TPG Telecom’s (ASX:TPG) profit rockets 362% despite pandemic

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Summary

  • TPG Telecom posted strong numbers for the twelve months ended 31 December 2020 despite pandemic disruptions.
  • The company reported strong demand among customers for telecommunications services in online activities such as video streaming and working from home arrangements.
  • The company’s board declared a dividend of 7.5 cents per share.

 TPG Telecom (ASX:TPG) on Thursday reported robust earnings for the twelve months ended 31 December 2020 despite a mix of unfavourable factors including the disruptions due to COVID-19-induced global travel restrictions, continued NBN headwinds, ongoing mobile competition and regulatory challenges.

Image Source: © Guyerwood | Megapixl.com

TPG Telecom announced a net profit after tax (NPAT) of A$734 million, a whopping 362 per cent growth over the year-ago period. The revenue surged 24 per cent to A$4.35 billion. The reported net profit after tax (NPAT) stood at A$734 million, which includes a one-off, non-cash credit to income tax expense of A$820 million. On a pro forma basis, NPAT fell 10 per cent to A$282 million. 

The company also reported strong demand among customers for telecommunications services in online activities such as video streaming and working from home arrangements. TPG Telecom has grown its share of the fixed broadband market. The company’s subscriber base increased six per cent from 2019 to 2.17 million, a net growth of 117,000. The company’s NBN base grew 28 per cent to 1.90 million, with 415,000 net subscriber growth.

The company’s board declared a maiden dividend of 7.5 cents per share.

Image Source: © Olivier | Megapixl.com

Company commentary

Commenting on the results, CEO Iñaki Berroeta said that the company was building on the momentum gained in the final quarter of 2020, continuing the merger integration plans. The company’s 5G mobile network was on track to reach scale in the top six cities by the end of the year, and it would begin offering 5G fixed wireless services in the first half, Berroesta added.

Outlook

The company expected a fall in international roaming and international visitor revenue to impact financial performance throughout 2021. It also expected total NBN headwinds of nearly A$60 million and an A$11 million negative impact from the RBS levy for the year.

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Stock performance 

Shares of TPG Telecom closed at A$7.02, up 0.0100 points, or 0.14 per cent on Wednesday, 24 February 2021, against the previous closing on Tuesday, 23 February 2021. The stock has lost 1.12 so far this year.


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