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Shares of TPG Telecom Ltd (ASX:TPG) surged by as much as 7% on Friday, reaching AU$4.90, their highest level since February 27. This makes TPG one of the top gainers on the benchmark S&P/ASX 200 index, signaling strong investor sentiment despite a mixed financial performance.
Investor Confidence Boosted by Positive EBITDA Outlook
The rise in TPG's share price comes after the wireless telecommunications services provider reaffirmed its EBITDA guidance for FY24. The company is now tracking toward the mid-point of its current EBITDA guidance range of A$2.0 billion to A$2.03 billion (approximately $1.36 billion to $1.38 billion). This optimistic outlook appears to have outweighed concerns over other aspects of the company's financials.
Profit Decline and Cost-Cutting Measures
Despite the upbeat revenue forecast, TPG reported a significant decline in profitability. The company's half-year profit attributable to shareholders dropped by 40% to A$29 million. This sharp decline was influenced by increased expenses related to network investments and higher financing costs.
In response to these financial pressures, TPG recently undertook cost-cutting measures, including the reduction of around 120 roles across the business. These steps are part of the company's broader strategy to manage operating costs and maintain a leaner organizational structure.
Steady Dividend Amid Market Challenges
TPG also declared an interim dividend of 9 Australian cents per share, maintaining its payout to shareholders despite the profit slump. This move indicates the company's commitment to delivering shareholder value even as it navigates a challenging market environment.
Year-to-Date Stock Performance
While TPG Telecom's shares experienced a notable rally, the stock had previously fallen by 11.6% for the year as of the last close. This recent surge, however, reflects renewed investor confidence in the company's future prospects, particularly given its strong EBITDA guidance and efforts to streamline operations.
