Australian operator TPG Telecom reported a net profit after tax of AUD 734 million for the twelve months ended 31 December 2020. This includes a one-off, non-cash credit to income tax expense of AUD 820 million. Reported revenue increased 24 percent from 2019 to AUD 4.35 billion, while EBITDA jumped 18 percent to AUD 1.39 billion.
With AUD 342 million of net cash flow generated in the first six months post-merger, the TPG Telecom bard has declared a maiden dividend of 7.5 cents per share. TPG Telecom says its results were “relatively resilient” despite the impact of Covid-19 crisis, especially global travel restrictions, continued NBN migration, mobile competition as well as regulatory challenges.
TPG says its reported results for 2020 include a full twelve months of the company formerly known as Vodafone Hutchison Australia (VHA) and a contribution of six months and four days from TPG Corporation (the company formerly named TPG Telecom) post the merger effective date of 26 June 2020.
TPG Telecom’s fixed broadband subscriber base rose 6 percent from 2019 to 2.17 million at 31 December 2020, representing a net growth of 117,000 in the period. The company’s NBN base increased 28 percent to 1.90 million with 415,000 net subscriber growth as the NBN migration nears completion.
The company’s mobile customer base was impacted by the absence of overseas visitors and migrants to Australia, especially international students, due to global travel restrictions. Postpaid mobile customers declined five per cent to 3.26 million from 3.42 million. Postpaid ARPU decreased 5.1 percent to AUD 40.90 due to the decline in international roaming revenue and aggressive market competition. Prepaid mobile customers decreased 22 percent to 1.97 million from 2.52 million.
TPG Telecom estimates the financial impact of the Covid-19 crisis during 2020 was around AUD 90 million to reported EBITDA, in addition to NBN and regulatory headwinds. The company also reports it saw improved momentum in mobile in the final quarter of 2020 and it is optimistic about continued recovery in 2021.
TPG Telecom starts 5G fixed wireless testing, 5G network live in 350 suburbs
This year, TPG Telecom plans to expand its 5G rollout in the top six cities, as well as start offering 5G fixed wireless services. TPG Telecom also reports it has started testing 5G fixed wireless devices using its 3.6 GHz spectrum and is on track to begin offering services to customers in the first half of 2021.
Its 5G services are now available in 350 suburbs in Sydney, Melbourne, Brisbane, Adelaide, Perth, Canberra and Gold Coast, as well as Newcastle. Since November, over three quarters of the opeartor’s postpaid handset sales were 5G-capable devices, and TPG reports it currently has more than 425,000 5G-enabled smartphones on its mobile network. The operator is on track to reach its goal of 85 percent 5G population coverage in the top six cities by the end of the year. “Our network team is currently working on another 1,600 sites and we will roll them out to customers as soon as possible”, TPG added.
Merger synergy programme on target
TPG Telecom also reports it has made progress on merger integration activities and is targeting AUD 70 million of cost synergies across the Group in 2021, which excludes the contribution from fixed wireless services and revenue synergies from cross-selling. 2020 progress included finalisation of executive team; integration of the two legacy businesses under a unified management team; deployment of 1800 MHz spectrum for 1.8 million Australians; nearing completion on programme to integrate 400 small cells into the mobile network; programme to connect dark fibre to an additional 700 mobile sites. Around 60 percent of iiNet mobile customers have migrated to the company’s mobile network.
The company expects the decline in international roaming and international visitor revenue to continue to impact financial performance throughout 2021. It also expects total NBN headwinds of AUD 60 million and an AUD 11 million negative impact from the RBS levy for the year.
