Friday, 06 September 2019 06:30

TPG profits fall 56% 'due to mobile network cancellation' Featured

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Telecommunications provider TPG Telecom has reported a fall of 56% in net profits for the financial year 2019 compared to last year, with the company attributing the fall from $397.5 million to $175 million to its being forced to give up plans for a mobile network.

Revenue was also down, with $2.5 billion coming in, a 0.7% decrease from FY2018.

The company was forced to cancel plans for its mobile network, which would have been the fourth in Australia, after the Australian Government banned Chinese telecommunications vendor Huawei Technologies from supplying equipment for any 5G networks in the country.

At the half-year point itself, TPG recorded a drop of 76.4% in net profit, with the figure being just $46.9 million compared to the $198.6 million of the previous year.

TPG and Vodafone Hutchison Australia are waiting on the Federal Court for a decision on a merger between the two companies. Announced in August last year, the plan did not find favour with the competition watchdog, the Australian Competition and Consumer Commission.

The court hearing is scheduled to begin on 10 September and conclude in three weeks.

In its results statement, TPG said its earnings before before interest, taxes, depreciation, and amortisation had also been affected by the migration of DSL and home phone customers to low-margin NBN services. The EBITDA figure for FY19 was $809.4 million, a drop of 2.1%

 tpg fy19 results

Chief executive David Teoh hinted that the next year could also be a bad one, saying: "FY20 is expected to be the year that the Group experiences the greatest financial impact from customer migration to the NBN, with combined headwinds from residential DSL and home phone customers moving to NBN expected to be around $85 million.

"In addition, the annualisation of the deterioration of profitability of existing NBN customers experienced in 2H19 a result of increased NBN wholesale cost per user is forecast to create a further NBN headwind for FY20 of approximately $25 million.

"By the end of FY20, the Group expects to have less than 15% of its residential broadband customer base remaining on ADSL."

The company said it was continuing to build its Singapore mobile network, with outdoor service coverage measured at 99.69% in July.

"Sign-ups to the free service trial continue to be strong (now close to 300,000)," Teoh said. "Feedback on network coverage and quality continues to be positive and the launch of free unlimited roaming to Malaysia and Indonesia has been particularly well received. Free roaming to India will be launched in September 2019."

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Sam Varghese

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Sam Varghese has been writing for iTWire since 2006, a year after the site came into existence. For nearly a decade thereafter, he wrote mostly about free and open source software, based on his own use of this genre of software. Since May 2016, he has been writing across many areas of technology. He has been a journalist for nearly 40 years in India (Indian Express and Deccan Herald), the UAE (Khaleej Times) and Australia (Daily Commercial News (now defunct) and The Age). His personal blog is titled Irregular Expression.

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