TPG results slugged by nixed network

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TPG results slugged by nixed network

TPG Telecom has announced its FY19 results and said they were off a bit due to its decision to cancel the rollout of its Australian mobile network due to the ban on Huawei supplying core network kit to local carriers.

In the telco's FY19 results announcement (pdf) released to the ASX today, the company said results for the year ended 31 July 2019 was impacted by a $236.8 million impairment expense related to the cancelled rollout and the acquisition of spectrum licences.

Another $9m slug came from the cost of the planned merger with Vodafone Hutchison Australia that is currently on hold awaiting regulatory approval after the ACCC expressed concerns about the deal.

TPG also revealed that revenue and EBITDA have declined due to margin losses related to migration of both DSL and home phone customers to the NBN. Here's the numbers slide from the results presentation.

TPG Telecom revenue and EBITDA. Screenshot taken from FY19 results presentation

The carrier's results presentation also pointed out that the NBN isn't helping matters, predicting that FY20 will see “the greatest financial impact” from customer migration to the network. As residential DSL and home phone customers move to the to the network, TPG expects to bleed around $85 million. The telco also expects to have less than 15 percent of its residential customer base remaining on ADSL.

While the company expects to see more savings from its operating cost efficiency programs and more growth in its corporate division, TPG said it won’t be enough to offset the headwinds, and expects FY2020 EBITDA to be between $735 million to $750 million.

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