TPG share price crashes 10% on FY 2023 results

The TPG Telecom Ltd (ASX: TPG) share price is having a tough start to the week.

In early trade, the telco’s shares are down 10% to $4.82.

This follows the release of the company’s full year results.

TPG share price sinks on FY 2023 results

• Revenue up 4.3% to $4,632 million
• Statutory EBITDA down 12.2% to $1,875 million
• Normalised EBITDA up 7.6% to $1,930 million
• Final dividend of 9 cents per share

What happened during the year?

For the 12 months ended 31 December, TPG reported a 4.3% increase in revenue to $4,632 million. Management advised that this reflects mobile subscriber and average revenue per user (ARPU) growth.

Things weren’t quite as positive for its statutory EBITDA, which fell 12.2% to $1,875 million.

However, it is worth noting that the prior corresponding period included a one-off gain on its tower sale. On a normalised basis, EBITDA rose 7.6% to $1,930 million.

TPG’s statutory net profit after tax was $49 million, down from $513 million in FY 2022. This was once again due largely to the tower sale a year earlier. In addition, higher depreciation and amortisation costs, as well as higher market interest rates weighed on its profits.

Adjusted net profit after tax was down 9.6% to $584 million but its dividends for FY 2023 were flat at 18 cents per share.

How does this compare to expectations?

While the company’s result was largely in line with expectations, its guidance fell short. This appears to be why the TPG share price is falling today. Goldman Sachs commented:

FY24 Outlook: (1) EBITDA guidance $1,950-$2,025mn (vs. GSe: A$2,050mn; Visible Alpha Consensus Data: A$2,042mn) – noting EBITDA guidance now excludes transaction costs, includes transformation costs (was opposite prior).

Management commentary

TPG’s CEO, Iñaki Berroeta, said:

Our mobile business has achieved solid gains driven by new subscribers and the successful refresh of plans across our premium Vodafone brand as we position our business for sustainable growth in a competitive market. Our transformation continues at pace, and we are seeing the positive impact of simplifying and removing complexity from the business. These benefits will accelerate in the coming years as we deliver better network and service experiences for our customers.

Outlook

As noted above, TPG has provided guidance for FY 2024 EBITDA with its result.

It expects this to be in the range of $1,950 million to $2,025 million. This represents an increase of 1.4% to 5.3% year on year on a comparable basis.

Berroeta concludes:

We are pleased with the very strong growth we delivered in FY23 and expect to deliver further growth in FY24 at the same time as we continue to invest in the transformation and simplification of our business. We are confident in the outlook for strong improvements in cash earnings over the next few years, supporting returns for shareholders as the working capital, capital investment and interest cost cycles reduce from currently elevated levels.

The post TPG share price crashes 10% on FY 2023 results appeared first on The Motley Fool Australia.

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Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Goldman Sachs Group. The Motley Fool Australia has recommended Tpg Telecom. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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