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TPG Telecom Reports a Seventh Consecutive Year of Growth

TPG Telecom Reports a Seventh Consecutive Year of Growth
Sep 22, 2015 By Ben Visser

TPG Telecom Limited (ASX:TPM) has reported its full FY15 results, reporting growth for a seventh consecutive year.

The company reported Net Profit After Tax (NPAT) of $224.1 million, an increase of 31 per cent compared to last year. Earnings before interest, tax, depreciation and amortisation (EBITDA) increased by 33 per cent to $484.5 million. Earnings per share came in at 28.2 cents per share, up 31 per cent on the previous year.

To company’s board has declared a final dividend of 6.0 cents per share, bringing the total FY15 dividend to 11.5 cents per share (fully franked), an increase of 24 per cent compared to last year. The dividend is payable on 17 November 2015 with an ex-dividend date of 11 October 2015.

The Consumer Division reported EBITDA of $239.7 representing underlying growth of 18.5 per cent, not including a $3.3 million non-recurring benefit in the FY14 results. The company states that growth has been driven by ongoing organic broadband subscriber growth as well as an increase in EBITDA contribution per broadband subscriber. The group’s consumer broadband base grew by 73 per cent, compared to 77 per cent in the previous year. The growth does however excluded FTTB subscribers who now acquire FTTB services through wholesale customers of the Group.

The Corporate Division reported EBITDA of $242.3 million for the year, up 52.2 per cent on the previous year. The EBITDA growth was largely from the acquisition of AAPT, which contributed a full 12 months to the Group’s FY15 result compared to only 5 months in FY14. If AAPT had been owned by the group for the whole of FY14, the extra 7 months would have contributed to approximately half of the growth in EBITDA, implying that the other rest of the FY15 growth in EBITDA is attributable to organic revenue growth and EBITDA margin expansion post acquisition of AAPT.

The company reported pre-tax cash generated from operations of $492.8 million, and free cashflow after tax, capex and interest of $213.8 million. The free cash was used to fund investments in Covata and Amcom, to make debt repayments of $21 million and pay increased dividends of $81.4 million.

On 7 September the Group completed the acquisition of iiNet Group (ASX:IIN). In order to fund the acquisition the Group entered into revised debt facility agreements with a syndicate of banks in August 2015, totalling $1,960 million. The change in control occurred after 31 July 2015, therefor iiNet did not contribute to the Group’s FY15 results.

The company has not provided specific guidance for FY16 yet, stating that it has only been a few weeks since the iiNet acquisition, making it too difficult to forecast with sufficient certainty.

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Ben Visser Author: Ben Visser Sep 22, 2015

Ben is a Wise-owl equity analyst focusing on ASX blue-chips stocks. Ben has a Bachelor of Business in Finance majoring in property valuations and management. In his role at Wise-owl Ben conducts in-depth fundamental and technical analysis which helps him to find profitable investment opportunities on the ASX and abroad.

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