TPG estimates $90M hit from COVID, NBN and regulatory headwinds

TPG estimates $90M hit from COVID, NBN and regulatory headwinds

First results posted since VHA merger.

Iñaki Berroeta (TPG Telecom)

Iñaki Berroeta (TPG Telecom)

Credit: TPG

TPG Telecom has estimated the financial impact from COVID-19 at $90 million to its reported earnings before tax, in addition to NBN and regulatory headwinds, in its full financial year results ending 31 December.

Despite this, the telco remained particularly optimistic that its earnings before tax (EBITDA) and net profit were ‘resilient’ in a year full of challenges.

The telco revealed revenue increased 24 per cent to $4.35 billion and reported EBITDA increased 18 per cent to $1.39 billion. 

Reported net profit was $734 million, which includes a one-off, non-cash credit to income tax expense of $820 million. On a pro-forma basis, net profit fell 10 per cent to $282 million. 

These results include the full 12 months of Vodafone Hutchison Australia along with a contribution of six months from TPG (post merger dated 26 June). 

TPG CEO and managing director Iñaki Berroeta said despite the COVID and regulatory challenges that disproportionately impacted the telco, it saw improved momentum in mobile in the final quarter of 2020 and it was optimistic about continued recovery in 2021. 

“In 2020, we completed the merger and delivered on our promises to customers and shareholders in the most trying year for Australia’s economy and society in decades, while managing a number of significant regulatory challenges,” Berroeta said. 

“We drove increased competition in the market, supported our customers and employees through COVID, accelerated our 5G rollout, made solid progress on integration activities, reduced debt and declared a maiden dividend of 7.5 cents per share. 

“Our results are pleasing given we were not only managing COVID impacts, NBN headwinds and aggressive market competition, we were also regaining ground following uncertainty around the merger delay and the 5G vendor restrictions.”

TPG said it continued to grow its share of the fixed broadband market with its subscriber base climbing six per cent to 2.17 million. Its NBN base also increased 28 per cent to 1.9 million, with 415,000 net subscriber growth as NBN migration nears completion. 

TPG particularly noted its mobile customer base was impacted by the absence of overseas visitors and migrants, especially international students, due to the global travel restrictions, suffering a five per cent decline in postpaid mobile customers to 3.26 million. Prepaid mobile customers also decreased 22 per cent to 1.97 million. 

Berroeta anticipates as the telco heads into 2021 it will continue to face COVID uncertainty, NBN margin erosion to the tune of $60 million and about an $11 million impact from the Regional Broadband Scheme (RBS) levy. 

“To offset these headwinds, we will work to service more customers with fixed wireless and other on-net services, continue to improve performance in mobile, grow enterprise and government, and realise significant merger synergy cost savings,” he said. 

Furthermore, Berroeta said TPG was focusing on building momentum, merger integration plans and its 5G mobile network, which was on track to achieve scale in top six cities by the end of the year and launch a 5G fixed wireless services offerings in the first half. 

So far, the merger progress includes finalising the executive team, integrating the two legacy businesses under a unified management team; deploying 1800MHz spectrum to 1.8 million customers; nearing completion to integrate almost 400 small cells into the mobile network; migrating around 60 per cent of iiNet customers to its mobile network — all while being ahead of schedule to connect dark fibre to an additional 700 mobile sites. 

The combined enterprise team was also winning several major tenders, including one with NAB to supply fixed and mobile services. 

“We are better together, and a result of the integration work we have completed so far, consumers and enterprise customers are already benefiting from enhanced network services and stronger competition,” Berroeta added. 

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