Why the TPG Telecom (ASX:TPG) share price is plummeting today

The TPG Telecom Ltd (ASX: TPG) share price is slumping this morning after the 2020 annual report release and resignation of its founder.

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The TPG Telecom Ltd (ASX: TPG) share price has slumped in early trade today after the company released its 2020 annual report. It comes after the full-year financial report release to shareholders in February 2021.

Today’s report highlighted the surge in full-year revenue and profits for the Aussie telco. That came after a $15 billion merger with Vodafone Hutchison Australia Pty Limited (Vodafone) in July 2020.

TPG also provided an update on its strategic initiatives and broader group focus in the annual report.

At the time of writing, the TPG share price is down 9.3%, trading at $6.26.

Why is the TPG share price falling?

TPG this morning provided its annual report for the year ended 31 December 2020 (FY2020). Revenue and earnings before interest, tax, depreciation and amortisation (EBITDA) surged higher, making the TPG share price worth watching today.

Full-year revenues jumped 24 per cent from 2019 to $4.35 billion while EBITDA climbed 18 per cent to $1.39 billion. That saw net profit after tax (NPAT) rocket higher to $734 million after a $280 million loss in 2019. However, TPG did note that the 2020 and 2019 results are largely incomparable due to the impact of the merger.

On the balance sheet side, TPG’s net assets reversed from -$1.2 billion in 2019 to $11.9 billion in 2020. That comes after the July 2020 merger, which created the current large-cap Aussie telco group.

The TPG share price is one to watch following this morning’s update. Shares in the Aussie telco have trended lower since mid-2020, dragging TPG’s market capitalisation to its current $12.9 level.

The group’s strategic priorities remain on rolling out its 5G network to reach scale in major cities. That includes a 2021 target to reach 85 per cent 5G population coverage in the top six cities.

TPG will also focus on enhancing and simplifying the customer experience while delivering more benefits of the merger to stakeholders. The telco is also forecasting $70 million in cost savings as part of the synergies from the merger.

Chairman resignation

The TPG share price is slumping this morning following the annual report release. That coincided with another announcement that TPG founder David Teoh will resign as chairman.

Mr Teoh has been with TPG for over 30 years but has today announced his resignation alongside his son, Shane Teoh. Canning Fok will become chairman of the board while Mr Teoh’s other son, Jack, will join alongside Antony Moffatt.

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Motley Fool contributor Ken Hall has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. 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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