The focus on Vocus
We last spoke about Vocus Communications Limited (ASX: VOC) at the end of October and it’s rallied nicely since. Our thesis for investing in Vocus stems from the high incremental profit margins it earns on its dark fibre assets. This part of the business seems to be tracking fairly well with buildings on the network up from circa 3,300 at June 30 to >3,500 by end September 2015. We expect there’s plenty more to come with the company reporting 20,000 ‘near-net’ buildings yet to convert over. Vocus also announced that it is entering into a joint venture with Nextgen to build a new submarine cable from Perth to Singapore. In a nutshell, submarine cables connect Australia to the internet and our increasing demand for data is taking up significant capacity on other cables in operation. The project is set to cost US$120m-$130m which isn’t cheap but it expects to generate solid returns on capital invested (an internal rate of return of 25 per cent). READ THE FULL ARTLCE HERE: (VIEW LINK)
Roger Montgomery founded Montgomery Investment Management, www.montinvest.com in 2010. Roger has than three decades of experience in investing, financial markets and analysis. Roger also authored the best-selling investment book, Value.able.