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TPG Delivers Profit Boost, But Shares Slump

TPG Telecom’s shares have today taken a tumble following release of its financial year 2016 results.

While TPG reported a 69 per cent year-on-year increase in net profit after tax, totalling $379.6 million for the period (underlying net profit after tax grew 46 per cent to $361 million), its shares have fallen over 20 per cent for the day, with the NBN rollout a factor in its 2017 guidance.

At the time of this report, TPG’s shares are trading at $9.28.

TPG posted revenue for the year of $2.39 billion, up 88 per cent on the previous year.

Its earnings before interest, tax, depreciation and amortisation (EBITDA) of $849.4 million were up 75 per cent year-on-year, with underlying EBITDA of $775.3 million up 60 per cent.

TPG advised that, since its acquisition of iiNet last year, iiNet had contributed EBITDA of $242.6 million in the eleven-and-a-quarter months post-acquisition, inclusive of $6.3 million in restructuring costs from integration activities.

The telco’s underlying EBITDA outlook for the 2017 financial year is in the range of $820 to $830 million, with it noting the potential impact of the NBN rollout.

“Our underlying EBITDA guidance for FY17 is affected by the acceleration of the NBN rollout, which will create margin headwinds for the group, and it also reflects the increasingly competitive marketplace and a level of uncertainty of outlook with regards to the CVC charges,” The Australian reported TPG as stating.

“During this period of transition to the NBN, it’s the right strategy for the group to continue to compete aggressively and as a result the guidance has seen some reduction in margin, but we see that as an investment in the long-term good of the business.”

TPG had 885,000 broadband subscribers as at July 31, up 64,000 for the year, with iiNet’s total broadband subscribers standing at 983,000, down 9,000.

Together, the two had combined subscribers of 1.868 million, up from 1.842 million in the previous year.

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