Telecom service provider TPG Telecom Limited (ASX: TPM) made an announcement on 10 December 2018 in which the company informed that its joint venture with VHA Australia, Mobile JV Pty Ltd has been a successful bidder in the auction for spectrum in the 3.6GHz band. Following this news, the share price of TPM went down by 0.204 percent as on 10 December 2018.
All the lots which are purchased by Mobile JV are for a total consideration of $263.3 million which will be paid in early 2020. As TPG Telecom is in a 50/50 joint venture with Mobile JV Pty Ltd, half of the payment will be done by TPG. Mobile JV will make the decisions regarding the best use of the 5G spectrum after consulting with its shareholders. As per TPG’s CEO Mr. David Teoh, the management of the company is very happy to secure an access to 3.6GHz spectrum through the joint venture. He further added that the 3.6GHz would help the company to deliver better speeds to its customers and it will also provide more capacity for the future.
In the recently held Annual General Meeting (AGM), the chairman of the company informed about the challenging environment in which the telecommunication industry is currently running in. He discussed the effects of NBN (National Broadband Network) over the industry structure and profitability.
According to him, despite facing this challenging environment, TPG was able to maintain its focus on implementing its long-term strategies for building a platform for long-term growth while simultaneously continuing to compete hard in the marketplace. He informed that the company made good progress by implementing its major long-term strategic initiatives through its mobile network builds in Singapore and Australia. Further, the company also negotiated a good deal for shareholders to merge its business with Vodafone Hutchison Australia.
The merger with Vodafone Hutchison Australia is expected to create a step change in the evolution of TPG which will benefit shareholders and customers alike. Together both companies will become a more formidable competitor to Telstra and Optus, and their fixed and mobile infrastructure will enable them to provide more competitive value propositions to Australian consumers coupled with the high levels of customer service. Further, the financial year 2018 was a tenth consecutive year for the company in which it reported underlying revenue, EBITDA and NPAT growth. In FY18, the company earned reported revenue of $2,495.2 million and reported EBITDA of $841.1 Mn. The earnings per share (EPS) of the company was 42.8 cents in FY 2018 which is higher than the EPS of 47.9 cents in FY 2017.
Meanwhile, in the last six months, the share price of the company uplifted by 34 percent as on 7 December 2018 and traded at a PE ratio of 17.22x. TPM’s shares traded at 7.360 with a market capitalization of circa $6.84 billion as on 10 December 2018 (AEST 4:00 PM).
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