REPORT: Why the TPG Telecom Ltd share price is shooting the lights out

Credit: Cebit Australia

The TPG Telecom Ltd (ASX: TPM) share price could get a welcome boost today following a promising half year profit result.

Here are the key figures from the TPG half year report:

  • Revenue rose 8% to $1.24 billion
  • Profit rose 11% to $224 million
  • A fully franked dividend of 8 cents, up 14%, is payable in May
  • Underlying operating profit (EBITDA) rose 8% to $473 million

Having recently acquired iiNet, TPG Telecom’s results were boosted by the revenue injection from its broadband business, as well as synergies, and organic growth.  

Source: TPG Telecom Half Year Results Presentation

Source: TPG Telecom Half Year Results Presentation

Pleasingly, TPG Telecom’s Corporate and Consumer businesses both continued to show strength, with revenue and operating profit (EBITDA) growing during the period.

Source: TPG Telecom Half Year Results Presentation

Source: TPG Telecom Half Year Results Presentation

Total broadband subscribers stood at 1.91 million, up from 1.84 million in the same period last year. A total of 24,000 consumers were using TPG’s fibre-to-the-basement (FTTB) network, which rivals the NBN. Pleasingly, churn rates across TPG Consumer and iiNet came in at just 1.4%.

The company now has 453,000 mobile subscribers.

In December, the company made its first big investment in Singapore with the purchase of mobile spectrum for S$105 million. TPG Telecom says network planning is progressing well, with an anticipated rollout cost of between S$200 million ($185 million) and S$300 million ($277 million).

The company spent $330 million in capital expenditure during the half, compared to just $133 million last year. Around $222 million of the expenditure was spent locally in Australia.

Looking ahead, TPG Telecom reiterated underlying operating profit (EBITDA) guidance of between $820 million and $830 million.

Buy, Hold or Sell TPG Telecom Shares

Today’s result appears upbeat to me. The company is growing in key areas, investing for growth and paying a healthy dividend. Best of all, its shares look cheap. All that combines to make TPG shares a buy in my book.

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Motley Fool Contributor Owen Raszkiewicz does not have a financial interest in any company mentioned. Owen welcomes and encourages your feedback. You can follow him on Twitter @OwenRask.

The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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