TPG FY results jump after iiNet takeover

Australian operator TPG Telecom reported revenues for its fiscal year to July up 88 percent to AUD 2.39 billion, driven by its takeover of iiNet as well as organic growth. Excluding the extra costs for the takeover and gain on its existing stake in iiNet, underlying EBITDA at the company rose to AUD 775 million from 485 million in 2015, and net profit increased to AUD 361 million from AUD 247 million. On a reported basis, EPS jumped 61 percent to AUD 0.453. 

Capital expenditure rose to AUD 281 million from AUD 154 million, driven by fibre expansion, a AUD 15 million spectrum payment and AUD 27 million for the acquisition of property in Glebe. Free cash flow still improved to AUD 318 million from AUD 228 million. TPG's debt increased four-fold over the year due to the takeover, to AUD 1.350 billion, putting leverage at 1.8x adjusted EBITDA. After a final dividend of 7.5 cents a share, TPG's total dividend for the year is up 26 percent. 

The company ended July with a total 1.868 million broadband subscribers, up by 26,000 from six months earlier. Growth was due to the TPG operations, which finished the period with 885,000 customers, while iiNet saw a small drop in its base over the six months to 983,000. TPG's growth came entirely from the NBN market, where it added 75,000 customers in the year for a total 119,000. The share of ADSL bundle customers also increased, to 582,000 at the end of July. iiNet had 157,000 customers on the NBN, nearly double the year-earlier total, while on-net ADSL customers fell to 539,000. TPG said iiNet had a better finish to the year, with positive customer growth in August after the release of new plans. 

The group also counted 475,000 mobile customers at year-end, up by 2,000 from January. TPG confirmed it's filed for spectrum in Singapore, and if successful in its bid, it aims to move quickly setting up a new mobile operator later. The new project would be financed by debt facilities and cash flow from the Australian operations. TPG said the market conditions laid down by the Singapore regulator offer attractive conditions for a competitive market and long-term returns. 

The planned investment in Singapore was not included in the company's guidance for capex in the current year, which it expects to rise to AUD 370-420 million. The increase includes AUD 72 million for 1,800 MHz spectrum, AUD 50 million for committed international capacity purchases and planned further spending on fibre services. TPG also forecast an increase in underlying EBITDA this year, to AUD 820-830 million.