The TPG Telecom Ltd (ASX: TPG) share price is up around 7% after the company reported its FY24 half-year result.
TPG is one of the largest telcos in Australia, with brands including Vodafone Australia and TPG.
FY24 half-year result
Here are some of the highlights from the six months to 30 June 2024:
- Mobile service revenue grew 7.2% to $1.12 billion
- Total service revenue rose 1.7% to $2.3 billion
- EBITDA grew by 3.5% to $974 million
- Adjusted net profit down 13.2% to $264 million
- Statutory net profit rose by 2.2% to $979 million
- Operating free cash flow improved $340 million to $278 million
- Interim dividend per share maintained at $0.09
TPG explained that the continued growth in its mobile business reflects its focus on offering “simple, great value plans in an environment of growing demand, despite slowing subscriber growth”. Total mobile average revenue per user (ARPU) grew 4.2% to $34.40. Ongoing ARPU growth could be key for the TPG share price going forwards.
In the fixed/broadband part of the company, it has been successful at rolling out its fixed wireless products – broadband powered by its mobile connection – which is helping offset the impact of its intense competition in the NBN market.
While fixed wireless subscribers increased 7.9% year on year to 245,000, total fixed subscribers fell 3.6% year on year to 2,097,000. Mobile postpaid subscribers dropped 1.1% to 3.22 million, while prepaid subscribers increased 5.1% to 2.3 million.
TPG is investing in its 5G network upgrade and technology capabilities. The company is “taking action” on operating costs, removing 120 roles from the organisation as it aims to offset the impact of cost inflation and deliver a “flatter overall operating cost profile”.
Outlook for the TPG share price
TPG said it’s tracking towards the mid-point of its current EBITDA guidance range of between $1.95 billion to $2.03 billion, excluding ‘material one-offs’. Savings identified in FY24 will deliver annualised savings of $20 million in FY25.
The telco business is looking to progress its proposed regional network sharing arrangement with Optus, and complete the strategic review of its fire infrastructure assets.
The 5G national rollout remains “on schedule” with more than 3,400 mobile sites upgraded to 5G. The rest of the company’s metropolitan sites are scheduled to be completed by the end of 2026.
TPG is growing revenue but losing market share in some aspects of its operations, which isn’t a good sign. I wouldn’t want to own shares, there are better opportunities out there, in my opinion.
