TPG Telecom (TPM) has exceeded analyst earnings expectations in reporting a 2013-14 net profit of $171 million.
Market forecasts had predicted TPG would report annual revenues of around $971 million and earnings before interest, taxation, depreciation and amortisation (EBITDA) of $354 million.
But TPG’s reported EBITDA for the year was $120 million better at $364 million, while revenue hit $971 million, up 34% and boosted by the inclusion of AAPT from mid February.
Directors said yesterday they expect to grow that to around $455-$460 million in the current financial year, a rise of 24%.
The company increased final dividend to 4.75 cents a share (fully franked), bringing total dividends for 2013-14 to 9.25 cents a share (fully franked), an increase of 23% over the previous year.
The shares jumped 6% to end the day at $7.
TPM YTD – Earnings growth at TPG
Directors said the higher result was were mostly driven by strong topline revenue growth across TPG’s consumer and corporate division.
Broadband subscribers rose by 77,000 in the 12 months ending July 2014, roughly in line with analyst expectations. The company said it had soft-launched its NBN plans and was signing up 500-600 customers every week.
"The Consumer division’s EBITDA for the year was $205.6m which includes $3.3m of non- recurring benefits arising from credits and commercial settlements related to prior years,” directors said.
"As reported last year, the division’s EBITDA for FY13 of $180.6m benefitted from $10.0m of back- dated rebates arising from favorable regulatory determinations. The Consumer division’s underlying EBITDA growth for FY14 relative to FY13 is therefore $31.7m or 19%.
"The Group’s consumer broadband subscriber base continued to grow strongly increasing by a further 77,000 subscribers over the year, driven by the ongoing appeal of TPG’s bundled internet and home phone plans. As at 31 July 2014 the Group had 748,000 broadband subscribers and 362,000 mobile subscribers.
"The Group’s Corporate division (excluding AAPT) achieved an EBITDA of $126.0m for the year. This result includes $6.3m of non-recurring benefits (comprising $4.0m of back-dated supplier credits and a $2.3m IRU gain). As reported last year, the division’s FY13 EBITDA of $110.3m included a $10.5m IRU gain.
"The Corporate division’s underlying EBITDA growth for FY14 relative to FY13 is therefore $19.9m or 20%. This increase has been achieved through revenue growth as well as an improvement in underlying margin from 43% to 50%.
"The acquisition of AAPT on 28 February 2014 contributed $29.9m to the Group’s FY14 EBITDA. Excluding $5.1m of one-off integration costs and $3.2m of acquisition related costs incurred in the period, AAPT’s underlying EBITDA for the 5 months to 31 July 2014 was $38.2m.
"Integration activities have focused on the consolidation of teams, systems, networks and processes, resulting in an uplift in AAPT’s EBITDA margin from ~18% pre-acquisition to 23% underlying for the 5 months,” directors said yesterday.
