The Tuas Ltd (ASX: TUA) share price has soared 28% in early reaction to the telco’s FY21 result.
Tuas is a business that was de-merged out of TPG Telecom Ltd (ASX: TPG). It’s a telecommunications business that’s just starting out in Singapore.
Tuas FY21 result
The company has reported its financial result for its inaugural financial year, covering it from the period from 11 March 2020 to 31 July 2021.
Management said that the result was creditable given the “substantial challenges” that the company and the Singapore community have faced.
Revenue grew month on month through its result to S$34.4 million, which was an increase of S$30 million since the interim result released in October 2020.
Looking at profitability, total EBITDA (EBITDA explained) was a loss of S$2.5 million. However, there was a positive – TPG Singapore, the operational business of the group, saw positive EBITDA of S$0.9 million for the 12 months to 31 July 2021 and has continued to “track positively” in the first quarter of FY22.
A key part of the result was subscriber growth. At 4 September 2020 it had 133,000 paid active subscriptions. In the 11 months since that date, TPG Singapore subscriptions have tripled to a total of 392,000 at 31 July 2021.
Operational highlights
Tuas said that TPG Singapore will complete its 4G rollout in the 2021 calendar year.
Regulatory licence conditions for outdoor coverage, indoor coverage and road tunnels have now been fully met, with coverage in those areas consistently exceeding 99.3% in regulatory testing. Most rail tunnels and stations are already serviced and all will be completed this calendar year. That’s when TPG Singapore will have satisfied its regulatory coverage commitments.
Management comments
TPG Singapore CEO Richard Tan said: “We are very proud of the quality and coverage of our mobile network and our plans are leading the market. We are bringing tremendous value and benefits to Singapore consumers and are looking forward to an exciting future.”
Summary thoughts on the Tuas share price
The early reaction to Tuas has been very positive. It’s good to see that the business is turning EBITDA positive, as that means it’s getting close to self-funding its growth.
Singapore isn’t a very big market, but there is potential for Tuas to expand beyond into other Asian countries over time.
I’m not sure if it’s buy at this stage, I don’t know how much profit it can generate in the future. There are other ASX growth shares and ASX dividend shares I’ve got my eyes on.
