Vocus Group has booked more than $1.5 billion in write-downs spread across its Australia and New Zealand businesses and updated the market on its earnings.
Valuations across the telecommunications sector have dropped significantly in the last 12 months as the industry face headwinds from greater competition and the National Broadband Network.
Following a review of its assets and goodwill, Vocus decided to take $1.3 billion of non-cash impairments on its Australian business and a further $199 million on its New Zealand business.
The write-down is a recognition the landscape for Australian telcos has changed dramatically and analysts had forecast such a move.
The goodwill on the telco’s balance sheet has increased following a wave of mergers and acquisitions.
In the last two years Vocus has completed a $1.2 billion merger with Amcom, a $3.8 billion merger with M2 Group and finally bought Nextgen for $807 million.
“The review has been undertaken utilising the detailed five year business plans for each of the three operating divisions and group services,” the company said in a statement to the Australian Securities Exchange.
“These plans have been developed over the last few months taking into account the current competitive market environment, in particular in the consumer broadband sector in both Australia and New Zealand.”
Vocus will report its full-year results next week and on Thursday it said its unaudited underlying earnings before interest, tax, depreciation and amortisation have come it at $366.4 million, within the company’s guided range of $365 million to $375 million.