TPG share price: 3 key things we learnt from the telco’s 2019 AGM

We examine some of the key things discussed at TPG’s latest Annual General Meeting – held in Sydney today.

With TPG (ASX: TPM) today holding its annual general meeting in Sydney, the telco took time to look at some of its operational highlights from FY19, challenges faced during the year and to discuss its FY20 outlook.

TPG share price: is there growth ahead?

Centrally, though the 2019 fiscal year proved a challenging one for TPG – with company earnings (EBITDA) declining by $4m, this was due primarily to 'profit headwinds of $76 million in the year caused by the Government’s NBN rollout.’

Here, the company further noted that:

‘This was quite a respectable achievement in the circumstances and was driven by our continued focus on cost control.’

Growth in the telco’s Corporate Division also helped offset these headwinds.

Speaking of the current operating environment, TPG’s Chief Executive Officer – David Teoh – noted that these NBN headwinds are expected to continue for the next couple of years. On the flip-side of this, Mr Teoh is confident that once these NBN issues subside – the lean telco is well positioned to enter another growth phase.

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The current TPG-Vodafone stance

Secondly, TPG’s CEO took today’s AGM to unequivocally express his commitment for the proposed – and subsequently blocked – TPG-Vodafone merger. Though the TPG share price first surged on the back of this news, extreme price action has moderated somewhat as uncertainty around the legal outcome persists.

Here, Mr Teoh said:

'Given our firm belief that the proposed merger would greatly enhance competition in the Australian telecommunications industry, the merger parties launched proceedings in the Federal Court seeking orders that the proposed merger will not, and is not likely to, substantially lessen competition.’

A decision on this matter is expected to be handed down in February 2020. Ultimately, TPG remains 'hopeful' that the merger will not face further impediment from the courts – though no one can tell for certain which way Justice John Middleton will lean when he hands down his decision in February.

The 2020 outlook tracking well

Though NBN headwinds indeed persist, TPG struck an optimistic tone as part of their AGM Presentation, noting that ‘year-to-date results [are] tracking well to the above guidance’ for the 2020 fiscal year.

For the 2020 fiscal year, TPG is expecting earnings (BAU EBITDA) in the range of $735 million to $750 million.

On the front of capital expenditure (BAU CAPEX) for FY20, the telco expects this figure to come in at between $200 million to $240 million.

Clarifying the nature of these earnings, it was noted that 'BAU EBITDA relates to existing Consumer and Corporate Division operations. It excludes Singapore EBITDA and Australian mobile network operating costs.'

The TPG share price current sits somewhat off its 52-week high: currently trading at $6.85 per share.


This information has been prepared by IG, a trading name of IG Markets Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients.

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