International travel return a boon for TPG, CEO Iñaki Berroeta says

A post-pandemic travel bump has helped Telstra rival TPG lift its mobile subscriber base and annual profit.

TPG chief executive officer Inaki Berroeta. Picture: iStock

Shares in telco TPG have climbed as the company lifted revenue and earnings for the 2022 financial year, buoyed by a return of international visitors to Australia and a $950m sale of its passive mobile tower and rooftop infrastructure.

TPG reported a net profit after tax of $513m for the 12 months to December 31, up from $113m a year earlier, adding 300,000 net new mobile customers for the year and lifting average revenue per user by 1.9 per cent.

The company on Monday posted service revenue of $4.4bn for the year – up 1.5 per cent annually – and earnings before interest, tax, depreciation and amortisation (EBITDA) of $2.1bn, up 23.6 per cent, including a $402m accounting gain for the sell-off of its tower assets.

It declared a fully franked final dividend of 9c a share, taking total dividends for the year to 18c a share.

“These results reflect solid execution of our strategy as we benefited from renewed customer activity throughout 2022,” chief executive Inaki Berroeta said.

“The operational and strategic foundations we have put in place are translating to an improving ­financial performance, which we expect to gather momentum through 2023.”

The company ended the year with 5.28 million total mobile customers, up 6 per cent on December 2021, with Mr Berroeta singling out the return of international travellers to Australia as a key growth driver.

“We are now at 85 per cent of our roaming revenues versus pre-pandemic levels, and that has developed quite quickly throughout 2022,” he said. “As we see people travelling more, we expect this to come back to pre-pandemic levels by the end of the year.”

The telco is also ramping up its push to pare customers away from the NBN, doubling its fixed home wireless customers to 171,000 for the year.

TPG has launched a blitz for new 4G and 5G fixed wireless customers in a bid to entice users away from the NBN and on to its network.

More than a quarter of Australians consider their phone and internet costs to be unaffordable, a recent study from the Australian Communications Consumer Action Network found, and retailers are now increasingly pushing wireless 5G plans that in many cases are superior – and less expensive – than those offered by NBN. Home 5G typically offers speeds of between 100 and 600 megabits per second, which in many cases is as much as 12 times the speed of NBN’s 50 megabits per second plans.

TPG executives say the ­migration of every 100,000 NBN customers back on to its own infrastructure represents about $50m in annual savings for the telco.

“It’s been very important in the last couple of years to ramp up this customer base and bring the product to market, and we believe there is probably an opportunity to serve about 20 per cent of our base with this technology,” Mr Berroeta said on Monday.

“So we are almost halfway there, and I think that inside our whole home broadband strategy, fixed wireless remains extremely relevant, because it offers a low entry point for internet access to Australian consumers, and it helps improve margins across our total fixed base.

“While we are pleased to see the NBN constructively engage with industry on pricing, more needs to be done to ensure affordable broadband remains available to all customers.”

As The Australian reported on the weekend, bids for TPG Telecom’s Vision Networks are believed to be due next week, with its price tag expected to be about $1bn.

The company said assuming no material change in operating conditions, it expected EBITDA for the current financial year of between $1.85bn and $1.95bn.

As a result of the competition watchdog’s decision to block a regional network sharing deal between TPG and Telstra, TPG did not include any financial impacts of the proposed agreement in its results.

“The ACCC decision not to authorise this network sharing agreement was a significant loss for regional Australia and for consumers and businesses,” Mr Berroeta said.

“TPG Telecom and Telstra are challenging the decision through the Australian Competition Tribunal.”

Shares in TPG closed up 5.9 per cent at $5, giving it a market capitalisation of about $8.8bn.