Continued NBN headwinds hit TPG financials

Continued NBN headwinds hit TPG financials

Posts $199.9 million profit, 11.2 per cent less than previous year

TPG Telecom's (ASX:TPM) profit was down by 11.2 per cent, with the company posting $199.9 million for the first half of the 2018 financial year, the telco has revealed in its latest financials. 

TPG told shareholders it experienced significant headwinds in 1H18 from the migration of DSL customers to lower-margin NBN services, resulting in a $21 million gross profit margin decrease for the period, year-on-year. 

A loss of gross profit from home phone services as customers migrate to NBN bundled services and electricity price increases also affected the telco. Subsidiary, iiNet saw fixed voice gross profit decrease by $9 million and electricity prices increase cost the company $3 million.

The revenue for the company showed 0.8 per cent increase to $1.25 billion, with $878 million coming from consumer and $374 million from corporate.

Earnings before interest, tax, depreciation and amortisation (EBITDA) was down 11.7 per cent to $418.2 million.

The telco told shareholders on 20 March that the first half EBITDA result is representative of the underlying EBITDA. There is however a decrease in the results of $55.2 million, as in the previous corresponding period the company benefited from $55.8 million of favourable non-recurring items.

The corporate segment showed better results than consumer with corporate EBITDA of $158.9m for 1H18 compared to $157.2m for 1H17. The consumer had EBITDA of $260.2m compared to $267.8m for 1H17.

TPG has updated its full year underlying EBITDA guidance following the half year results from $800-815 million to $825-830 million for the full 2018 financial year.

Net profit after tax (NPAT) for the reporting period ending 31 December 2017 was $198.7 million.

The telco closed the 2017 financial year – ended 31 July 2017 – with revenue of $2.5 billion, or a four per cent increase from the previous year, when the company posted $2.4 billion.

Earnings before interest, tax, depreciation and amortisation (EBITDA) were up by five per cent to $890.8 million, with the underlying EBITDA for FY17 of $835 million. This was the first time that iiNet's results were incorporated into the group's results. TPG acquired iiNet in August 2015 for $1.4 billion.

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