TPG H1 profit slumps 76.5% on mobile hit

Joanna Estrada
March 21, 2019

The fall was due to the company having to write off a total of $227.4 million due to the cancellation of its mobile network rollout.

Stripping out those one-off hits, underlying earnings before interest, tax, depreciation and amortisation rose 2.8 per cent to $424.4 million, and underlying net profit increased by 3.5 per cent to $225.2 million.

Net profit took the biggest hit, down 76.4 percent to $46.9 million, while EBITDA, which didn't include the mobile network impairment, was up 1.7 percent to $420 million.

Earnings from TPG's consumer business, which is dominated by the provision of home broadband, fell 4.8 per cent to $243 million.

An approximate AU$76 million hit occurred as a result of the writing down of the capex associated with the construction of its mobile network, while a writedown of around AU$60 million was attributed to interest capitalisation on debt needed for spectrum purchases.

In December, the Australian Competition and Consumer Commission (ACCC) said it needed more time and information to consider the merger, with the consumer watchdog saying it was unclear as yet whether it would substantially lessen competition in the telecommunications market.

The corporate segment however fared much better, with revenue growing from $374 million to $382.2 million and revenue rising from $158.7 million to $182 million.

"The $39 million of other EBITDA growth achieved relative to HY18 was driven by growth in the corporate division (including an uplift in contribution from the VHA fibre contract) and the continued realisation of operating expense efficiencies across the group", TPG stated. TPG has to reassess the carrying value of these assets.

For the full 2019 financial year TPG expects EBITDA to be in the range of $800 to $820 million.

Half-year revenue dropped 1.5% year-on-year to $1.25 billion.

TPG said its new Singapore network now covers 99 per cent of the island nation and it has expanded the free trial period to 200,000 users following positive customer feedback.

Other reports by Click Lancashire

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