Slide 1: ASX cover letter: Results for Full Year Ended 31 December 2022
Market Announcements Office Australian Securities Exchange Level 4, 20 Bridge Street Sydney NSW 2000 Sydney, 27 February 2023 TPG Telecom Limited Results for Full Year Ended 31 December 2022 – Investor Presentation Please find attached for immediate release to the market an Investor Presentation con
Slide 2: TPG Telecom Limited Full-Year Results
TPG Telecom Limited Full-Year Results 27 February 2023 1
Slide 3: Acknowledgement of Country
Acknowledgement of Country TPG Telecom acknowledges the Traditional Custodians of Country throughout Australia and the lands on which we and our communities live, work and connect. We pay our respects to their Elders, past, present and emerging. ‘Listening to Land - Connecting to Country’ by Riki Sa
Slide 4: Agenda
Agenda Results highlights and ● Iñaki Berroeta business update Chief Executive Officer and Managing Director Review of financial performance ● Grant Dempsey Chief Financial Officer Summary and outlook ● Iñaki Berroeta Chief Executive Officer and Managing Director 3
Slide 5: Results highlights and business update
Results highlights and business update Iñaki Berroeta Chief Executive Officer and Managing Director 4
Slide 6: FY22 highlights: growth momentum is improving, supporting execution of our strategy
FY22 highlights: growth momentum is improving, supporting execution of our strategy • Positive momentum in Mobile: 300k net subscriber adds, plan simplification and pricing refresh underway Growth • Improved Fixed profitability: Fixed Wireless base more than doubled; NBN plan re-pricing executed ret
Slide 7: Mobile subscribers: strong rebound in momentum delivered net adds of 300,000
Mobile subscribers: strong rebound in momentum delivered net adds of 300,000 during 2022 Mobile subscribers – Postpaid (‘000s) 3,228 3,193 3,148 3,164 • Postpaid up 80k year on year Vodafone1 • Prepaid up 92k year on year • Customer growth driven by improved execution, return of international travel
Slide 8: ARPU up, largely driven by international roaming recovery in Postpaid
ARPU up, largely driven by international roaming recovery in Postpaid; momentum to be supported by plan refresh in FY23 31.5 31.8 32.1 32.4 42.0 42.7 41.1 41.4 Total Mobile Postpaid Mobile 0.2 0.4 1.2 2.2 • Postpaid ARPU up 3.1% vs. 2H21, ARPU ($/month) ARPU ($/month) 2.8 3.1 2.8 2.3 including impac
Slide 9: Consumer Postpaid plan refresh: creating a simpler experience
Consumer Postpaid plan refresh: creating a simpler experience with a continued focus on a value-first approach Refreshed Vodafone Consumer Postpaid plans Small Medium Large • Simplification of Vodafone consumer Postpaid plans $45 $55 $65 per month per month per month completed in January 40 GB 150 G
Slide 10: Fixed: NBN price discipline and Fixed Wireless growth
Fixed: NBN price discipline and Fixed Wireless growth supporting focus on profitability improvement Strong AMPU growth reflects targeted NBN re-pricing and Fixed Wireless base more Fixed Wireless contribution than doubled in 2022 +8.0% 2,222 2,223 2,218 2,195 24.2 71 41 35 ADSL 21.7 22.4 91 and othe
Slide 11: Enterprise, Government and Wholesale: returned to growth with new E&G contracts
Enterprise, Government and Wholesale: returned to growth and building momentum with $150m+ of new E&G contracts E&G revenue ($m) Partnering with Hungry Jacks Enterprise & • Double-digit growth in on-net Fast Fibre 370 and will accelerate as legacy transition 349 346 342 Government 54 Legacy complete
Slide 12: Vision Network: high quality assets, well positioned for growth
Vision Network: high quality assets, well positioned to capture significant growth opportunity • Strategic review announced 31 October 2022 to support growth of the business following completion of functional separation from retail operations • Focus on unlocking value for TPG Telecom shareholders a
Slide 13: Mobile network: delivered 1,000+ additional 5G sites in FY22
Mobile network: delivered 1,000+ additional 5G sites in FY22 despite tight labour market, supply chain constraints Mobile network Regional network sharing – MOCN agreement Tamworth Regional Livestock Exchange using 5G enabled computing to help farmers automate the labour intensive practice of counti
Slide 14: Cyber resilience: significant investments to help protect customers
Cyber resilience: significant investments to help protect customers and their personal information • TPG Telecom takes protecting customers and critical infrastructure from cybercrime extremely seriously • We currently block well in excess of one million scam SMS and calls every day • Recently there
Slide 15: Sustainability: pathway towards net zero by 2050
Sustainability: solid progress made, delivered a pathway towards our commitment to reach net zero by 2050 Key progress made in FY22: •2030 targets established: reduce Scope 1 and 2 emissions by 95% and Scope 3 emissions by 30%1,2 •2050 targets: reduce Scope 1, 2 and 3 emissions by 90% and achieve ne
Slide 16: In 2022 we were proud to...
In 2022 we were proud to... … keep friends and loved ones connected through challenging times… … united and strengthen the connection of our People – evidenced by ‘Our Spirit’ survey, 2022 Employer of Choice award 79% 78% … offer essential communication 76% services to help Australia stay connected
Slide 17: Review of financial performance
Review of financial performance Grant Dempsey Chief Financial Officer 16
Slide 18: FY22 financial summary: operating performance improving, supported by tower sale gain
FY22 financial summary: operating performance improving, supported by one-off gain from sale of tower assets Metric FY211 FY22 Change Commentary Service revenue $4,372m $4,439m 1.5% Growth supported by strong 2H in Consumer Gross margin $2,787m $3,243m 16.4% Included $402m from sale of tower ass
Slide 19: Consumer gross margin: strong contribution from mobile and fixed
Consumer gross margin: strong contribution from mobile and fixed, delivering first revenue growth since merger Consumer gross margin ($m) Higher subscriber Stabilised in 2H22 base and Int. roaming 35 46 (27) (25) 1 2,090 38 (25) Network 2,047 Margin accretive efficiencies migration towards higher lo
Slide 20: Enterprise, Government & Wholesale gross margin
Enterprise, Government & Wholesale gross margin: strong new customer growth offsetting ongoing impact of legacy transition Enterprise, Government & Wholesale gross margin ($m) 25 3 5 (15) (1) E&G achieved high 37 single-digit growth ex-legacy 3 Optimised 724 720 network cost (53) Fixed growth suppor
Slide 21: Total costs: synergies of $140m achieved, mitigating inflationary pressures
Total costs: synergies of $140m achieved, mitigating inflationary pressures linked to tight labour market and higher energy costs Total cost ($m) 7 38 71 (20) (29) 22 3,689 (75) 3,658 (39) (6) 2,581 COGS 2,610 $140m total cost synergies, of which $120m is opex Opex 1,108 1,048 FY20 pro Electricity c
Slide 22: Balance sheet: position strengthened for higher rate environment
Balance sheet: position strengthened allowing TPG Telecom to better withstand impacts of a higher rate environment Solid cash flow and proceeds from tower $m FY21 FY22 FY23 outlook Funding cost assets sale have enabled reduction in bank Continued handset receivables financing increased in line debt
Slide 23: Cash flow: strong cash generation supporting 5G and technology investment
Cash flow: strong cash generation supporting accelerated 5G and technology investment and balance sheet strengthening Cash flow conversion bridge ($m) 1,733 (265) Classification of handset (217) receivables financing as 1,251 working capital results in financing cash flow Handset adversely impacting
Slide 24: Capex: accelerated profile in the short to medium term
Capex: accelerated profile in the short to medium term to enable 5G rollout to 2025 Indicative capex profile ($m) 992 c.$1 billion Spectrum 31 Outlook excludes spectrum, noting 917 Grow 94 3.4 and 3.7 GHz band auction Investments in new 91 expected in early Q4 2023 assets and footprint, seeking 115
Slide 25: Dividend: 9% increase consistent with solid cash profit
Dividend: 9% increase consistent with solid cash profit Reconciliation of statutory to Adjusted NPAT ($m) Dividends (cps) +9.1% 46 646 18.0 60 16.5 Final dividend 9.0 cps 160 9.0 513 Final 8.5 269 Interim 8.0 9.0 Fully franked FY21 FY22 Total dividend at 52% of Adjusted NPAT1 402 Number of ordinary
Slide 26: Disciplined capital allocation framework
Disciplined capital allocation framework will drive growth and return aspirations Recurring capital management Value maximisation levers Annual Enhanced Additional Sustaining Strong Transformation Growth dividend to portfolio return to investment balance sheet investment investment shareholders mana
Slide 27: Summary and outlook
Summary and outlook Iñaki Berroeta Chief Executive Officer and Managing Director 26
Slide 28: Our ambition: to be Australia's best telco
Our ambition: to be Australia’s best telco for our customers, shareholders, our people and the community Three guiding principles, providing long-term direction to our strategy Integrate and Simplify Win Smart Maximise our Potential Making the experiences of Delivering targeted growth, Investing in
Slide 29: Ten key strategic initiatives informed by our guiding principles
Ten key strategic initiatives informed by our guiding principles Strategic initiative FY22 achievements FY23 focus Grow Consumer Mobile service revenue Returned to strong subscriber growth Implement simplified refreshed pricing plans Drive Consumer Fixed profitability NBN re-pricing; doubled Fixed W
Slide 30: Continuing transformation of our customer value proposition
We are focused on the continuing transformation of our customer value proposition 2022 Target state Collection of overlapping Differentiated brands Brands mobile or fixed brands with clear value proposition c.6,000 products and plans Core products with a fewer simple plans Products and Limited cross
Slide 31: 2023 outlook: improving operating momentum to support EBITDA growth
2023 outlook: improving operating momentum to support EBITDA growth in FY23, offset by rising interest costs FY22 FY23 guidance1 $1,793m $1,850m to $1,950m EBITDA excluding material one-offs and excluding material one-offs and restructuring costs transformation costs Restructuring/ $60m c.$50m Trans
Slide 32: Questions and Answers
Questions and Answers 31
Slide 33: Appendices
tpg tisss Appendices 32
Slide 34: Financial statements impact of sale of tower assets
Financial statements impact of sale of tower assets FY22 Impacts $m Comments impact Profit and lose statement Accounting gains $402m • Capital gain on asset sold Sale of tower assets Depreciation and amortisation ($18m) • Lower PPE and new RoU asset replacing old Lease interest $14m • 1,237 existing
Slide 35: Revenue and gross margin by product
Revenue and gross margin by product Revenue ($m) Gross margin ($m) Enterprise, FY22 4,417 998 5,415 Government 2,090 724 2,814 and Wholesale Group Consumer FY21 4,306 986 5,292 2,047 720 2,767 Total Mobile FY22 1,347 449 1,738 6 877 4,417 Mobile postpaid 1,454 637 2,090 Mobile prepaid Consumer Fixed
Slide 36: Gross margin breakdown by half-year period
Gross margin breakdown by half-year period CONSUMER ENTERPRISE, GOVERNMENT & WHOLESALE Reported Reported Reported Change Change Reported Reported Reported Change Change $m 2H21 1H22 2H22 vs 2H21 vs 1H22 2H21 1H22 2H22 vs 2H21 vs 1H22 Service revenue 1,743 1,744 1,796 3.0% 3.0% 455 446 453 (0.4%) 1.6
Slide 37: Income statement summary
Income statement summary $m FY21 FY22 Change Service revenue 4,372 4,439 1.5% Handset, accessories & hardware 920 976 6.1% Total revenue 5,292 5,415 2.3% Other income 41 438 968.3% Cost of provision of telco services (1,655) (1,636) (1.1%) Cost of handsets sold (891) (974) 9.3% Technology cost (358)
Slide 38: Balance sheet summary
Balance sheet summary $m FY21 FY22 Change Cash and cash equivalents 202 114 (88) Trade and other receivables 476 681 205 Other current assets 155 238 83 Total current assets 833 1,033 200 Property, plant and equipment 3,401 3,580 179 Right of use assets 1,294 1,527 233 Spectrum licenses 2,251 2,010
Slide 39: Cash flow reconciliation
Cash flow reconciliation EBITDA TO FCF RECONCILIATION OCF TO OPERATING FREE CASH FLOW (OFCF) RECONCILIATION Contribution to Contribution to $m FY21 FY22 $m FY21 FY22 change in cash flow change in cash flow EBITDA 1,727 2,135 408 Accounting gains (402) (402) Handset financing movements (265) (265) Wo
Slide 40: EBITDA to NPAT reconciliation
EBITDA to NPAT reconciliation EBITDA TO NPAT RECONCILIATION $m FY21 FY22 Change EBITDA 1,727 2,135 408 Depreciation of PPE (607) (554) 53 Depreciation of right of use assets (141) (143) (2) Amortisation of Spectrum licence (261) (269) (8) Amortisation of Customer base (160) (160) Amortisation of Oth
Slide 41: Mobile subscriber base
Mobile subscriber base SUBSCRIBERS (‘000) 300k 1H21 2H21 1H22 2H22 5,281 135 14 90 Prepaid net 5,078 5,086 adds (‘000) 15 301 MVNO 15 4,981 16 Data sims 329 304 (46) 310 (99) 2,016 1,837 1,881 Prepaid excl. data sims 1H21 2H21 1H22 2H22 1,791 64 22 Postpaid net adds (‘000) 2,897 2,864 2,886 2,950 Po
Slide 42: Fixed broadband ARPU breakdown
Fixed broadband ARPU breakdown NBN ARPU ($/month) On-net Fixed line ARPU ($/month) Fixed Wireless ARPU ($/month) +3.8% +0.8% -0.4% 65.3 64.7 66.8 59.4 58.8 57.6 58.1 64.4 41.4 42.8 42.6 33.5 1H21 2H21 1H22 2H22 1H21 2H21 1H22 2H22 1H21 2H21 1H22 2H22 1. ARPU = Average revenue per user. ARPU represen
Slide 43: Disclaimer
Disclaimer Future performance and forward looking statements Forward looking statements, opinions and estimates provided in this Presentation are based on assumptions and contingencies which are subject to change without notice, as are statements about market and industry trends, which are based on