Travel bans hurt TPG Telecom’s mobile earnings, but internet demand strong

Coronavirus restrictions slashed TPG Telecom’s margins for mobile phone roaming while retail store closures reduced sales, the company’s first post-merger financial results show.

Coronavirus travel bans have had a massive negative impact on TPG Telecom, reducing its ability to sign up all-important international visitors for prepaid mobile phone services and slashing margins for roaming.

Retail store closures also reduced sales in the first half of the calendar year, the company’s first post-merger financial results show, while call centre operations were down in March and April due to lockdowns in India.

But internet service demand remained strong as customers increasingly relied on it for remote working and education, the company said.

TPG Telecom, which completed its tie-up with Vodafone Hutchison Australia just before the end of June, said the travel bans resulted in a 30 per cent plunge for prepaid mobile phone connections.

Foreign students are a major market for the Vodafone and Lebara brands.

“These customers’ absence from the market is a major reason for the decline in the mobile customer base,” TPG Telecom said.

Customer financial hardship and support efforts also dented revenue, which fell 11 per cent in the six months to June 30 to $1.54 billion.

“We simultaneously supported our customers to help keep them connected through COVID, moderated the financial impacts of the pandemic on our own business, completed the merger and commenced our 5G rollout after an 18-month delay due to the vendor restrictions,” chief executive Inaki Berroeta said.

Vodafone CEO Iñaki Berroeta says the pandemic has hit the company’s mobile business hard. Picture: Adam Yip

“While our results reflect a negative impact from COVID on the mobile sector, they also demonstrate the relative resilience of the industry and our capacity to deliver the essential services which our customers rely on.”

Reported net profit was $83 million, including one-off expenses totalling $256 million, with the merger costs accounting for $30 million of that figure.

The motive for the $15 billion merger was to create an entity big enough to compete more effectively with Telstra and Optus.