TPG quadruples profits, lifts guidance

Stuart Corner
Tuesday, 23 March 2010 15:12

IT Industry - Listed Tech

TPG Telecom (ASX: TPM) has reported a 443 percent increase in after tax profit and 34 percent increase in EBITDA for the six months to 31 January 2010.

NPAT was $27.5m and EBITDA $77.1m. Revenue was $241.5m, down 0.1 percent. The directors have upgraded FY10 EBITDA guidance from $140m-$150m to $152m-$158m. The company says it will issue revised guidance taking into account the addition of the Pipe Networks business in due course.

At 31 January 2010 TPG had accumulated cash reserves of $47.2m, after paying $17.6m in the half year to subscribe for 2.8 million shares in Pipe Networks, the acquisition of which it is about to complete.

TPG said it expected to achieve synergies worth $5m between the two businesses in FY11 and over the four years from late in FY11 a total cost saving of about $100m.

Pipe Networks guidance for FY10 is for revenue of $94.0m - $98.0m, EBITDA of $51.5m - $53.5m and NPAT of $23.0m - $25.0m. These figures are well ahead of FY09 actuals of, respectively $50.4m, $18.6m and $10.5m.

Cash reserves will be used, together with the $66.2m raised through an institutional placement and share purchase plan conducted in February, and a new debt facility signed in March, to fund the acquisition of Pipe Networks under the scheme of arrangement approved on 17 March.

In the six months to 31 January 2010 TPG added a net 54,000 broadband customers, 48,000 of these on-net. At 31 March it had a total of 460,000 subscribers. Fixed broadband customer ARPU was $48 per month.

This growth, the company says puts it ahead of iiNet (22,400 new subs) and Optus (13,000 combined in the six months July to December 2009. In the same period, Telstra lost 30,000 fixed broadband customers.

In the six months August 209 to January 2010 TPG's mobile subscriber numbers declined from 220,000 to 208,000 thanks to a significant fall-off in customers of the former Soul business (down from 130,000 to 85,000) that was not fully compensated for by an increase in TPG mobile customers (up from 90,000 to 123,000). Soul customers generated much higher ARPU ($43 per month than those of TPG ($25).