TPG Telecom embarks on multi-year business program

TPG Telecom embarks on multi-year business program

Revenue increased 3 per cent to $2.7 billion, while net profit took a 48 per cent plunge from $167 million down to $48 million.

Iñaki Berroeta (TPG Telecom)

Iñaki Berroeta (TPG Telecom)

Credit: TPG Telecom

Publicly listed TPG Telecom is making moves to execute a multi-year program to simplify its portfolio, rationalise products, increase digitisation and streamline internal systems and platforms. 

This comes as the telco witnessed a revenue increase of 3 per cent to $2.7 billion, while net profit took a 48 per cent plunge from $167 million down to $48 million in the first half of the financial year ending 30 June. 

The telco explained net profit in the previous year included a one-off tax benefit of $110 million arising from the recognition of capital tax losses in anticipation of its tower asset sale, which was completed in July 2022. 

Excluding customer base amortisation and tax benefits disclosed in the prior corresponding period, net profit was $104 million in HY23 compared to $113 million in HY22.

Earnings before tax rose 12 per cent to $941 million, which TPG attributed to increasing its service revenue and maintaining cost discipline. 

TPG CEO and managing director Iñaki Berroeta said streamlining its products, services and platforms will strengthen its ability to deliver value and simple connectivity services.

“Our focus on executing against our growth and transformation priorities has produced another set of solid results,” Berroeta said. 

“We expect to deliver a strong full-year performance as we drive growth across the business, accelerate simplification for our customers and deliver value to shareholders.”

From FY27 onwards, the program is expected to deliver net cash benefits of about $140 million per annum compared to FY23, split evenly across capital expenditure saves and EBITDA gains from improved gross margin and lower operating costs.

The operating cost impact of the program will be about $15 million to $20 million per annum in each FY24 and FY25. 

TPG’s enterprise, government and wholesale business recorded revenue of $557 million including underlying growth of 3.1 per cent. For the first time, this includes the wholesale revenue from Vision Network. The underlying growth was also underpinned by the uptake of its on-net Fast Fibre and NBN Enterprise Ethernet solutions, with new customers including Village Roadshow and Healius. 

In August, Vocus made an offer of about $6.3 billion to acquire certain assets, which Berroeta indicated it was still considering in line with its shareholder commitment to value. 

The telco said it saw a net increase in mobile subscribers during the six months to June, of 39,000, making it a total of 5.32 million mobile customers at the end of the first half. Average revenue per user (ARPU) increased 2.8 per cent to $33 per month, driven by a 6.2 per cent increase in postpaid ARPU to $44.60 per month, reflecting the benefits of TPG’s refreshed pricing plans introduced earlier this year. 

Total fixed customer base dropped 43,000 to 2.18 million as the telco focused on improving margins. 

Take up of TPG’s fixed wireless services continued to grow with the addition of 38,000 new subscribers, taking the total customer base up 209,000.

Earlier this month, TPG, along with Telstra, came out and declared they will not appeal the Australian Competition Tribunal’s decision to reject their proposed regional network sharing deal.

TPG said it will not seek a judicial review of the determination. It added that it will keep looking for commercial options to expand its mobile network and will “advocate for sensible policy reform for improved connectivity in regional Australia”.

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