TPG Telecom profits dip 85 percent following merger after losing tax benefit

TPG Telecom has taken a massive hit to its profitability after its operations have stabilised through 2021, with the previous year benefiting from a one-off tax benefit of $820 million.

The telco reported net profit after tax of $110 million in its financial year ended 31 December 2021, down from $734 million year over year. Revenue was up 22 percent to $5.3 billion, up from $4.3 billion.

Apart from the tax benefit in 2020, the company said the results were impacted by “market headwinds” including COVID-related border closures impacting mobile customer volumes, and margin erosion in fixed broadband from legacy customers transitioning to NBN services, higher NBN wholesale costs and the introduction of the Regional Broadband Scheme.

Chief executive Iñaki Berroeta however said TPG had produced “solid” financial results in its
first full year as an integrated company, with growth in services like fixed wireless and investments in its 5G network.

“2021 was a year of significant progress as we unified our operations and demonstrated strong operating and financial discipline to navigate the challenging COVID operating environment and position ourselves strongly for improving market conditions,” Berroeta said.

“Having completed the first phase of merger integration, we are accelerating the transformation of our network. We are now poised to deliver on our full potential for customers as we focus on providing more choice and even better products and services for Australian customers.”

Despite the hit from mobile, TPG also recorded a net increase in mobile subscribers since November 2021, adding 33,000 mobile subscribers from international travellers returning to Australia during the period. Overall mobile customers however declined 4 percent year over year to 5.02 million.

“We have been encouraged by the uptick in mobile customer numbers as international travel
returns and we are optimistic about the year ahead as COVID impacts lessen,” Berroeta said.

TPG also revealed its 5G network has reached some 85 percent of the population of Australia’s largest cities and regions via some 1000 5G sites.

Looking ahead, Berroeta said, “Having executed strongly against our objectives in 2021 amid challenging conditions, we are now in a strong position to achieve our full potential as an integrated full-service telecommunications company in coming years.

“We are confident of delivering value from targeted growth initiatives, smarter asset utilisation and further simplification of our business as headwinds lessen and underlying momentum improves in 2022.”