The share price of telecommunications provider and IT company TPG Telecom Ltd (ASX: TPM) is up around 8.5% this morning after reporting record profits and exceeding guidance in their full year results.
Below is the summary of the results.
- Net profit after tax (NPAT) grew 9% on FY16 figures, to $413.8 million
- The company's underlying NPAT grew 16% to $417.3.
- Earnings before interest, tax, depreciation and amortisation (EBITDA) grew 5% to $890.8 million.
- Excluding irregular items, underlying EBITDA increased by 8% to $835 million.
- Earnings per share (EPS) increased by 6% to 47.9 cents per share.
- Cash generated from operations (pre-tax) totalled $869.7 million in FY17
- The group announced a final FY17 dividend of 2 cents per share fully franked which reaches its ex-dividend date on October 17th.
TPG also highlighted in their guidance that solid growth is expected for FY18, whilst acknowledging the headwinds presented by the NBN, which is likely to squeeze its margins on fixed line residential broadband services. The company predicts underlying EBITDA in FY18 will be in the range of $800-$815 million, down from the $835 million reported in FY17.
The company also highlighted that it has secured additional debt financing of $750 million, bringing the group's total committed debt facilities to $2,385 million to finance planned mobile network builds. TPG highlighted that their mobile strategy is on track after making solid progress in the implementation of mobile network rollouts in Australia and Singapore.
TPG Telecom presently is trading at a market valuation of around $4,827 million and its share price has hit levels between $5.05 and $11.6 in the past 12 months, following a tough year for ASX Telcos. After its promising results and guidance on their mobile strategy, I believe TPG is a good buy at its modest price-to- earnings multiple of 11.55.
