Vocus Communications Ltd — Strong penetration in domestic Australia and New Zealand division

Strong penetration in domestic Australia and New Zealand division: Vocus Communications Ltd (ASX: VOC) continued to expand its penetration through fiber network and data center in Australia and New Zealand. VOC rose its Australian metro fiber network to 760km while over 4,200km in New Zealand added on completion of FX Networks acquisition. VOC has over 15 data center facilities spread across 11 locations with a total area of 5,788 square meters and started a new flagship data center in Melbourne CBD while extending its Auckland data center by state of the art facility. The group bought rights to 10% of the SE-ME-WE 3 cable connecting Perth to Singapore, to increase its international connectivity through the West coast. Meanwhile, VOC reported revenue and underlying EBITDA rise by 62% and 56% to $149.8 million and $51.6 million, respectively, during fiscal year of 2015. Moreover, the group and M2 Group entered into a Merger Implementation Agreement and accordingly VOC stock surged over 21.33% (as of January 20, 2016) in the last six months. On the other hand, the surge in the stock placed VOC at unreasonable valuations which is trading at a relatively higher P/E. The group also has a very low dividend yield. We give an “Expensive” recommendation on the stock at the current price. To read the complete report click here

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