The TPG Telecom Ltd (ASX: TPM) share price is on watch after a weak FY20 update at its annual general meeting (AGM).
Why is the TPG share price on watch?
The Aussie telco is holding its AGM today, which started with a review of FY19.
It wasn't the strongest of years for TPG as underlying revenue and earnings before interest, tax, depreciation and amortisation (EBITDA) fell 1%. Net profit after tax (NPAT) and earnings per share (EPS) both plummeted 13% lower to $173.8 million or 18.7 cents.
However, the TPG share price pushed higher following the result as investors seemed to see the light at the end of the NBN tunnel.
TPG's "Business as Usual" (BAU) EBITDA came in at $823.8 million, marginally higher than its $800 million to $820 million guidance range.
The group's Corporate segment revenue edged higher largely due to strong increases in its Data/Internet business. Voice and Legacy/iiNet revenues both slumped lower compared to FY 2018 levels.
TPG provided an update on Singapore with outdoor service coverage reaching 99.79% in October 2019. The group also launched free unlimited roaming to Malaysia, Indonesia and India during FY 2020.
The TPG share price could be worth watching today following its EBITDA and capex guidance for FY 2020. So far, TPG shares have edged slightly higher in early trade, up 0.66% to 6.88 per share.
The group's BAU EBITDA is forecast to be between $735 million and $750 million, well down on its $823.8 million in FY 2019.
At the middle of this range, this would represent a year on year (YoY) decline of 9.87%.
The decline in earnings is largely due to NBN-led margin declines in its DSL operations and further decline in profitability of TPG's existing NBN base.
BAU capex is forecast at $200 million to $240 million for FY 2019 compared to just $198.7 million last year.
What about the proposed Vodafone merger?
On 30 August 2018, TPG announced a proposed merger with Vodafone Hutchison Australia (ASX: HTA), which sent the TPG share price surging higher.
The ACCC opposed the proposed merger on 8 May and TPG is waiting for the judgement from the Federal Court .
A decision on the merger is expected by February 2020.
