Revenue has stalled at TPG as NBN headwinds start to bite

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  • TPG Telecom full year revenue $2.5 billion, up 0.2%.
  • Statutory profit $396.9 million, down 4.1%.
  • Significant earnings headwinds from migration of customers to NBN.

TPG Telecom reported flat full year sales and a dip in statutory profit as the telco hit “significant headwinds” from migration of customers from fixed line services to NBN.

Revenue was flat at $2.5 billion, up just 0.2%, and statutory profit fell 4.1% to $396.9 million.

Revenue at all Australia’s telcos is suffering as the NBN rollout sees fixed lines, and accompanying revenue, retired.

TPG says its full year underlying EBITDA (earnings before interest, tax, depreciation and amortisation) increased by a modest $6.1 million to $841.1 million, making 2018 the 10th consecutive year of underlying earnings growth.

The main contributors to this growth came from fibre to the building services, and cost savings from the integration of iiNet.

“This modest underlying EBITDA increase in FY18 has been achieved despite the significant headwinds that were experienced during the year from the migration of DSL customers to lower margin NBN services, loss of gross profit from home phone services as customers migrate to NBN bundled services and electricity price increases,” the company says.

However, the company is forecasting weaker earnings in 2019, as customers migrate from fixed line services to the NBN, of between $800 million and $820 million.

TPG says its small cell network rollout is continuing in major capital cities and densely populated metropolitan areas.

TPG Telecom and Vodafone Hutchison Australia last month announced a merger of equals, creating an entity with enough scale and financial resources to take on Telstra and Optus.

“If the merger with Vodafone Hutchison Australia (VHA) proceeds, TPG’s small cell network would be complementary to VHA’s mobile network bringing greater strength to the combined group through increased coverage and capacity in densely populated areas,” says TPG.

The merger deal doesn’t include TPG’s Singapore business where the company has the island nation’s fourth mobile phone network. this will be floated off to existing shareholders.

In Singapore, the company says it is on track to achieve its milestone of outdoor service coverage by the end of 2018 with the production network already covering in more than 90%.

The company declared a final fully franked dividend of two cents a share.

The 2018 results:

TPG Telecom

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