TPG shares boosted on profit increase
SYDNEY: Shares in TPG Telecom have soared after the fourthranked internet player beat its earnings forecast and delivered a 9% lift in fullyear profit.
However, TPG executive chairman has signalled his company will face pressure on earnings next year due to increased costs from migrating customers on to the national broadband network.
TPG cut its payout to shareholders as it prepares to start spending on the new mobile phone network it announced in April
The telco, which in April announced that it would spend about $A1.9 billion ($NZ2.1 billion) building Australia’s fourth mobile network, slashed its final dividend from A7.5c to a fully franked 2c as it prepares to spend on the rollout of its mobile services.
Executive chairman David Teoh said shareholders would benefit in the long term from what he called a ‘‘fiscally prudent’’ decision.
‘‘The board has concluded that it is in the best interests of shareholders that a greater proportion of profits be retained in the company to be deployed in the mobile rollouts,’’ Mr Teoh said in a statement yesterday.
‘‘The board is confident that this course will prove in the long run to be the right decision for shareholders.’’
The reduced dividend takes
TPG’s total payout for the year to 10c, compared to the previous year’s 14.5c.
TPG’s net profit for the year to July 31 rose to $413.8 million from $379.6 million a year ago, while revenue for the period rose 4% to $2.49 billion, from $2.39 billion — helped by the completion of the integration of the iiNet business acquired in 2015.
Australia’s secondlargest fixedline internet provider boosted statutory earnings 5% to $890.8 million with assistance from $49 million gained on asset sales.
Underlying earnings were $835 million — up $5 million on the $820 million to $830 million guidance the company gave in April.
TPG shares were up 7.7% to $5.62 in early trading yesterday.
Mr Teoh also said he expected underlying earnings for the year ahead to drop to between $800 million and $815 million, as DSL subscribers shift to the NBN, which will incur higher connection fees for providers.
‘‘The group is anticipating another year of solid growth in FY18 but expects this to be offset by NBN margin headwinds,’’ TPG said.
Chief financial officer Stephen Banfield said the company expected its DSL subscribers to decline by between 400,000 and 500,000 during the 2018 fullyear, as they shift to the NBN. — AAP