TPG posts healthy profit following network sharing rejection

TPG posts healthy profit following network sharing rejection

NPAT was up when including May tower asset sale, stable when excluding.

Iñaki Berroeta (TPG Telecom)

Iñaki Berroeta (TPG Telecom)

Credit: TPG

TPG Telecom has ended its 2022 financial year with profit remaining healthy, coming months after its plans for its network sharing agreement with Telstra were quashed.

The telco wrapped up FY22 with net profit after tax (NPAT) going up 354 per cent, during the 12 months to 31 December 2022, which includes customer base amortisation and the selling of its passive tower assets in May, which nabbed it $950 million.

Excluding this, however, the figure remained relatively stable, dropping down slightly to $222 million, down from $225 million in FY21.

Service revenue was also up, rising 1.5 per cent to $4.4 billion, while earnings before interest, tax, depreciation and amortisation (EBITDA) were up 23.6 per cent to $2.1 billion. Underlying EBITDA meanwhile was pegged at $1.8 billion.

Meanwhile, TPG saw an increase of 300,000 mobile customers, which brought its total up 6 per cent to 5.3 million. The average revenue per user (ARPU) for mobile was also up 1.9 per cent to $32.40 per month and postpaid mobile ARPU rose 3.1 per cent, to $42.70 per month.

Iñaki Berroeta, TPG CEO and managing director, said the telco benefited from this renewed customer activity and reflect the “solid execution” of its strategy.

“The operational and strategic foundations we have put in place are translating to an improving financial performance, which we expect to gather momentum through 2023,” he said.

The telco’s rules come months after the Australian Competition and Consumer Commission (ACCC) did not authorise its proposed network sharing deal in December, which, among other features, would see TPG’s mobile coverage expanded to 98.8 per cent of the Australian population.

As such, TPG said it did not recognise any material financial impacts of the agreement in its FY22 results.

“The ACCC decision not to authorise this network sharing agreement was a significant loss for regional Australia and for consumers and businesses,” Berroeta said. “TPG Telecom and Telstra are challenging the decision through the Australian Competition Tribunal.”

Its total Fixed customer base was “broadly flat” at 2.2 million subscribers, but more than doubled its Fixed Wireless subscribers to 171,000 over the period.

“Our Fixed Wireless services continue to play an important role in attracting more customers onto services delivered over our own infrastructure, helping improve margins across our total Fixed base,” Berroeta said.

TPG’s 5G rollout is also on schedule, with over 2,000 mobile sites completed to date, with 1,000 more expected in 2023, as well as a “similar number” for 2024 and 2025.

Its Enterprise, Government and Wholesale business also grew during FY22, with a total contract value of over $150 million recorded.

“Our Enterprise, Government and Wholesale business continues to grow service revenue, reflecting our ability to deliver essential connectivity solutions to businesses of all sizes,” Berroeta added.

Looking ahead, TPG said that, assuming no material change in operating conditions and excluding material one-offs and transformation costs, it expects underlying EBITDA for FY23 to land between $1.9 billion and $2 billion.

Article updated on 28 February at 9:21AM to reflect that service revenue was at $4.4 billion, EBITDA was at $2.1 billion and underlying EBITDA for FY23 is expected to increase and land between $1.9 billion and $2 billion, as opposed to million.

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