The TPG Telecom Ltd (ASX: TPG) share price is charging higher on Friday.
In morning trade, the telecommunications company's shares are up 6% to $4.79.
This follows the release of the company's full year results for FY 2024.
TPG share price races higher on results day
- Service revenue up 1.5% to $4.7 billion
- Gross profit up 3.5% to $3.2 billion
- Operating expenses down 3.6% to $1.2 billion
- Statutory EBITDA down 8.7% to $1.7 billion
- Underlying EBITDA up 3.4% to $1.99 billion
- Underlying net profit after tax up 4.8% to $87 million
- Total dividends flat at 18 cents per share
What happened in FY 2024?
For the 12 months ended 31 December 2024, TPG reported a 1.5% increase in service revenue to $4.7 billion. This was driven by a strong performance in mobile services, which generated a 5.4% increase in revenue to $2.27 billion. The key drivers of this growth were higher average revenue per user (ARPU) and a boost in Prepaid subscribers, offsetting some softness in the Postpaid segment.
TPG's total mobile subscriber base grew 1.8% to 5.51 million, underpinned by strong demand for its Prepaid digital brands and a major contract win with mobile virtual network operator (MVNO) Lyca Mobile. However, aggressive handset discounting from rivals and the 3G network shutdown led to a drop in Postpaid subscribers.
In the fixed-line segment, TPG remained Australia's largest provider of Fixed Wireless services. While total fixed subscribers declined 2.4% to 2.08 million, the company's focus on higher-margin Fixed Wireless services helped offset the impact on profitability. Overall, group gross profit increased 3.5% to $3.2 billion.
Profit and dividends
A focus on cost control helped TPG slow its operating expenditure growth to just % in the second half of the year. This, along with reduced capital expenditure, supported strong operating free cash flow (OFCF) of $672 million, an increase of $474 million from the prior year.
TPG's statutory EBITDA came in at $1.7 billion, but this included a previously announced $250 million non-cash impairment related to decommissioned mobile network sites for its regional sharing deal with Optus. Excluding impairments and other one-offs, underlying EBITDA was $1.99 billion, up 3.4% and in line with its guidance.
As for capital returns, the TPG board elected to maintain its total dividends at 18 cents per share in FY 2024. Its final dividend of 9 cents per share will be unfranked, as the company has exhausted its franking credits.
Management commentary
Commenting on the year, TPG's CEO and managing director, Iñaki Berroeta, said:
In FY24, we achieved continued growth in Mobile Service Revenue, expanded gross margin, increased EBITDA in line with our guidance, materially improved our cash flow and delivered higher return on capital and stable dividends.
We have made substantial progress with our strategy, doubling the size of our mobile network coverage through our innovative regional sharing agreement with Optus. We have made material progress to simplify our business for customers by rationalising plans, IT systems and brands. We have agreed the sale of our fibre infrastructure and EGW Fixed assets to Vocus, further simplifying our business, derisking our network costs as we grow, and strengthening our financial position.
Outlook
Looking ahead, TPG expects EBITDA of between $1.95 billion and $2.025 billion in FY 2025, assuming no major shifts in operating conditions. Capital expenditure (excluding spectrum payments) is forecast to be around $900 million, down from $1,014 million in FY 2024.
The company also revealed that it expects ongoing service revenue growth and stable operating costs to help offset the financial impact of its regional network sharing deal and structural changes to a key enterprise IoT contract. Management also anticipates a stronger OFCF performance in FY25 due to reduced capital investment and improved working capital.
