TPG takes a hit as NBN rollout bites

TPG Telecom has suffered a slide in full-year profit after the National Broadband Network rollout hit broadband margins and home phone revenue.

The junior carrier yesterday reported a net profit of $396.9 million for the year to July, down 4.6 per cent from the previous year.

It flagged further profit headwinds from the NBN this financial year, when it expects to complete its $15 billion merger with Vodafone Australia, subject to approval from the competition watchdog.

The pair also has committed to a separate joint bid for 5G mobile spectrum at a federal government auction in November. In a statement, TPG executive chairman David Teoh said the impact of the NBN had been “in line with, or slightly less than, expectations”.

Full year earnings before interest, tax, depreciation and amortisation slipped 5.6 per cent to $841.1 million, although underlying earnings — which exclude one-off items — were up 0.7 per cent, boosted by the sale of investments.

Chief financial officer Stephen Banfield said the ongoing migration of fixed-line customers to lower-margin NBN services had eroded $43 million from earnings in the past year — 14 per cent less than expected. Another $50 million hit to earnings was predicted this year as the company passed the halfway point of transition to the NBN, with 940,000 subscribers left to migrate from DSL, or digital subscriber line, services.

Mr Teoh highlighted the “pleasing” $72 million growth in earnings from the telco’s corporate segment, as well as fibre-to-the-building services and cost savings from the ongoing integration of the iiNet business the group bought in 2015. TPG will pay a final, fully-franked dividend of 2c a share — unchanged from last year — on November 20.

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