mobile's big profit pool is about to be carved out by a 4th player and margin eroded by price competition.


----------



## JTLP (12 April 2017)

skc said:


> I think the market wasn't sure if TPM was going to bid... and certainly wasn't sure that TPM was going to win the spectrum auction. Mobile's big profit pool is about to be carved out by a 4th player and margin eroded by price competition.




I still don't understand the real effects on a reseller though? Don't TPG already offer mobile?

Interesting to see pundits views on the TPG auction deal. Seems pretty exy the way they're talking.


----------



## Boggo (12 April 2017)

galumay said:


> ...
> 
> Dealing every day with the structural dysfunction and incompetence of TLS and TPG makes me think there is plenty more bad news for the major telcos in the future!




Looks like that whole sector has been on the nose since Jan 2015 and today it broke down through the 50% retracement.

Weekly of the XTEJ


----------



## skc (13 April 2017)

JTLP said:


> I still don't understand the real effects on a reseller though? Don't TPG already offer mobile?




The same as any other provider really... more competition, lower consumer price, lower margin, higher churn. VOC's retail broadband may also be impacted if TPM rolls out more bundle deals etc.

TPG has ~500k mobile subscriber under a reseller model. It mentioned in it's presentation that the net work is expected to be EBITDA breakeven @ 500k subscribers. Assuming TPM intends to make a return on the ~$1.9B capital invested, they'd probably want to gain more than their current share. Price is probably the quickest way to gain that share, and the gains will probably come from the cheap and nasty end of the market (VOC, Amaysim etc).


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## Triathlete (15 April 2017)

I have updated my Vocus chart based also on the latest Fundamentals from Lincoln stock doctor just downgraded...www.lincolnindicators.com.au.............  14 day free tral

*Strategic comment.*
Last updated: 13 April 2017

VOC is no longer a Borderline Star Growth Stock following a recent discussion with the company.

Following that discussion we are now of the opinion that they will not achieve the hurdles set for outlook and forecast when they next report. As previously commentated, VOC needed a lot to work perfectly, and though not a Star Growth Stock, we are disappointed with this outcome. The complexity and number of acquisitions unfortunately will now mean they are unlikely to meet our metrics within the next 12 months.

*Weekly Chart:




*


----------



## Boggo (15 April 2017)

Almost identical, 2.90 to 2.97 being critical, below that ????

Daily chart


----------



## mcgrath111 (15 April 2017)

Triathlete said:


> I have updated my Vocus chart based also on the latest Fundamentals from Lincoln stock doctor just downgraded...www.lincolnindicators.com.au.............  14 day free tral
> 
> *Strategic comment.*
> Last updated: 13 April 2017
> ...



Hi Triathelete
Did they go into why it doesnt fit the criteria?

Or just the short outline you added?


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## Triathlete (15 April 2017)

Yes they did,the report is much longer  and the metrics that they use must be met which in there view will be outside what is required for this company. I have just used the shortened version.


----------



## joeno (17 April 2017)

What's happening to this stock sounds a bit like what happened to Slater and Gordon. Anyone have more details about this co's issues?


----------



## Klogg (17 April 2017)

joeno said:


> What's happening to this stock sounds a bit like what happened to Slater and Gordon. Anyone have more details about this co's issues?




Negative sentiment, plus some other small/short-term issues that have arisen:

- 2nd Singapore/Perth cable announced
- Potentially won't meet guidance (according to Lincoln Stock Doctor)
- TPG winning at auction for 700MHz (4G) - potentially impacts Vocus as a mobile reseller

To me, this is mostly irrelevant. Provided the cable achieves a reasonable return on investment, and the company keep loading up additional users onto their fiber network, the rest a sideshow. If sales figures continue as they are (especially in the wholesale/enterprise unit), increased EBIT margin should start to show.

But you need a longer time frame than 6 months - which seems extremely rare at this point.

Edit: FWIW - the SGH analogy is ridiculous.


----------



## Klogg (17 April 2017)

Triathlete said:


> Yes they did,the report is much longer  and the metrics that they use must be met which in there view will be outside what is required for this company. I have just used the shortened version.





The funny part is, they end it with this:
"...we have decided to remove the business as a Borderline Star Growth Stock with a final valuation of $4.15."

So the company trades at an ~30% discount to their 'valuation' (which seems extremely precise, to say the least), and they decide to remove it from their portfolio. Interesting decision to say the least...


----------



## Triathlete (17 April 2017)

Klogg said:


> The funny part is, they end it with this:
> "...we have decided to remove the business as a Borderline Star Growth Stock with a final valuation of $4.15."
> 
> So the company trades at an ~30% discount to their 'valuation' (which seems extremely precise, to say the least), and they decide to remove it from their portfolio. Interesting decision to say the least...




Well if you are a Fundamental value investor just load up with more stock....I am sure it will come good in a couple of years....In the meantime I will just trade it based on the technical aspect....


----------



## Klogg (17 April 2017)

Triathlete said:


> Well if you are a Fundamental value investor just load up with more stock....I am sure it will come good in a couple of years....In the meantime I will just trade it based on the technical aspect....




Oh I wasn't taking a crack at you, just at Lincoln. If your system works, who am I to tell you otherwise.


----------



## galumay (17 April 2017)

Lincoln are in the same boat as the Fools and Dodgy Roger IMO. Amazes me that people pay for the nonsense they put out.

(and, yes, the irony is pretty rich that once they trade at a discount to value the so called value investing website dumps them!!)


----------



## Triathlete (17 April 2017)

Klogg said:


> Oh I wasn't taking a crack at you, just at Lincoln. If your system works, who am I to tell you otherwise.



Ok I see....


galumay said:


> Lincoln are in the same boat as the Fools and Dodgy Roger IMO. *Amazes me that people pay for the nonsense they put out.*
> 
> (and, yes, the irony is pretty rich that once they *trade at a discount to value the so called value investing website dumps them!!*)




Why do you say that??   I would have thought if the service was not up to scratch they would have been out of business a long time ago.

 If I was just a fundamental investor I might agree with you to a certain extent but since I use the service to give me another angle to my Technical analysis the service works fine for me..

From what I understand about fundamentals , just because a company trades at a discount it does not make it a good investment at that point in time. I also do not think that those that use fundamentals invest in companies to see the share price drop in price from when they entered the market....just an opinion of course.


----------



## Triathlete (18 April 2017)

galumay said:


> The news about TPG and their mobile network was well known prior to the official release so not sure how much impact the release of the 'news' really had. I think the negative sentiment around telcos generally is pretty strong, *I took a position in VOC at the low 4's and am not surprised its fallen further*. It will take a couple of positive reporting sessions to see a real turn around IMO.
> 
> Dealing every day with the structural dysfunction and incompetence of TLS and TPG makes me think there is plenty more bad news for the major telcos in the future!




So in this situation what is your next move ???

I mean if you are not surprised by the fall ,your analysis must have told you something different that was favourable for this investment in the first place...

As a fundamental investor do you revisit your analysis, or just hold for the turnaround no matter how far it falls (remember SGH) who knows what is going on inside this company they do not tell you everything in reports....or do you Buy more stock to average down or bite the bullet and close the position for now take your loss and re-enter when the company makes the turnaround however long that takes....I like to know from a fundamental investors view....


----------



## galumay (18 April 2017)

Triathlete said:


> Why do you say that?? I would have thought if the service was not up to scratch they would have been out of business a long time ago.




There seems to be plenty of these type of services, a basic knowledge of human psychology explains why they remain in business!!



> From what I understand about fundamentals , just because a company trades at a discount it does not make it a good investment at that point in time. I also do not think that those that use fundamentals invest in companies to see the share price drop in price from when they entered the market....just an opinion of course.




In my experience most genuine fundamental investors are of the belief that if a company is trading at a discount to its intrinsic valuation range then it is likley a good incvestment at that point in time. For a mob like Lincoln to say, "oh, its now trading at well below what we believed it was worth, we are going to stop coverage of it." is entirely at odds with FA IMO!. I believe, like other long term investors that use a FA approach, that a drop in price below fair value range is just another opprotunity to own more of the company at a discount. We know the market is irrational and volatile, if we have done our research, analysis and due diligence then what is there to fear in a falling price?



> So in this situation what is your next move ???




Every situation is different IMO Triathlete, in the case of VOC its in a sector I dont think is a particularly attractive one from a business or investment point of view, so it wasnt a business that was on my radar to be invested in. It fell sufficiently in price to become substantially mis-priced by the market IMO, and was trading well under the range of valuation I had calculated, so I took a position.

Given the headwinds, and negative sentiment towards the sector I thought it would be some time before the market re-rated it (years), and I am happy to hold unless something arises to change my analysis. I revisit the analysis of all my decisions regularly, whether or not that is enough to prevent an event like SGH remains to be seen - as I have detailed elsewhere, I am not sure I would have done much differently there even after the experience. Its such an easy bias to fall into - to convince ourselves that we have learnt from our mistakes - when in reality people very rarely honestly even know what the mistake was!

Sometimes I will average down, but in the case of VOC that would mean being more heavily invested than I am comfortable with in the sector, so at this stage I will happily hold and as I have found many times, patience is a very rewarding master! 

As Klogg has said, regarding the critisism of Lincoln, its not personal, you obviously have a clear and detailed strategy you believe in and follow, your posts are ones I always read - absorbing different world views and approaches to investing is always valuable!


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## mcgrath111 (18 April 2017)

Ive averaged down to 3.75.
Whole sector is feeling it, look at TPM down 16% or TLS.
Given VOC has been the biggest dog, nothing has come to light that has justified the drop from results SP ( which got it to about 4.60?) And were now at 3.08
Dont understand the flames and I cant see the smoke; maybe the house isnt on fire after all?


----------



## Triathlete (18 April 2017)

galumay said:


> There seems to be plenty of these type of services, a basic knowledge of human psychology explains why they remain in business!!
> 
> 
> 
> ...




Thanks for your view galumay...


----------



## Boggo (20 April 2017)

Triathlete, follow up from TLS thread.
Daily chart attached but it is not the consistent or 'rule' compliant pattern that I would like.
Basically the price has just touched the minimum W5 level and has attempted a bounce from there.

If we were to expect VOC to play out according to this then there is quite a bit more downside but I would be looking for other factors to influence opinions or decisions.

Daily chart...


----------



## Triathlete (20 April 2017)

Boggo said:


> Triathlete, follow up from TLS thread.
> Daily chart attached but it is not the consistent or 'rule' compliant pattern that I would like.
> Basically the price has just touched the minimum W5 level and has attempted a bounce from there.
> 
> ...




Thanks Boggo.....Always good to get another opinion....Lets see how it plays out..!


----------



## JTLP (2 May 2017)

Well called by chartists. Bit of a downer trading update released late this evening.


----------



## mcgrath111 (2 May 2017)

JTLP said:


> Well called by chartists. Bit of a downer trading update released late this evening.



Indeedy.
Insider trading.
Insider trading.
Oh and did I mention?
Insider trading.


----------



## skc (2 May 2017)

Attitude A: How did hedge funds work it out? What was wrong with the broker's projections? Could I have worked it out? What did I miss? Should I change my style and use technical analysis?

Or

Attitude B:


mcgrath111 said:


> Indeedy.
> Insider trading.
> Insider trading.
> Oh and did I mention?
> Insider trading.




Only one of these will help someone learn and master the market...


----------



## JTLP (3 May 2017)

skc said:


> Attitude A: How did hedge funds work it out? What was wrong with the broker's projections? Could I have worked it out? What did I miss? Should I change my style and use technical analysis?
> 
> Or
> 
> ...




Assuming you're referring to attitude A? 

Anyway glad I didn't double down on this one [emoji29]. I'm expecting to see sub $3s today.


----------



## Klogg (3 May 2017)

Downgrade is substantial and I'll be keen to listen to the conference call.

What I find interesting is $40m of revenue that's deferred ends up as $33m of EBITDA... Operating leverage is a double edged sword. (From the below two points)

_"Following an accounting review of the negotiated contract terms on a number of large projects included in the 2HFY17 forecast, the revenue associated with these projects will be predominantly recognised in future periods rather than recognised as an upfront contribution in FY17 ~$40m"

"Impact of the accounting review as stated above ~$33m"_


Similarly, $12m in revenue from Enterprise & Wholesale along with additional headcount impacts the EBITDA line to the tune of $10m.
I wish they'd split out the additional headcount, that way one can get a feel for the operating leverage at play.


Also, using these numbers and comparing to first half, EBITDA appears to be flat, but NPAT reduced ($92m 1H vs $70m 2H). Huge increase in D&A, likely due to NextGen and the large capex profile.


I really need to see deeper numbers (subscriber numbers, Enterprise revenues/margins) to prove or disprove a few of my previous ideas.


----------



## craft (3 May 2017)

Klogg said:


> Downgrade is substantial and I'll be keen to listen to the conference call.
> 
> What I find interesting is $40m of revenue that's deferred ends up as $33m of EBITDA... Operating leverage is a double edged sword. (From the below two points)
> 
> ...



Mainly looks like the infrastructure side of the merger is causing intergestion. Not a surprise really considering the departures. However the more departures I see the more I like it.  Building more and more telecommunications infrastructure looks to be becoming a tragedy of the commons for the industry. The have some good niche infrastructure to leverage from the M2 combination but all the bob the builders from old Voc, Nextgen, Amcom etc need to disappear, Superloop is welcome to them. Share register needs to adjust accordingly.

Once the teething has passed the underlying M2 business should be able to leverage the new infrastructure appropriately.

Apart from the weather induced electricity volatility the M2 retail business seems to be doing o.k. Market share and churn rates both going in the right direction.

I still have my original core M2 holdings and would like to replace what got trimmed off on the way up because of portfolio risk limits, but every time I have tried so far there has been decided weakness indicating the time is not right. Perhaps this will be the opportunity.


----------



## Klogg (3 May 2017)

craft said:


> I still have my original core M2 holdings and would like to replace what got trimmed off on the way up because of portfolio risk limits, *but every time I have tried so far there has been decided weakness indicating the time is not right.* Perhaps this will be the opportunity.




What do you mean by this, specifically the section in bold?


----------



## craft (3 May 2017)

Klogg said:


> What do you mean by this, specifically the section in bold?




Transacting in many parcels you get a feel and every time I have transacted so far it has not felt right. At key little points that frame the parcel accumulation it has been far to easy to buy and hard to sell when puking them back up.

So my interpretation of the conference call is confession that they are not on top of the complexities arising from the combinations. Indigestion risk has materialised, its going to take time and investment into management systems before the business can be driven hard to knowledgably reduce costs of doing business and increase organic revenue growth through cross sell. We are somewhat in the vicinity of covenants so cash flow conversion becomes a focus. I can't see acquisition growth remaining an option unless they are insane.  So flat earnings growth for a couple of years whilst they get on top of complexity and management systems for the larger business but in that time it will be imperative (and that is going well) that they still take market share in the NBN / UFB roll outs - because that is a one off churn opportunity.


----------



## mcgrath111 (3 May 2017)

skc said:


> Attitude A: How did hedge funds work it out? What was wrong with the broker's projections? Could I have worked it out? What did I miss? Should I change my style and use technical analysis?
> 
> Or
> 
> ...




Lets lock in A Eddie.

I don't understand how all of a sudden the big funds 'worked out', and as such drove the price down from low 4's to low 3's within a week. Smells fishy.

They mention the Singapore cable, yet 'people interested'. 

Going to call it a day with VOC. 
Haven't done much research off the update, and I don't get much detail from it either to be honest.


----------



## mcgrath111 (3 May 2017)

Weird, I thought I could edit my post.

Also, I took an exit today....I see capital raising as a very real issue.


----------



## MrChow (3 May 2017)

Downgrade 1: From October 1 to November 28 net short stock increased to 300% of previous levels.

Downgrade 2: From April 13 to May 2 50-80% of volume was shorted each day.

Would love to work for an institution that gets superior information.


----------



## skc (3 May 2017)

mcgrath111 said:


> Lets lock in A Eddie.




That's the correct answer....cue millionaire music.



mcgrath111 said:


> I don't understand how all of a sudden the big funds 'worked out', and as such drove the price down from low 4's to low 3's within a week. Smells fishy.




Looking at the shorts interest on VOC, they worked it out around Oct/Nov last year, before the first downgrade at the AGM.







VOC is not a simple business and I don't know how the instos worked it out. But the shorts' interests were definitely piped by the sell down and mass exodus of management ranks. There were important exits that weren't announced but were in the public domain. Those were without doubt insider trading...

On the change in revenue recognition which was responsible for $40m of lost revenue, the example given in the conference call was that when customers pay $5m upfront for the 5 year contract, VOC used to recognise the full $5m in the current year, but now it will be spread over the life of the contract. I am no accountant, but geez doesn't that sound like accrual accounting 101? Were there notes in the annual reports that hinted at this and were picked up by the shorters? And seriously, who pays the full amount upfront when the project lasts for years? You wouldn't even do that on a $5k paint job.


----------



## galumay (4 May 2017)

Its a little frustrating when there is corruption on this scale, I am doubly kicking myself because I was so reluctant to get into this sector that I dont like and in a company whose management I knew was awful (in a sector riddled with awful management!), but I overrode all my instincts and took a position in the low $4s because of my analysis that it was oversold on the news (in hindsight i was sort of right - it was oversold on the news the public knew, but the inside traders were another story!).

Luckily my reservations meant I only took a small position and I will chalk it off as another important learning experience. (in a week where I have had a couple!)


----------



## Triathlete (4 May 2017)

It does not matter what insider trading (if it was going on at all) ....Those with technical experience in charts saw it coming.
It played out exactly as an Elliott wave should.
As I have mentioned on a number of occassions the first place you are going to see problems with a stock is on a chart, regardless of what information is out in the public domain.


----------



## Triathlete (4 May 2017)

Boggo said:


> Triathlete, follow up from TLS thread.
> Daily chart attached but it is not the consistent or 'rule' compliant pattern that I would like.
> Basically the price has just touched the minimum W5 level and has attempted a bounce from there.
> 
> ...



I think VOC  played out exactly as was expected.....


----------



## So_Cynical (4 May 2017)

Many PE suitors are circling according to the Australian...a cluster **** of private equity sharks.


----------



## Boggo (6 May 2017)

Triathlete said:


> ...
> 
> As I have mentioned on a number of occassions the first place you are going to see problems with a stock is on a chart, regardless of what information is out in the public domain.




100% agree with that statement Triathelete, happens again and again in both directions.

Looks like the StockDoctor guys were on the money too with their method of reading between the lines.

I have been out of internet contact in the Gammon Ranges for the last week, just got home tonight (fri) and it looks I missed all the fun 

Is that the bottom or is the next level and option ??


----------



## Boggo (6 May 2017)

galumay said:


> In my experience most genuine fundamental investors are of the belief that if a company is trading at a discount to its intrinsic valuation range then it is likley a good incvestment at that point in time. For a mob like Lincoln to say, "oh, its now trading at well below what we believed it was worth, we are going to stop coverage of it." is entirely at odds with FA IMO!.




Isn't the fact that it is trading below what it is worth (based on what, company reports etc ??) a clue that there is an issue or am I missing something really "fundamental" here ?


----------



## So_Cynical (6 May 2017)

Boggo said:


> Looks like the StockDoctor guys were on the money too with their method of reading between the lines.




They didn't see **** coming with RCG, however ballsy for Stock Dr to still rate them as well as they do..


----------



## Triathlete (6 May 2017)

[QUOTE="Boggo, post: 946547, member: 

Is that the bottom or is the next level and option ??
View attachment 70985

	

		
			
		

		
	
[/QUOTE]

All I know is the 5th wave usually extends 50% to 75% so if ut is at those ranges now it  could get a bit riskier to trade and  you would need to watch it like a hawke.

There is a cment that the PE guys may be interested and this might cause a bounce. I have closed my short at $2.36 so just watching now and will.be away from my screens till thursday .I will take another look when I get back...


----------



## Boggo (22 May 2017)

Watching this as an exercise, follow up from here...
VOC - Vocus Group

Now that it has popped up above 2.57 it looks like it may continue to the $3 area. Should it continue through that and past $3.55 the we may have a new trend direction in place.
Just my


----------



## Boggo (24 May 2017)

Boggo said:


> Now that it has popped up above 2.57 it looks like it may continue to the $3 area. Should it continue through that and past $3.55 the we may have a new trend direction in place.
> Just my




That's the gap closed this morning at around the $3, expecting to see a few sellers appear and capitalise on the recent run.
Overall it looks strong so expecting it to continue upwards.


----------



## JTLP (7 June 2017)

Highly conditional $3.50 a share offer. Can't imagine anyone wanting this. Was hoping for a purchase of non core as per credit suisse's note.


----------



## So_Cynical (7 June 2017)

So_Cynical said:


> Many PE suitors are circling according to the Australian...a cluster **** of private equity sharks.




Sharks coming in for the kill.


----------



## skc (7 June 2017)

So_Cynical said:


> Sharks coming in for the kill.




I guess this is the first bid... there is probably more than one shark in the water given the quality of the meat.
VOC did get itself in this shark infested water though, didn't they? 

This is one of the few rare times that a Financial Review takeover rumour actually turn out to be true!


----------



## rb250660 (7 June 2017)

Did you buy any last week Boggo? Cheering?


----------



## Boggo (7 June 2017)

rb250660 said:


> Did you buy any last week Boggo? Cheering?




You knew I would have for the gap .
Not as many as I should have, isn't hindsight great 

I could see that it was likely to close the gap at around $3 which it did, the sell off after that wasn't convincing enough to cause panic and it turned back up at my entry price.
The stop was at 2.60 risking about $600, guesstimate R/R of over 3/1.
One of those every few weeks will keep the wine rack topped up


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## AlwaysBeClosing (8 June 2017)

So what does this mean?  I bought at around $2.40 a share and sold for $1 profit on each - will everyone's shares get taken from them if the buyout happens?  I sold because I was up (and happy to have made my first withdrawn profit), should I have kept on to them?


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## Boggo (9 June 2017)

Boggo said:


> Now that it has popped up above 2.57 it looks like it may continue to the $3 area. Should it continue through that *and past $3.55 the we may have a new trend direction in place*.
> Just my




Quoting my own post here. 
Looking like good support above the $3.55 point, just need another takeover bid now to keep the momentum going.


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## JTLP (18 July 2017)

So it looks like VOC is stuck at $3.50, with 2 offer at this price. 

For all the fanfare of its assets and the potential, this must be pretty disappointing for long term holders. 

Can anyone see a higher bid coming? Looks unlikely to me now.


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## skc (18 July 2017)

JTLP said:


> So it looks like VOC is stuck at $3.50, with 2 offer at this price.
> 
> For all the fanfare of its assets and the potential, this must be pretty disappointing for long term holders.
> 
> Can anyone see a higher bid coming? Looks unlikely to me now.




I think higher bids are possible. The assets are long life and infrastructure-like, so some clever structuring might allow the bidder to offload the hard assets to some long term holders, like a pension fund, who sometimes overpay for assets like these. The bidder would then be left with a telco operator (as opposed to infrastructure owner), so perhaps higher risk but the bidder could recover a large chunk of its outlay with the hard assets spun out.


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## craft (18 July 2017)

JTLP said:


> So it looks like VOC is stuck at $3.50, with 2 offer at this price.
> 
> For all the fanfare of its assets and the potential, this must be pretty disappointing for long term holders.
> 
> Can anyone see a higher bid coming? Looks unlikely to me now.




What's disappointing is that intergration has not gone well. To lose exposure via them endorsing a low cash take over offer would be really disappointing. 

No problem with them granting access for due dillagence - Management lost the right to arrogantly send Private equity packing when they lost comprehesive control of the business and disallusioned a large part of the shareholder base. However I don't expect Private Equity to make a bid for the whole company that gets endorsed - maybe an agreed asset sale to retire debt and give management the time to extract the longer term value for shareholders.


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## JTLP (10 August 2017)

Vocus took a fair ole tumble today on the back of no news. Unless someone got an inside whiff of the upcoming results, or a bidder had walked?


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## notting (10 August 2017)

One for investigation if one of the bidders has walked!


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## JTLP (21 August 2017)

notting said:


> One for investigation if one of the bidders has walked!




Well isn't this a surprising tidbit?


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## mcgrath111 (21 August 2017)

JTLP said:


> Well isn't this a surprising tidbit?



Not one but two!
"The two private equity firms that had been engaged in a bidding war for Vocus Group (ASX:VOC) have bowed out of the race for the Australian telco."


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## galumay (21 August 2017)

I suspect this will prove to be a good outcome for shareholders who are actually investors, I would have been annoyed if they sold out at $3.50. Much better to reject the offers. Hopefully we will see a slow recovery and eventual re-rating of the business.


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## JTLP (21 August 2017)

galumay said:


> I suspect this will prove to be a good outcome for shareholders who are actually investors, I would have been annoyed if they sold out at $3.50. Much better to reject the offers. Hopefully we will see a slow recovery and eventual re-rating of the business.




Oh I hope the same. Just funny how the price got sold down and then "oh, but parties have walked".


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## skc (21 August 2017)

notting said:


> One for investigation if one of the bidders has walked!




Seems to happen a lot these days. Not the investigation part, but the news getting leaked part.


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## mcgrath111 (20 February 2018)

Back down she goes!
Board never fails to disappoint.


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## tinhat (12 October 2018)

I just found out that Vocus offers a 20% discount on iprimus NBN plans that I think makes the pricing very attractive. The only other provider that comes in a couple of dollars cheaper per month that I could find on whistle out is MyRepublic. The deal requires a natural person to own a minimum of 500 shares (approx $1,555 worth).

I rate Vocus a buy. New management led by Bob Mansfield is getting down to business with the support of activist shareholder John Ho of Janchor and has restructured the debt and has seen off the need for any asset fire sales and threat of opportunistic take-overs. Technically the price appears to have come off a long accumulation phase following a triple bottom. Furthermore, I think the change in industry structure with the planned merger between Vodafone and TPG will require TPG to compete more like a mature cash cow business to generate the dividend stream that will be needed to service the Hutchinson Australia zombie debt. Although the NBN makes fixed line a more contestable market and the race for market share continues while the NBN rolls out, margins could also settle down in time especially if nbn's balance sheet gets restructured along the way.


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## So_Cynical (13 October 2018)

tinhat said:


> I just found out that Vocus offers a 20% discount on iprimus NBN plans that I think makes the pricing very attractive.




https://vocusgroup.com.au/investors/my-shareholding/shareholder-rewards/

They kept that quiet - anyway marginal saving for me from my current (good) NBN service, but did notice that my current provider is charging me $5 more per month than if i signed up now for a new plan...

Iprimus still forcing customers to bundle when i haven't have a land line for years, also the address search says im ADSL ready, strange since i have been connected to NBN fibre for 2 and a half years.


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## Trav. (6 December 2018)

Question for anyone out there. 
In the chart below I was wondering if this is a good example of a likely end to a rising market (TradeGuider term) or a Break Out as per my scanning software as indicated by black line.
1. End of rising market  - Large volume today and the Narrow Range Bar (NRB) formed following good rise since August.
2. Break Out - Accumulation over last few days testing the $3.50 HR.


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## peter2 (6 December 2018)

No, it's not an end to a rising market.


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## Boggo (7 December 2018)

I'm long on this on the weekly, had a good run on it ages ago but unlikely to get the same again.


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## Cam019 (19 February 2019)

VOC looking interesting here. Nice big weekly basing pattern into an ascending triangle. It put out one buy signal for my system on the week finishing 19-10-2018 and then nothing since. That could possibly change soon. Potential for the weekly portfolio @peter2?


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## peter2 (19 February 2019)

I agree that the chart looks appealing. A nice asc tri at the end of the 20 mth long base pattern augurs well. It's a company I've not traded and know very little about.  

I'd like to know why price fell from 9.5 to 2.5 at the time the market was rising and that the problem has been rectified. 

The current bumpy reporting season is opening up spaces in the portfolio every day.


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## citac (19 February 2019)

Some reasons for its downfall
-NBN wiping profit from the face of the earth.
-Sea cable, costing money while the business wasn't making up ground in other areas.
-Merger and acquisitions, nearly killed the business. To many to fast.
-Management and Boardroom issues.
-High Management turnover.
-Missed guidance 2 times from memory(please check that)
-TPG combined with IINET, seemed like it could/would dominate the market Vs Dodo and Iprimus. 

That's all I can remember off the top of my head. But there's is more.

it is looking more positive, however the results will be the ultimate decider. 

I got lucky and re bought then hit green and got out with +10%.

Telco is changing in so many ways, TPG and Voda, Vs Vocus and Optus, Vs Telstra trying to introduce 5G as to not use NBN and make greater profit margin.


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## tinhat (19 February 2019)

I sold out of VOC last year. The chart does look enticing but the telco sector is in a period of margin destruction brought about by the NBN. Telstra ended up with the lion's share of the new high frequency bandwidth that will power 5G and potentially compete directly with the NBN for use by the internet of things.

On the plus side, the story of VOC is one of internal transformation under the stewardship of Bob Mansfield. They are carrying a lot of good will on their balance sheet for a bunch of brands that are not that impressive IMHO.


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## citac (28 February 2019)

tinhat said:


> I sold out of VOC last year. The chart does look enticing but the telco sector is in a period of margin destruction brought about by the NBN. Telstra ended up with the lion's share of the new high frequency bandwidth that will power 5G and potentially compete directly with the NBN for use by the internet of things.
> 
> On the plus side, the story of VOC is one of internal transformation under the stewardship of Bob Mansfield. They are carrying a lot of good will on their balance sheet for a bunch of brands that are not that impressive IMHO.




Hi Tinhat, 

I agree stay away, the 5G play by the telcos is drumming up investor support but once again, its to compete against the government.


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## JTLP (18 April 2019)

Any reasons why vocus has been on the march? Some solid increase recently.


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## MARKETWINNER (18 April 2019)

Only think I can say is:  It is quietly going up. It had a strong start in January.


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## galumay (18 April 2019)

Not sure, its still a dog of a business IMO.


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## Cam019 (20 April 2019)

Multiple entry signals here for *VOC* on both the daily and my own weekly system. Can't comment on the business side of things as it's not a consideration of mine when picking stocks, but I can appreciate others might be cautious about it. Still, a nice base breakout on the daily, however, waiting for a test of the support level would offer a better R:R opportunity.


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## greggles (27 May 2019)

Vocus Group has confirmed that it has received a confidential, non-binding, indicative proposal from EQT Infrastructure to acquire all of the shares in Vocus at a price of A$5.25 per share in cash, to be implemented by way of a scheme of arrangement.

After consideration by the VOC Board and the Company's advisers, the Board has decided to grant non-exclusive due diligence access to EQT to enable EQT to potentially put a formal binding proposal to Vocus. That process is likely to take a number of weeks.

Given that VOC's closing price on Friday was $3.89, an offer of $5.25 seems a pretty good result in the circumstances.


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## JTLP (27 May 2019)

greggles said:


> Vocus Group has confirmed that it has received a confidential, non-binding, indicative proposal from EQT Infrastructure to acquire all of the shares in Vocus at a price of A$5.25 per share in cash, to be implemented by way of a scheme of arrangement.
> 
> After consideration by the VOC Board and the Company's advisers, the Board has decided to grant non-exclusive due diligence access to EQT to enable EQT to potentially put a formal binding proposal to Vocus. That process is likely to take a number of weeks.
> 
> Given that VOC's closing price on Friday was $3.89, an offer of $5.25 seems a pretty good result in the circumstances.




Hmm. Market isn’t convinced. Last potential T/O ended with buyers walking away (read - the books were no good). I’d be happy to get out around $5. Hopefully some other suckers step up to buy.


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## JTLP (4 June 2019)

JTLP said:


> Hmm. Market isn’t convinced. Last potential T/O ended with buyers walking away (read - the books were no good). I’d be happy to get out around $5. Hopefully some other suckers step up to buy.




And just like that, discussions terminated. Damn. Should have gone with the gut and sold. 

$4 on the nose tomorrow I’d imagine.


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## bigdog (5 June 2019)

Motley reports
https://www.fool.com.au/2019/06/05/why-the-vocus-share-price-is-getting-slammed-today/

*Why the Vocus share price is getting slammed today*
Tom Richardson | June 5, 2019 |

The *Vocus Group Ltd* (ASX: VOC) share price plunged 18% to $3.75 this morning after the home broadband and enterprise-facing fibre-optic internet and data centre group had some bad news for shareholders.

Apparently Vocus’s Swedish private equity suitor *EQT Infrastructure* has withdrawn its $5.25 per share takeover bid after doing just over a week’s due diligence in the Vocus data room. 

In fact, Vocus shareholders won’t like the look of the chart below: 





Source: Google Finance

At $3.75 today, the Vocus share price is now 40% below the indicative $5.25 per share price EQT tabled this month. For investors, the big unanswered question is why has EQT become the third private equity group in a couple of years to walk away from a Vocus takeover offer after doing due diligence on the business. 

In fairness to Vocus, there could be any number of reasons why the private equity groups walked away—including that the bids were quite speculative in the first place in wanting to have a closer look at the business, without a genuine commitment to proceeding with the bids. 

Vocus also has a net debt load of $1.1 billion, and NBN-facing consumer broadband and business internet businesses as a result of its M2 Group merger that are lower quality compared to its dark fibre assets. As such, it’s likely that one issue weighing heavily on the minds of any potential private equity buyer is how much they could sell M2 or float the assets for in a bid to reduce the debt and restructure the business.


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## JTLP (6 June 2019)

I was way off. Finished below the pre-offer price. Buyers walking away from due diligence 3 times in a row mustn’t be a good look. 

Wonder why they didn’t let AGL take a look?


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## JTLP (11 June 2019)

JTLP said:


> I was way off. Finished below the pre-offer price. Buyers walking away from due diligence 3 times in a row mustn’t be a good look.
> 
> Wonder why they didn’t let AGL take a look?




And just like that, AGL are back with a bid for $4.85. 4 weeks exclusive due diligence granted by Vocus. I can’t see the synergies but would be happy to have this taken off my hands at this price.


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## So_Cynical (12 June 2019)

JTLP said:


> I can’t see the synergies.




Something about smart grid and data...


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## Smurf1976 (12 June 2019)

So_Cynical said:


> Something about smart grid and data...



The electricity retailers (retailers as distinct from generators or networks) are now responsible for new metering installations.

Existing property with existing meter = owned by the distributor (company that owns the poles and wires). Replacement metering installation at an existing property or a new building = metering is the responsibility of the retailer (eg AGL, Origin, etc).

Depending on what they want to do with the smart grid stuff, owning a telco may or may not have advantages there but there's a lot of "if" aspects to it in my opinion.

It's not the first such thing however on either side:

Telstra has had an electricity retail licence for years and it was always expected by many in the power industry that they'd become a major player but they've never pursued it.

Likewise there have been past communication offerings by electricity companies, including those who built their own FTTH network prior to the NBN idea.

It's a somewhat "loose" sort of synergy though but then there's the regulatory aspect. If AGL wants to grow its business then given their already large position and the politically contentious nature of the energy industry it's rather hard for them to grow in that space so they'd be looking at what else they could do. To the extent that they've got experience relevant to other things it's in finance, utility type services (eg telco) and mining. Of that lot, buying a telco is probably the easiest step.


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## Smurf1976 (12 June 2019)

Adding that I left out data centers.

They're big energy users so another synergy for an energy company.


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## Zaxon (12 June 2019)

Smurf1976 said:


> The electricity retailers (retailers as distinct from generators or networks) are now responsible for new metering installations.



Is that the case in all states?  If so, some 2-bit electricity retailer startup, and there are a number of these since they're really just a billing service, will suddenly have to worry about meter infrastructure.


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## Knobby22 (12 June 2019)

Zaxon said:


> Is that the case in all states?  If so, some 2-bit electricity retailer startup, and there are a number of these since they're really just a billing service, will suddenly have to worry about meter infrastructure.



There is a separate entity for metering installation.


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## Zaxon (12 June 2019)

It would seem that Smurf is correct.  I guess smaller retailers will just hire a 3rd party company, perhaps like Service Stream Ltd.


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## So_Cynical (13 June 2019)

Thanks Team ASF - this could be interesting, VOC is basically a network business and that really would come in handy for smart grids and meters.


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## Smurf1976 (13 June 2019)

Zaxon said:


> Is that the case in all states?



It is for the National Electricity Market (NEM) states certainly for those on the main grid. Not sure what WA and NT are doing as they're separate.

So your existing meter which is owned by the distributor (eg SAPN) stays but if an ew one is required for any reason (eg installing solar, end of life replacement, whatever) then that's now the retailer's responsibility and all new meters, under normal circumstances, will be smart meters which communicate (so no more manual meter reads).

As the nature of the energy industry changes there's a growing need to control not just generation but also load and to take that well beyond the traditional approaches. Doing that first requires a method of communication with that load.

Some examples of that are AGL's Virtual Power Plant trial in SA using communication connected batteries. Another one is the King Island Renewable Energy Integration Project (Hydro Tasmania) which includes very rapid switching of certain consumer loads. Other companies also have various projects.

That's one "data" aspect of the energy industry - using data in the context of supplying power.

That data centers use enough power that most electricity companies have at least some interest is another.

The overall concept of retailing a "connected home" sort of approach is another. Think in terms of Telstra offering entertainment content not just the method of communications. There's no real barrier to AGL getting into that if they want to - sign up with them for electricity and they'll give you "free" access to whatever online entertainment service carrying their own branding etc. Or maybe they just offer the actual means of communication without the content. Lots of options there.


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## rederob (13 June 2019)

Smurf1976 said:


> So your existing meter which is owned by the distributor (eg SAPN) stays but if an ew one is required for any reason (eg installing solar, end of life replacement, whatever) then that's now the retailer's responsibility and all new meters, under normal circumstances, will be smart meters which communicate (so no more manual meter reads).



Smurf, do you see any value in retrofitting meters?
Or, do you think it is likely that AGL would retrofit meters?


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## Smurf1976 (13 June 2019)

rederob said:


> Smurf, do you see any value in retrofitting meters? Or, do you think it is likely that AGL would retrofit meters?



There's no set program to do so and a lot of uncertainties as to how fast it will happen, that is replacement due to need (slowly) versus replacement for purely commercial reasons (potentially very fast), but ultimately it will happen and at some future time the retailers will own all metering (so the distributors own none).

Other industries are interested in or going down a similar approach. Eg gas and water meters. They have some difficulty when compared to electricity meters since gas and water meters in residential situations don't have mains power connected, they're a purely mechanical device traditionally, meaning that any "smarts" need to be low powered. 

Some utilities have gone half way however. Eg water meters in Hobart have low powered transmitters in them and the meters are read simply by driving past. So there's still a meter reader but they don't get out of the car to read the meter, just drive past slowly in an ordinary car with a receiver in it. So it's still a sort of "big data" approach, albeit one implemented in a very basic manner.

Public transport's another example of a utility-like industry that has gone down the "data" track. Ticketing is one aspect of that but physically tracking vehicles, especially buses, is another. Use your smartphone to see in real time exactly where the bus you're waiting for is.

Control of the systems too. Eg monitoring gas or water pressure and communicating that back to whatever central control system and raising an alarm for human investigation if it goes outside where it should be.

Things like large LPG tanks in areas without mains natural gas are another one. Monitoring and communication to a central system to alert when it's down to x% full and needs to be topped up saves anyone having to keep a watch on it and manually arrange a gas delivery.

Road signs are another one. Eg every school in Tasmania has solar powered illuminated speed signs which light up during the school zone times as a road safety measure (it's pretty hard for anyone to miss seeing a great big flashing sign even if it's foggy at the time). Another example of a system installed in the open which communicates back to a central control system for programming and monitoring. If the battery's running flat then someone can be alerted. If the school's shut tomorrow for whatever reason then the sign doesn't turn on. Etc.

And so on. The common element in all of this is traditional utility and utility-like services going down the path of implementing "smart" systems all of which rely on data. Now a modest size bus company won't likely buy a telco but for someone like AGL that's an option to explore certainly.


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## rederob (13 June 2019)

Smurf1976 said:


> The common element in all of this is traditional utility and utility-like services going down the path of implementing "smart" systems all of which rely on data.



I guess my thinking was along the lines of creating microgrids, especially where battery and solar are integrated.  Given that 60% of homes in our street already have solar PV, and I imagine many other Australian suburbs would have high solar uptake, then I was curious how a microgrid would be possible *without *retrofitting smart meters, given I heard the concept is being piloted somewhere .


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## Smurf1976 (14 June 2019)

rederob said:


> I guess my thinking was along the lines of creating microgrids, especially where battery and solar are integrated.  Given that 60% of homes in our street already have solar PV, and I imagine many other Australian suburbs would have high solar uptake, then I was curious how a microgrid would be possible *without *retrofitting smart meters, given I heard the concept is being piloted somewhere .



In a purely technical sense it would be dead easy. There needs to be a means of controlling the connected solar (etc) equipment but that's a separate task as such to metering.

Whether any company would be interested in such an approach from a commercial perspective and could make it pay is another matter.

More directly relating to AGL possibly taking over VOC, something I left out is that a rival (non-AGL) electricity company already offers their customers their own branded NBN / ADSL product as an additional service upon signing up to a 12 month electricity contract.


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## JTLP (17 June 2019)

Vocus must be an absolute basket case under the hood. Every bidder has walked away early and it seems very negative.


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## rederob (17 June 2019)

JTLP said:


> Vocus must be an absolute basket case under the hood. Every bidder has walked away early and it seems very negative.



Vocus went up in price as a result of speculation and several opportunities for a buyout.
These have all - especially after AGL's decision today - come to nought.


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## JTLP (17 June 2019)

rederob said:


> Vocus went up in price as a result of speculation and several opportunities for a buyout.
> These have all - especially after AGL's decision today - come to nought.




Well aware. Just saying that every bidder that’s had a look has baulked early on. Not a good sign.


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## Knobby22 (17 June 2019)

JTLP said:


> Well aware. Just saying that every bidder that’s had a look has baulked early on. Not a good sign.




They always call them suitors so you think of the company as a pretty girl.
I keep thinking that every time they "look under the bonnet" they find more than the bargained for..


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## Smurf1976 (17 June 2019)

JTLP said:


> Vocus must be an absolute basket case under the hood. Every bidder has walked away early and it seems very negative.



It seems so.

AGL management seem to be saying that they're still keen on the concept of getting involved with communications, just not by means of buying VOC.

Perhaps what's most concerning for VOC shareholders is that AGL reached their conclusion so quickly. Whatever the reason, logic says it must be a big enough one to have made the decision very clear cut with no need to give it too much thought.


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## JTLP (16 August 2019)

Where’s that head bang emoji? For some stupid reason didn’t sell out when the first offer came through, now left languishing and this is getting punished hard. 

Is it NBN driven or something more sinister?


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## peter2 (9 September 2019)

The weekly chart shows how disappointing VOC has been to investors ($9 to $2.3). VOC has been trading in a range for more than 2.5 years while mgt tries to turn the company around. The recent daily price action is looking more bullish and I'm anticipating price to BO>3.40 soon. I'll accept another buyout offer.


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## JTLP (13 December 2019)

Anyone got an insight in to why Vocus has taken such a beating? Back to the depths of sub $3, when not long ago we had buyouts on the table and an OK SP. 

In other news, I’ve participated in the class action and believe this month we’ll find out how much we’re entitled to...


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## Dona Ferentes (28 December 2020)

Vocus share price returned 40% for investors over the course of the year; it is back to the levels seen in June 2019, when termination of talks with AGL (to acquire VOC) were halted,

In recent years, sales have not increased, earnings per share (LHS below) have dropped and EPS (below, RHS) is in the low single digits.






Its core growth engine is the Vocus Network Services (VNS) – a fibre network that encompasses all of Australia, the Pacific rim to Hong Kong and the east coast of the United States, as well as New Zealand. The company’s retail offering, meanwhile, includes brands like Dodo and iPrimus.

FY20 was the first year in the company’s 3-year turnaround plan, where it delivered total recurring revenues of $1.75 billion, a 1% decline on the prior year. The company is predicting an even brighter FY21, and expects earnings to grown between 8% to 12% in its VNS business.


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## Trav. (28 December 2020)

@Dona Ferentes good post mate, I have added this one to the watch list. 

Weekly chart below showing another view.


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## Dona Ferentes (8 February 2021)

Macquarie Infrastructure and Real Assets has offered $5.50 a share in bid for Vocus


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## Dona Ferentes (9 March 2021)

VOCUS *AGREES SCHEME IMPLEMENTATION DEED *WITH CONSORTIUM OF  MACQUARIE INFRASTRUCTURE AND REAL ASSETS AND AWARE SUPER 
• If the scheme proceeds, Vocus shareholders to receive consideration of $5.50 per share in cash 
• Values Vocus equity at $3.5 billion and an enterprise value of $4.6 billion


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## System (26 July 2021)

On July 23rd, 2021, Vocus Group Limited (VOC) was removed from the ASX's Official List in accordance with Listing Rule 17.11, following implementation of the scheme of arrangement between VOC and its shareholders in connection with the acquisition of all the issued capital in VOC by Voyage Australia Pty Limited.


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