TPG lifts on lower-than-expected profit decline
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More news: Shares in TPG Telecom jumped nearly 7% to $4.89 after Australia’s third-biggest telecoms firm reported a lower-than-expected 40% drop in half year profit.
Jarden analysts said while the headline numbers were a small beat on expectations, operationally the result appeared somewhat soft. The broker has an 'overweight' rating on the stock with a $5.25 price target.
What they said: "TPG has announced headcount reductions of 120 this month which are expected to deliver $20 million in annualised cost savings, with restructuring costs of $7 million to $9 million to be taken below the line," they said in a note.
TPG cuts jobs as half-year profit tumbles
The news: TPG Telecom has reported a slide in first-half profit amid slowing subscriber growth, prompting a cut in 120 roles.
The numbers: Net profit for the six months to 30 June, 2024, was down 40% from a year ago to $29 million, ahead of analyst estimates of $26.9 million.
Earnings rose 3.5% to $974 million, while revenue was marginally higher at $2.71 billion. The company will pay an interim dividend of 9 cents a share, unchanged from a year ago.
The context: The telecoms firm attributed its weaker profit to increased depreciation and amortisation expenses from investments in network and technology as well as higher financing costs.
It said mobile service revenue rose 7.2% to $1.12 billion despite slowing subscriber growth, helping offset a 3.5% decline in fixed service revenue as competition heated up in the NBN market. The group reaffirmed its FY24 earnings guidance range of $1.95 billion to $2.03 billion,
TPG, which signed a regional network sharing agreement with bigger rival Optus earlier this year, and has also revived talks with Vocus for the sale of its fixed network, said it is now looking to take action on operating costs.
CEO Inaki Berroeta said the company cut 120 roles this month as it “looks to offset the impact of sustained inflation of recent years and deliver a flatter overall operating cost profile heading into FY25".
The source: ASX announcement
