TPG adds 72,000 subscribers, surpasses $400m profits

TPG has revealed NBN broadband subscriber growth, a mobile subscriber decrease and profit and revenue increases in its 2017 full-year financial results.

The telco saw its broadband subscriptions reach 1.94 million by the end of FY17, split 979,000 for iiNet and 957,000 for TPG. TPG’s net subscribers grew 72,000 for the year, while NBN subscriptions increased by 143,000, with many ADSL customers making the migration to fibre.

iiNet’s broadband subscribers decreased by 4000, while NBN subscriptions increased by 142,000, again eating away at former ADSL customers.

The group reported underlying revenue of $2.48 billion for the year ending 31 July 2017, up 4 percent from 2016’s $2.38 billion. Underlying EBITDA was $835 million, up 8 percent from $775.3 million last year. Underlying net profit after tax increased by 16 percent year on year to hit $417 million, from 2016’s $361 million.

The corporate segment brought in revenue of $743 million for FY17, up 2 percent from FY16’s $726 million. Data and internet accounted for $526 million of TPG’s 2017 corporate revenue, with voice at $147 million and legacy iiNet contributing $69.8 million. Corporate voice and legacy iiNet sales were down 12 percent and 3 percent on 2016’s results respectively.

The company reported that corporate data and internet revenue took a $4 million hit when the retail fibre to the building subscribers of a wholesale customer were acquired by the consumer segment near the end of the first half of the year.

The group’s consumer segment revenue was $1.74 billion, stemming from $1.37 billion in broadband sales, $165 million in fixed voice sales, $118 million in mobile sales and $80.5 million in other sales. The consumer segment generated $523 million in EBITDA.

Mobile subscribers decreased by 30,000, affecting both TPG and iiNet. The company expects to make up for these decreases with some major upgrades to its mobile networks in Australia and Singapore.

TPG is set to become Australia’s fourth mobile network operator, investing $1.26 billion in the acquisition of two 10Mhz lots of the 700Mhz spectrum in April.

At the time, TPG revealed it would spend a further $600 million for network rollout expenditure over three years. TPG also said it was focused on building new capability in line with the spectrum acquisition, in particular, the rollout of equipment at between 2000-2500 sites, plus small cell sites, across the country.

“In Australia, where the initial network implementation is concentrated on the country’s most densely populated areas, the group has already entered into agreements with multiple partners to gain access to a large volume of sites to provide coverage of major metropolitan areas. Implementation of some initial site clusters in Sydney, Melbourne and Canberra is currently expected to be complete by mid-2018,” the company said in its FY17 report.

Looking ahead the group expects another year of growth in 2018 but is weary of the offset caused by “NBN margin headwinds”.

“The fixed-line residential broadband margin erosion faced by the industry in light of the NBN underlines the importance of the group’s strategy to take advantage of the valuable assets it has assembled to inject itself into the industry’s mobile sector, vastly expanding the addressable revenue pool for the group into the future,” TPG said in its result commentary.

TPG shares were trading at a two-week high of $5.42 at the time of writing.