The TPG Telecom Ltd (ASX: TPM) share price will be one to watch this morning following the release of its half year results.
How did TPG Telecom perform in the first half?
For the six months ended January 31, TPG Telecom posted a 1% increase in revenue over the prior corresponding period to $1,246.5 million.
The telco company's underlying EBITDA came in at $399.1 million for the half, which was down 6% on the prior corresponding period.
On the bottom line, underlying net profit after tax and earnings per share were both down 30% to $157.9 million and 17 cents per share, respectively. Management advised that this decline reflects the impact of commencing the amortisation of its Australian spectrum licences from the start of the second half of FY 2019.
On a reported basis, EBITDA was up 111% to $406.6 million and net profit after tax jumped 206% to $143.6 million. However, this was due to the prior corresponding period containing a material impairment arising from its decision to cease the Australian mobile network build.
The TPG Telecom board has declared a fully franked interim dividend of 3 cents per share, which is up 50% from 2 cents per share a year earlier. This dividend is payable on May 19 to shareholders on the register on April 14. The company advised that its dividend reinvestment plan remains suspended until further notice.
NBN headwinds are easing.
During the half the company advised that its combined NBN headwinds amounted to $55 million. While this is exactly half of the $110 million combined NBN headwinds that were anticipated in its full year guidance, it is $7 million less than it forecast for the first half.
Management advised that this was predominantly due to the NBN finally introducing some wholesale pricing relief for NBN12 services in October.
This supported stronger than expected EBITDA in the first half. In fact, the company is trading $34 million ahead of its guidance at present. This has been driven by a strong performance from its Corporate division, cost savings in the Consumer division, and organic Consumer division broadband (FTTB and NBN) subscriber growth.
Outlook.
In light of its better than expected first half performance, the company has upgraded its FY 2020 BAU EBITDA guidance.
Management now expects BAU EBITDA to be in the range of $775 million to $785 million. This compares to its previous guidance of $735 million to $750 million. The company's BAU capex guidance remains the same at $200 million to $240 million.
Merger update.
Management also provided an update on its merger with Vodafone Hutchison Telecommunications (Aus) Ltd (ASX: HTA).
Positively, this morning the ACCC has decided not to appeal the Federal Court's decision to approve the merger, advising that it has concluded that it does not have grounds for appeal.
ACCC Chair Rod Sims said: "The ACCC remains disappointed by this outcome, which has closed the door on what we consider was a once in a generation chance for increased competition in the highly concentrated mobile telecommunications market."
And while there are other regulatory conditions that must be met before the merger can proceed, the companies are targeting completion of the merger in mid-2020.
