Vocus NZ rebrands as IPO marketing roadshow kicks off

Vocus NZ has been rebranded as Orcon Group ahead of a dual listing on the NZX and ASX, according to leaked UBS and Goldman Sachs presentations.

The listing is expected before Christmas.

Vocus’ new owner Voyage Australia, earlier confirmed it had hired Goldman Sachs, Forsyth Barr and UBS to manage a possible float of its NZ operation, which includes the Orcon, Slingshot, and Stuff Fibre brands in the retail ISP market, provisioning for Sky Broadband, an electricity retailer, a data centre operation and a nationwide fibre network.

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Meetings with potential investors are expected to begin over the next week.

A UBS presentation values Vocus NZ, or “Orcon Group” at between $598m and $783m – or a valuation of between 8x and 11x ebitda. Spark is currently trading at around 9x operating earnings and the wholesale-focused Chorus at around 6x.

The Goldman Sachs deck says operating earnings – $65m in FY2020 and $69m in FY2021 – are expected to hit $71m in FY2022 and $76m in FY2021.

Orcon Group expects $428m revenue in FY2022 and $454m in FY23, Goldman’s report said, up from $417m in FY21 and $398m in FY2020.

It joins a flurry of possible tech listings on the NZX later this year. 2degrees’ US owner Trilogy is also lining up a local IPO for its NZ asset, while TradeWindow says it’s planning a direct listing by Christmas.

Where 2degrees’ non-deal IPO roadshow emphasised that the carrier now has its own nationwide mobile network (no longer reliant on roaming deals with Vodafone), Orcon put an emphasis on landline infrastructure, where it is the largest player in fibre backbone behind Chorus

Orcon Group also looms large in fixed-line retail broadband with around 230,000 customers (behind Vodafone’s 420,000 or so and Spark’s recently reported 701,000 and ahead of fourth-placed 2degrees’ on 139,000 and fifth-placed Trustpower on 112,000).

Its relatively modest mobile business is based on a wholesale or so-called virtual mobile network operator (VMNO) deal with Spark.

Vocus Group, which operates over Australia, NZ and parts of Asia, was delisted from the ASX on June 25 following its A$3.5 billion sale to Voyage Australia – a joint venture formed between Mira (Macquarie Asset Management, a subsidiary of ASX-listed Macquarie Group) and Aware Super.

The group’s NZ operation is headed by Mark Callander, who retained his roles as CEO of Vocus NZ and head of the telco’s wholesale operation on both sides of the Tasman after resigning his role as executive director in the wake of the sale as Voyage installed its own appointees.

As the deal closed Callander received A$8.4m compensation for the cancellation of long-term share options, tied to a bonus scheme. The payment was contingent on his continued service. The telco industry veteran’s experience is expected to be one of the selling points for the IPO.

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