TPG crunches product offering as profits soften

TPG Telecom will embark on a multi-year project to simplify its brand portfolio and product range, with a goal to cut its current 6000 different plans down to just 100.

The telco – which operates TPG, Vodafone, iiNet, Internode, Lebara, AAPT and more – said the project, announced with its latest half-year earnings, will cost the company $15 million to $20 million annually this financial year and next, but is expected to produce $140 million of net cash benefits by financial year 2027.

TPG Telecom chief executive Inaki Berroeta said the company will trim its number of plans and products from 6000 to 100. Credit: Louie Douvis.

TPG chief executive Inaki Berroeta said the move was less about killing off some of smaller brands, and more about re-organising them to make the offerings clearer.

“We have a lot of incredibly valuable brands, with customers that are attached to those brands. We want to simplify the products in a way that we can be more efficient when we manage our commercial proposition, but also we can make it simpler for the customer,” he said.

“We have products in iiNet and TPG that are the same. This exercise significantly simplifies that structure.”

TPG reported $941 million in earnings after tax for the half, a 12.4 per cent rise compared to the same period last year. Net profit slumped 71 per cent to $48 million due to a one-off tax benefit of $110 million that had inflated its prior-year result, as well as inflationary pressures on expenses.

TPG lost 43,000 fixed internet customers in the half, taking the total down to 2.18 million, possibly owing to rising prices; the average margin per user grew 20.4 per cent to $25.4 per month. Subscriber numbers and revenue per user were both up for mobile plans, with total revenue for the category up 8.4 per cent to $956 million, which Berroeta said showed TPG was competitive with the likes of Telstra and Optus.

“We are a telecommunications company, we don’t try to be other things. We don’t sell electricity. We want to make sure that we develop the products that we are good at developing,” he said.

As part of its ongoing transformation, TPG is considering an offer to sell some of its enterprise and wholesale assets to fibre network provider Vocus for around $6.3 billion. TPG said the Vocus deal was contingent on a number of factors including due diligence, debt financing, approvals and regulation, and that it had not made any decision to accept a deal yet. Berroeta said it was too early to speculate.

A proposed infrastructure share plan with Telstra, which would have lifted TPG’s effective mobile footprint from 96 per cent of the population to 98.8 per cent, was rejected by the competition tribunal earlier this year. While Berroeta reiterated that TPG was not planning to challenge that decision further, he said the door was still open for similar deals.

“The tribunal said that infrastructure-sharing deals are possible and could create good competition. So they are not against infrastructure sharing. But there were a number of aspects of that agreement that they felt could create in the future some competitive challenges,” he said.

“So the decision is quite helpful in terms of setting the parameters of how a network sharing agreement could work. So we basically thought it was better to work on the positive side, to continue exploring opportunities to bring such a deal, than to enter into a process that would probably take a long time.”

E&P Capital analyst Entcho Raykovski said the half-year results were in line with market estimates, with stronger earnings than expected.

TPG’s share price was up 3.6 per cent to $5.62 at 2.10pm AEST. The company will pay an interim dividend of 9¢ per share, unchanged from a year earlier.

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