The TPG Telecom Ltd (ASX: TPG) share price is up more than 4% after the ASX telco share announced its FY23 half-year result.
TPG has told investors how it performed in the six months to June 2023.
The TPG share price initially opened up close to 5% and it's currently up 4.5%.
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What did the company report?
- Service revenue up 4.5% to $2.23 billion
- Earnings before interest, tax, depreciation and amortisation (EBITDA) increased 12.4% to $941 million
- Net profit after tax (NPAT) dropped 71.3% to $48 million
- Adjusted NPAT dropped 3.3% to $320 million
- Underlying earnings per share (EPS) dropped 8.2% to 5.6 cents
Net profit fell so much because the FY22 first half included a one-off tax benefit of $110 million arising from the recognising capital tax losses in anticipation of the company's tower assets sale, completed in July 2023, which wasn't repeated in HY23.
Excluding customer base amortisation and tax benefits, net profit was $104 million in HY23, down from $113 million in HY22.
It achieved an increase of mobile subscribers of 39,000 in the first six months of 2023 to 2.18 million, which was driven by the reopening of international borders. Average revenue per user (ARPU) for the mobile division increased 2.8% to $33 per month, with a 6.2% increase in postpaid ARPU to $44.6 per month.
The total fixed customer base declined from 43,000 to 2.18 million as it focused on improving margins. The average margin per user in fixed broadband grew 20.4% to $25.4 million. The take-up of TPG's fixed wireless services continued to grow, with the addition of 38,000 new subscribers, taking this customer base to 209,000.
What else happened in the FY23 first half?
The business continues to roll out its 5G network, with more than 2,500 mobile sites upgraded to 5G. It has now upgraded over half of its approximately 5,000 sites into metropolitan population areas, covering 80% of the population. Upgrades to the rest are scheduled to be completed by the end of 2026.
On 14 August, the company confirmed it would not seek a judicial review of the rejected network-sharing agreement with Telstra Group Ltd (ASX: TLS). The TPG share price fell 11% on this news.
TPG has also received a conditional bid from Vocus to acquire certain fixed infrastructure assets for approximately $6.3 billion. Vocus currently has until 6 September 2023 for exclusive due diligence, and TPG is considering the offer.
What did TPG management say?
TPG CEO and managing director Inaki Berroeta said:
Our focus on executing against our growth and transformation priorities has produced another set of solid results. We expect to deliver a strong full-year performance as we drive growth across the business, accelerate simplification for our customers, and deliver value to shareholders.
What next for TPG?
The TPG share price may have gotten a boost by the fact that TPG upgraded its FY23 guidance range.
Assuming no change in operating conditions, TPG is expecting its FY23 EBITDA to be between $1.925 billion to $1.95 billion, which is in the top quartile of the previous range.
The EBITDA guidance range now includes transaction costs of between $20 million to $25 million (with $17 million occurring in the first half). However, the EBITDA guidance excludes any other "material" one-offs. Transformation costs are now estimated at between $35 million to $40 million, down from the original $50 million guided figure.
TPG share price snapshot
The TPG share price has gone up 17% since the start of 2023, while the S&P/ASX 200 Index (ASX: XJO) is up 3%.
