How does the TPG (ASX:TPG) earnings result compare to Telstra?

How does TPG’s 1H FY21 earnings report compare to that of rival Telstra?

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Shareholders in TPG Telecom Ltd (ASX: TPG) will be flicking through the latest half-year results from the telco giant on Friday. Adding to the interest, today’s release marks TPG’s maiden reporting season since merging with Vodafone Australia.

Considering Telstra Corporation Ltd (ASX: TLS) reported just over a week ago, it’s likely investors will be in the trenches for the next few days – meticulously comparing the two fierce competitors.

To save yourself some time, let’s run through the results of both companies and see how they stack up.

TPG falls on the ASX despite revenue boost

If you didn’t catch TPG’s first-half FY21 report, here are some of the highlights:

In early trade, the TPG share price moved positively on these results. However, it appears after some further time to process, the market has progressively become more pessimistic. At the time of writing, shares are swapping hands for $6.17 – down 6.66%.

Ordinarily, a 71% jump in revenue would be considered a major positive for an ASX-listed company such as TPG. Though, the trick is in the accounting of the Vodafone merger. On a pro forma basis, the merged entities’ revenue fell 3% compared to the prior corresponding period.

How does this compare to the Telstra earnings result?

Telstra dished out its own numbers last week on 12 August, though these metrics were for a full year as opposed to TPG’s half-year. Despite the difference, we can still look at the shifts in growth to grasp a sense of how these two companies are performing.

Without a doubt, Telstra is the top dog in Australia when it comes to network providers. The company’s full-year numbers reflected a reduction in revenue and an increase in earnings. CEO Andy Penn described the period as “transformational”, with the company expected to return to growth in FY22.

Here’s a summary of what Telstra reported:

  • Total income fell 11.6% to $23.1 billion
  • Reported EBITDA fell 14.2% to $7.6 billion
  • Net profit after tax increased 3.4% to $1.9 billion
  • Fully franked final dividend of 8 cents per share, bringing full year dividend to 16 cents per share
  • 1.6 million 5G-enabled devices on the Telstra network
  • $1.35 billion on-market share buyback

A notable line item on the above list is the $1.35 billion share buyback following Telstra’s InfraCo Towers transaction. While ASX-listed TPG is not conducting any buybacks, speculation has arisen around whether the smaller telco is contemplating the sale of some infrastructure assets of its own.

Additionally, where Telstra provided guidance for the year ahead, TPG left investors guessing for H2 FY21. Instead, the company simply shared its business focus for the second half. This could potentially be putting investors off the TPG share price today.

TPG share price snapshot

It has been a rocky 12 months for the TPG share price, with today’s session adding to the pain. Over the last year, shares in the Telstra competitor have fallen 14.9%. Meanwhile, the Telstra share price is up 32% over the same period.

However, it is worth keeping in mind that TPG is still in the process of realising synergies from its Vodafone acquisition. It will certainly be interesting to see the company’s full-year results, but we’ll have to wait for those.

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Motley Fool contributor Mitchell Lawler has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Telstra Corporation Limited. The Motley Fool Australia has recommended TPG Telecom Limited. 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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