Vocus Group Ltd Managing challenging conditions

Managing challenging conditions: Vocus Group Ltd (ASX: VOC) revised its FY17 guidance with revenue now expected to be over $1.8bn compared to guidance of approximately $1.9bn. FY17 Underlying EBITDA is now expected to be $365-375m compared to guidance of $430-450m. The FY17 underlying NPAT is now expected to be in the range of approximately $160-165m compared to guidance of $205-215m. Moreover, based on the FY17 revised earnings forecast, the net debt at June 30, 2017 is expected to be $1-1.1bn. On the other hand, the net leverage is expected to be ~2.6x compared to the covenant of 3.5x. Further, the cumulative run rate of acquisition synergies expected to reach $57m in line with guidance. VOC continues to expect FY17 core capital expenditure (pre-ASC payments but inclusive of IRU payments) to be ~$182m. VOC also clarified the letter from ASX requesting a response to specified questions in respect of the Revised Guidance released by the company. The group expressed about it realizing the financial metrics’ actual forecast to be lower than earlier guidance on May 02, 2017, based on a review of the trading inputs. On the other hand, the ongoing rollout of the NBN is creating headwinds for many telecommunication providers. The group still seems to hold long-term potential at the back of assets and network infrastructure, though trades on a volatile scenario as of now.

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