TPG (ASX:TPG) share price sinks 13% after HY22 result


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The TPG Telecom Ltd (ASX: TPG) share price just dropped 11% after it released its FY22 half-year result.

TPG is one of the largest telecommunications businesses in Australia with a number of brands, including Vodafone, TPG, iiNet and more.

TPG share price falls after HY22 report

Here are some of the highlights within the result:

  • Service revenue went up by 0.7% year on year to $2.19 billion
  • EBITDA (EBITDA explained) dropped 5.3% to $837 million
  • Underlying EBITDA fell 1.4% to $872 million
  • Net profit after tax (NPAT) of $167 million, up from $78 million
  • Interim dividend up 12.5% to 9 cents per share

TPG said that there was “strong” mobile momentum with a 135,000 net increase in mobile subscribers. It also saw fixed wireless subscribers at 113,000 and it’s on track for the FY22 target of 160,000.

Average revenue per user (ARPU) for mobile was up 1% to $31.8 per month. As the market for international visitors continues to cover, it’s expecting “positive momentum” ton continue.

TPG said that while NBN pricing continues to challenge industry profitability, it’s hopeful that the recent reset will lead to practical changes that will help provide access to fast, reliable and affordable connectivity.

Improvement initiatives

It also announced a “landmark” regional network sharing agreement with Telstra Corporation Ltd (ASX: TLS) and a regulatory approval process is underway. This will boost TPG’s mobile coverage to 98.8% of the popular and improve mobile competition across regional Australia. Management called this a “game changer”.

TPG said it’s on track to deliver its synergies target of between $125 million to $150 million in FY22. This refers to the synergies that TPG is trying to generate when TPG merged with Vodafone Australia.

The telco said that accelerating growth momentum through the second quarter of 2022 supports its outlook for the rest of FY22.

TPG also said its 5G rollout is ahead of schedule, with 1,500 mobile sites completed to date. It expects its 5G rollout will surpass 2,000 sites by the end of 2022. It’s expecting more than 1,000 mobile sites per year to be rolled out until the mid-2020s.

Outlook for the TPG share price

The telco said it’s transitioning to a new phase of growth and expects earnings momentum to accelerate with a full effect of a higher mobile subscriber base, targeted strategies and tactical pricing to support fixed product margins.

It’s on track to deliver total merger synergies of $125 million to $150 million in 2022, a year earlier than originally expected.

After rising around 20% over the prior two months, it has given up all of those gains. TPG is steadily growing its dividend, but I’m not sure the yield is high enough yet to be called one of the attractive ASX dividend shares. There are other ASX share I’m looking at first.

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