Tpg Telecom Limited · ASX:TPG
Tpg Telecom — Investor Presentation (August 2020)
46 slides from Tpg Telecom's investor presentation, Aug 21, 2020
Slide 1: ASX lodgement: Results for Half Year ended 30 June 2020 – Investor Presentation
Market Announcements Office Australian Securities Exchange Level 4, 20 Bridge Street Sydney, NSW, 2000 ELECTRONIC LODGEMENT 21 August 2020 TPG Telecom Limited Results for Half Year ended 30 June 2020 – Investor Presentation Please find attached for immediate release to the market an Investor Present
Slide 2: Investor Presentation: Results for the half-year ended 30 June 2020
TPG Telecom Investor Presentation Results for the half-year ended 30 June 2020 (‘1H20’)
Slide 3: Better together as a leading full service telco challenger
Better together as a leading full service telco challenger TPG Corporation Limited TPG Telecom Group TPG Telecom Limited (formerly TPG Telecom Limited (formerly Vodafone Hutchison Australia Limited (“TPM”)) (“VHA”)) In this presentation: ▪ TPG Telecom Limited (formerly Vodafone Hutchison Australia L
Slide 4: Agenda
Agenda Merger update TPG Telecom Group pro forma 1H20 results TPG Telecom (VHA) standalone 1H20 results TPG Corporation (TPM) standalone 1H20 results TPG Telecom Group look ahead Q&A 3
Slide 5: Merger update
Merger update tpgssiess
Slide 6: Merger implementation timeline
Merger implementation timeline 5 March 2020 8 May 2019 ACCC announced no 24 June 2020 13 July 2020 ACCC opposed appeal of Federal Court TPG Corporation shareholders 29 June 2020 Implementation of Scheme proposed merger decision voted in favour of Scheme Scheme effective date of Arrangement Integrati
Slide 7: Group pro forma 1H20 results
TPG Telecom Group pro forma 1H20 results • The merger of TPG Telecom Limited (formerly VHA) and TPG Corporation Limited (formerly TPG Telecom Limited) became effective for accounting purposes following court approval on 26 June 2020. • The merger implementation date was 13 July 2020. • The Group’s s
Slide 8: Group 1H20 financial highlights
TPG Telecom Group 1H20 financial highlights $m Reported Pro forma** Note Note 1 • The merger of TPG Telecom Limited (formerly VHA) and TPG Corporation Limited (formerly TPG Telecom Limited) became effective for accounting purposes Revenue 1,540 2,712 following court approval on 26 June 2020. • The G
Slide 9: Group June 2020 summary reported balance sheet
TPG Telecom Group 30 June 2020 summary reported balance sheet Reported $m 30 June 2020 Notes Current Assets Notes Cash and cash equivalents 470 1. ‘Shares to be issued’ comprises: Debt restructuring receivable 4,475 1 • $4,475m in respect of shares issued in July to VHA pre-merger Assets classified
Slide 10: Group June 2020 pro forma balance sheet
TPG Telecom Group 30 June 2020 pro forma balance sheet Merger implementation steps Issuance of TPG Telecom Reported Payment by TPG Corp Payment by TPG Corp TPG Telecom debt Pro forma $m shares to TPG Corp 30 June 2020 of Tuas dividend of special cash dividend restructure 30 June 2020 shareholders Cu
Slide 11: Group 1H20 reported income statement
TPG Telecom Group 1H20 reported income statement Group $m 1H20 Notes Notes Reported The Group’s consolidated income statement for 1H20 includes only 4 Revenue 1,540 days’ contribution from TPG Corporation. Other income 6 1. ‘Other operating expenses’ and ‘Net financing costs’ include one-off merger
Slide 12: Reconciliation from Group 1H20 reported income statement to VHA standalone
Reconciliation from Group 1H20 reported income statement to underlying TPG Telecom (VHA) standalone income statement Group 1H20 Less: 4 days Add back: TPG Less: one-off TPG Underlying TPG Telecom $m income statement contribution from Telecom merger Telecom income tax 1H20 TPG Telecom standalone Repo
Slide 13: TPG Corporation (TPM) pre-merger income statement
TPG Corporation (TPM) pre-merger income statement Underlying $m 1H20 Revenue 1,248 Cost of provision of telco services (672) Employee benefits expense (116) Other operating expenses (69) EBITDA 391 Depreciation and amortisation (166) Results from operations 225 Net financing costs (35) Profit before
Slide 14: Group 1H20 pro forma income statement
TPG Telecom Group 1H20 pro forma income statement Underlying Underlying Pro forma Eliminate intra-group Reflect post-merger $m TPG Telecom 1H20 TPG Corp 1H20 Other TPG Telecom Group transactions1 debt structure (from slide 11) (from slide 12) 1H20 Revenue 1,513 1,248 (53) 4 2,712 Other income 6 6 Co
Slide 15: Group 1H20 reported cash flow
TPG Telecom Group 1H20 reported cash flow Notes Group $m 1H20 Notes The Group’s consolidated cash flow statement for 1H20 includes only 4 days’ Reported contribution from TPG Corporation. 1. 1H20 operating cash flow materially impacted by negative working capital Operating cash flow 318 1 movement i
Slide 16: Group 1H20 pro forma cash flow
TPG Telecom Group 1H20 pro forma cash flow Add back Pro forma Group Less: 4 days TPG Telecom TPG Corp Eliminate Reflect post- merger TPG Telecom $m 1H20 contribution standalone standalone intra-group merger debt transaction Group Reported from TPG Corp 1H20 1H20 transactions structure costs 1H20 Ope
Slide 17: Group debt facility
TPG Telecom Group debt facility New facility $5,250 million Total drawn on merger implementation $4,780 million Undrawn on merger implementation $470 million • Maturity of 3 to 5 years Overview of new facility • Interest rate calculated as BBSY plus margin on drawn balance • Funding provided by 14 d
Slide 18: TPG Telecom Limited (VHA) standalone 1H20 results
TPG Telecom Limited (VHA) standalone 1H20 results 17
Slide 19: TPG Telecom (VHA) standalone underlying income statement
TPG Telecom (VHA) standalone underlying income statement Underlying Underlying $m TPG Telecom TPG Telecom Movement 1H20 1H19 Revenue 1,513 1,723 (210) Other income 6 5 1 Cost of provision of telecommunication services (352) (342) (10) Cost of handsets sold (368) (539) 171 Employee benefits expense (
Slide 20: TPG Telecom (VHA) underlying EBITDA bridge
TPG Telecom (VHA) underlying EBITDA bridge 1H20 EBITDA • Adversely impacted by mobile subscriber and ARPU movements (refer slides 23- 24) and COVID (refer slides 20-21) Other growth • Driven by opex savings, improved device margin and fixed broadband growth Notes EBITDA is presented on a post AASB16
Slide 21: COVID: Vodafone helping customers stay connected
COVID: Vodafone helping customers stay connected Free unlimited national calls and sms Bonus data for customers Substantial reduction in data overage charges Two months’ free mobile service for registered health practitioners Suspension of late payment fees, collection activities $10 Stay Connected
Slide 22: TPG Telecom (VHA) COVID impacts
TPG Telecom (VHA) COVID impacts Affected Areas Impact to-date Outlook ~80% reduction in margin contribution from Anticipate impact to continue for at least Roaming (inbound + outbound) April to June compared with prior year the rest of the year ~30% lower prepaid and ~20% lower postpaid Anticipate i
Slide 23: TPG Telecom (VHA) underlying results analysis
TPG Telecom (VHA) underlying results analysis Fixed & Other Revenue Mobile Mobile Hardware Revenue $m Service Total • 75% of decrease attributable Postpaid Prepaid revenue revenue to lower handset sales • Other revenue movements 1H20 861 199 80 373 1,513 driven by subscriber and 1H19 920 219 54 530
Slide 24: TPG Telecom (VHA) subscribers
TPG Telecom (VHA) subscribers Mobile - Postpaid Mobile - Prepaid Mobile - MVNO Mobile subscribers 5,978 6,019 5,990 5,744 • Prepaid declined by 200k in Subscribers (‘000) 356 5,469 337 349 310 1H20 297 2,209 2,209 2,196 2,018 • Postpaid declined by 62k in 1,818 1H20 • Includes impact of COVID 3,432
Slide 25: TPG Telecom (VHA) ARPU
TPG Telecom (VHA) ARPU ARPU ($/month) Postpaid ARPU 1H19 2H19 1H20 • Decrease of $1.2 compared to 59.8 2H19. Includes COVID impacts 59.4 58.6 44.3 43.1 41.9 Prepaid ARPU • $0.3 increase compared to 2H19 17.2 16.7 17.0 Fixed broadband (NBN) ARPU • Increased by $1.2 compared to 2H19 Mobile - Postpaid
Slide 26: TPG Telecom (VHA) 1H20 cash flow
TPG Telecom (VHA) 1H20 cash flow 1H20 1H19 • 1H20 operating cash flow materially impacted by negative working capital movement in Operating cash flow 303 402 the period principally due to timing of supplier payments. Operating cashflow for 2H19 Tax paid - - was $875m • Mobile spectrum payments Mobil
Slide 27: TPG Corporation Limited (TPM) standalone 1H20 results
TPG Corporation Limited (TPM) standalone 1H20 results 26
Slide 28: TPG Corporation (TPM) standalone underlying income statement
TPG Corporation (TPM) standalone underlying income statement Underlying Underlying Underlying $m 11 months from TPG Corporation TPG Corporation Movement 1 Aug 2019 to 30 June 2020 1H20 1H19 Revenue 2,287 1,248 1,241 7 Cost of provision of telco services (1,211) (672) (642) (30) Employee benefits exp
Slide 29: TPG Corporation (TPM) underlying EBITDA bridge
TPG Corporation (TPM) underlying EBITDA bridge • Headwinds continue from migration of DSL customers to less profitable NBN services • ‘Other growth’ driven by opex savings as well as Corporate Division and FTTB growth • No material financial impact to- date from COVID on fixed broadband business NBN
Slide 30: TPG Corporation (TPM) segment analysis
TPG Corporation (TPM) segment analysis Revenue $m Consumer Corporate Aust mobile Total Consumer Division 1H20 879 369 - 1,248 • Profit decline attributable to ongoing NBN headwinds 1H19 866 375 - 1,241 Movement 13 (6) - 7 Corporate Division • Continued margin improvement EBITDA $m Consumer Corporate
Slide 31: TPG Corporation (TPM) consumer segment product analysis
TPG Corporation (TPM) consumer segment product analysis $m Broadband Fixed Voice Mobile Other Total • Broadband revenue increase 1H20 driven by subscriber growth Revenue 771 15 48 45 879 but offset by NBN margin erosion Gross Profit 275 5 11 26 317 Gross Profit % 36% 33% 23% 58% 36% • Further decrea
Slide 32: TPG Corporation (TPM) corporate & wholesale segment
TPG Corporation (TPM) corporate & wholesale segment Revenue $m Data/Internet Voice Legacy iiNet Total 1H20 293 58 18 369 1H19 294 57 24 375 Movement (1) 1 (6) (6) $m Corporate Segment EBITDA 1H20 196 1H19 190 Movement 6 Notes 1H20 represents the six months ended 30 June 2020. 1H19 represents the six
Slide 33: TPG Corporation (TPM) cash flow
TPG Corporation (TPM) cash flow $m 1H20 1H19 • 1H20 operating cashflow exceeds EBITDA Operating cash flow 420 427 • Mobile spectrum payments comprise $131m for 3.6 GHz Tax paid (56) (51) and $352m for 700 MHz (final instalment) Mobile spectrum payments (484) - • Capital expenditure includes payments
Slide 34: TPG Corporation (TPM) broadband subscribers
TPG Corporation (TPM) broadband subscribers NBN On-net FTTB/HFC/VDSL On-net ADSL Off-net ADSL Other Off-net 1,931 1,940 1,971 1,922 1,926 19 • 31k net subscriber growth in 5 23 23 21 20 29 months to 30 June 2020 100 74 52 39 208 355 127 516 • 185k net NBN subscriber Subscribers (‘000) 725 123 growth
Slide 35: TPG Corporation (TPM) mobile subscribers
TPG Corporation (TPM) mobile subscribers TPG Corporation mobile Subscribers (‘000) subscribers at 30 June 2020: • TPG brand 252k 430 • iiNet brand 105k 422 410 367 357 242k of the TPG brand subscribers are also included in TPG Telecom (VHA) MVNO subscriber numbers at 30 June 2020 Jul-18 Jan-19 Jul-1
Slide 36: TPG Corporation (TPM) ARPU & Fixed voice subscribers
TPG Corporation (TPM) ARPU & Fixed voice subscribers ARPU ($/month) • ARPU is the weighted average 67.0 66.4 66.2 63.3 63.1 63.2 across all brands. It excludes 53.1 52.8 52.8 GST and any one-off charges and is the average for the six months ended on the date shown NBN On-net ADSL On-net FTTB/HFC/VDS
Slide 37: Group look ahead
TPG Telecom Group look ahead 36
Slide 38: Merger synergies being realised and on track
Merger synergies being realised and on track Network Key merger synergy 455 mobile site upgrades 5G network build Additional fibre rollout realised by integration of since merger, including: network assets for 700 Vodafone Extended Optus eJV for 5G Addition of 700 MHz, 3.6 GHz, 1800 MHz mobile sites
Slide 39: Management team in place to drive delivery of further synergies
Management team in place to drive delivery of further synergies Align and transform Cross sell FTTB / Fixed organisation wireless into Fixed NBN base Reduce mobile transmission Leverage mobile and fixed third party costs leveraging customer bases to increase existing fibre assets converged household
Slide 40: 5G rollout gaining momentum
5G rollout gaining momentum • More than 1,200 sites currently in planning mainly in Sydney, Melbourne, Brisbane, Adelaide, Perth and Canberra • 5G standalone network capability being developed • Targeting over 85% population coverage in the top 6 cities by end of 2021 with delivery of 5G standalone
Slide 41: Group priorities
Group priorities Convergence Enterprise Grow share of household spend Develop corporate and government unit On-net broadband 5G mobile network opportunities Accelerate 5G rollout Bring more customers onto FTTB, Fast Fibre & Fixed Wireless Integration activities Merger synergies Integration and optim
Slide 42: Our major brands: Vodafone
Our major brands: Vodafone 41
Slide 43: Our major brands: TPG
Our major brands: TPG SWITCH FOR AMAZING NBN SPEED CHOICE MAKE THE SWITCH TO
Slide 44: Our major brands: iiNet
Our major brands: iiNet linet ~“. 25GB Mobile By -™ re SIM Plan aoe Unlimited Talk & Text* New mobile customers only. Excess Data $10/2GB, For use in Australia, “To standard AU numbers.
Slide 45: Q&A
Q&A 44
Slide 46: Disclaimer
Disclaimer This presentation contains certain forward-looking and unaudited information. Such information is based on estimates and assumptions that, whilst considered reasonable by TPG Telecom at the date of preparation, are subject to risks and uncertainties. Actual results and achievements could