TPG Telecom Profit Dented by Abandoning Mobile Network
By Robb M. Stewart
MELBOURNE, Australia--TPG Telecom Ltd.'s (TPM.AU) annual profit
was slugged by the decision to drop development of a new mobile
network in Australia, and the telecom operator warned earnings are
likely to again falter as customers increasingly migrate to
Canberra's national broadband network.
Net profit slumped by 56% to 173.8 million Australian dollars
(US$118.1 million) in the 12 months through July, from A$396.4
million the year before, while revenue was just 0.7% lower at
A$2.48 billion from A$2.50 billion, TPG said Thursday.
The result was squeezed by an almost A$237 million impairment
expense for the move in January to abandon its rollout of an
Australian mobile network after the federal government blocked the
use of equipment made by China's Huawei Technologies Co. on
national security grounds. The company also booked a A$9-million
hit for one-off costs tied to its planned tie-up with Vodafone
Stripping out the impairment and merger costs, underlying
earnings before interest, tax, depreciation and amortization for
the financial year were down 1% at A$818.4 million, it said.
TPG said it would hold its dividend for the second-half of the
year steady at 2 Australian cents a share, for a full-year payout
of 4 cents, although its dividend reinvestment plan would remain
Australia's antitrust regulator earlier in the year blocked the
proposed merger between TPG and Vodafone Hutchison, arguing that
TPG remained the best opportunity in the country for the
development of a new competitive mobile network.
The companies argue there is little overlap between their
operations, and a deal would bring together Vodafone's strong
market position in the mobile market and TPG, which has the
second-largest fixed broadband business and no mobile network. In
May, the pair lodged proceedings in the Federal Court of Australia
seeking approval for their tie up.
TPG said it expected the 2020 financial year to hold the
greatest impact from customer migration to the federal government's
NBN network, and by the end of the period it anticipated having
less than 15% of its residential broadband customer base remaining
on ADSL. The NBN continues to roll out a wholesale broadband
network that sells open-access to retail phone and internet
TPG said its cost-efficiency program continued to deliver
savings and that its corporate division was expected to see another
year of growth, but its underlying earnings growth was unlikely to
offset what should be the peak year for NBN headwinds.
Write to Robb M. Stewart at email@example.com
(END) Dow Jones Newswires
September 04, 2019 19:09 ET (23:09 GMT)
Copyright (c) 2019 Dow Jones & Company, Inc.
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