Subscriber drop tough for TPG

TPG Telecom has suffered a fall in profit and subscriber numbers at the half-year mark but still expects to lift full-year earnings.

The telco challenger is looking to higher business customer numbers, cost cuts and a margin reprieve from a slowdown in the national broadband network rollout to improve underlying earnings for 2017/18.

Yesterday, TPG booked an 11.3 per cent fall in first-half profit to $198.7 million in a result skewed by

$55.8 million in one-off sale proceeds a year earlier

Underlying profit increased 5 per cent to $217.7 million.

But broadband subscriber numbers fell for TPG’s internet service brands, weighed down by a dip in iiNet subscribers, from 979,000 six months ago to 966,000.

Subscribers to the TPG-branded service rose marginally to 962,000 from 957,000 in July last year, while the number of customers on slimmer-margin NBN packages rose to 341,000, from 262,000.

Morningstar analyst Brian Han said while the NBN is weighing on subscriber numbers, iiNet pricing is also to blame.

“The broadband market is very tough and there are a lot of retailers offering good deals,” Mr Han said.

“So what happens in this competitive environment is iiNet’s pricing leads to greater churn, which means customers are switching in and out because of the competitive demands of the market.”

TPG now expects full-year underlying earnings to be between $825 million and $830 million, up from between $800 million and $815 million previously.

Meanwhile, Myer is set to unveil a first-half profit plunge of at least 35 per cent as it battles falling sales and a push by its biggest shareholder to overthrow the board.

The embattled department store chain, which is reportedly considering former David Jones boss Paul Zahra as the successor to departed chief executive Richard Umbers, will announce the results today, having already said it expects net profit to fall by between 35 and 41 per cent.

Myer flagged a 3.6 per cent slump in sales for the six months to January after sharp falls in sales during the key December and January trading months.

It said it expected a profit of between $37 million and $41 million, down from $62.8 million for the same period last year.

The results are likely to prompt further ire from Myer's largest shareholder, retail veteran Solomon Lew.

Mr Lew, whose Premier Investments has lost

$63 million on Myer since taking an 11 per cent stake a year ago, has been highly critical and is set on calling an extraordinary general meeting to oust the entire board. One of the major concerns for investors is Myer's debt levels, analysts have said.