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The share price of TPG Telecom Ltd (ASX:TPG) has risen approximately 7% following the company’s release of its FY24 half-year results.
As one of Australia’s major telecommunications providers, TPG, an ASX communication stock, operates under well-known brands such as Vodafone Australia and TPG. The latest financial report covers the six months leading up to June 30, 2024.
Key Financial Highlights
- Mobile Service Revenue: Increased by 7.2% to $1.12 billion.
- Total Service Revenue: Rose by 1.7% to $2.3 billion.
- EBITDA: Grew by 3.5% to $974 million.
- Adjusted Net Profit: Decreased by 13.2% to $264 million.
- Statutory Net Profit: Increased by 2.2% to $979 million.
- Operating Free Cash Flow: Improved by $340 million to $278 million.
- Interim Dividend Per Share: Maintained at $0.09.
Business Performance
The growth in mobile service revenue reflects TPG’s commitment to providing competitive value plans amidst rising demand, despite slower subscriber growth. The average revenue per user (ARPU) for mobile services grew by 4.2% to $34.40, a positive indicator for future performance.
In the fixed and broadband sector, TPG has seen success with its fixed wireless products, which use mobile connections to deliver broadband. This strategy is helping the company navigate intense competition in the NBN market. Fixed wireless subscribers increased by 7.9% year-on-year to 245,000. However, total fixed subscribers fell by 3.6% to 2,097,000. On the mobile front, postpaid subscribers decreased by 1.1% to 3.22 million, while prepaid subscribers grew by 5.1% to 2.3 million.
TPG is also investing in its 5G network and upgrading its technology. To manage costs, the company is reducing its workforce by 120 positions, aiming to address cost inflation and improve its cost structure.
Future Outlook
TPG anticipates achieving the mid-point of its EBITDA guidance range, which is between $1.95 billion and $2.03 billion, excluding significant one-offs. Savings identified in FY24 are expected to contribute $20 million in annualized savings for FY25.
The company is advancing a proposed regional network sharing arrangement with Optus and is conducting a strategic review of its fire infrastructure assets. The rollout of 5G continues as planned, with over 3,400 mobile sites upgraded. The completion of metropolitan sites is scheduled for the end of 2026.
While TPG Telecom is growing its revenue, it is experiencing some challenges with market share in certain areas. This mixed performance suggests that potential investors should carefully consider these factors when evaluating the company’s prospects.
