Thursday, 28 February 2019 08:08

TPG writes down $76m due to cancelled mobile rollout

TPG writes down $76m due to cancelled mobile rollout Supplied

Telecommunications firm TPG Telecom says it has written down its mobile network assets by $76 million and reduced the value of the spectrum licences it holds by $92 million ahead of issuing its results for the first half of the financial year 2019.

However the company said that its guidance for earnings before interest, taxes, depreciation and amortisation for FY19 was not affected.

In an update issued to the ASX on Tuesday, TPG said the expenditure on spectrum purchase had not been written off as expenditure in its balance sheet as the spectrum was not going to be used.

Even if its proposed merger with Vodafone Hutchison Australia went ahead, TPG said the spectrum it owned would be complementary to the VHA mobile network.

However, as the merger remained subject to regulatory and shareholder approval and was, therefore, not certain to proceed, the spectrum’s expected use by and value to the merged entity may not be taken into account in determining the current value of the spectrum to the Group.

"Therefore, pursuant to an impairment review undertaken for its 1H19 accounts, the group will reduce the value of its spectrum licences by approximately $92 million, primarily reflecting the fact that, as the licences have finite lives, their value necessarily diminishes over time," the update said.

The proposed TPG-VHA merger was announced in August 2018, with the scrip deal creating a company with an enterprise value of about $15 billion.

In December, the Australian Competition and Consumer Commission expressed some reservations about the merger, saying it would lessen competition in the mobile sector. The watchdog said it would give a final determination on the deal on 28 March.

In January, TPG said it was cancelling its plans for a mobile network. The $600 million network was announced in 2017. The company said the government ban on the use of Huawei equipment in 5G networks meant that it could not go ahead with its plans.

TPG said in Tuesday's update: "In these circumstances, an impairment review of these mobile network assets, undertaken for the Group’s 1H19 accounts, has given rise to a write-down of the mobile network capital expenditure incurred to-date of approximately $76 million."

TPG will announce its 1H19 results on 19 March.

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Sam Varghese

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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