Slide 1: TPG Telecom Limited Results for Half Year Ended 30 June 2024 – Investor Presentation
Market Announcements Office Australian Securities Exchange Level 4, 20 Bridge Street Sydney NSW 2000 Sydney, 30 August 2024 TPG Telecom Limited Results for Half Year Ended 30 June 2024 – Investor Presentation Please find attached for immediate release to the market an Investor Presentation concernin
Slide 2: TPG Telecom 2024 Half-Year Results
TPG Telecom 2024 Half-Year Results 30 August 2024
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 and present. ‘Listening to Land - Connecting to Country’ by Riki Salam (Mualg
Slide 4: Agenda
Agenda Results highlights and business update Iñaki Berroeta, CEO and Managing Director Review of financial performance John Boniciolli, CFO Outlook Iñaki Berroeta, CEO and Managing Director To seek a better understanding of TPG Telecom performance, users should read this presentation in conjunction
Slide 5: Results highlights and business update
Results highlights and business update Iñaki Berroeta Chief Executive Officer and Managing Director
Slide 6: Results highlights: solid trading and strong cash performance; increased action on cost and strategy delivery
Results highlights: solid trading and strong cash performance; increased action on cost and strategy delivery in the second half • Mobile service revenue1 up 7.2% vs.1H23 driven by sustained higher ARPU 1 First-half trading • Fixed broadband AMPU2 up 6.3% vs.1H23 driven by strong Fixed Wireless grow
Slide 7: Financial highlights: margin growth continues to exceed revenue growth
Financial highlights: margin growth continues to exceed revenue growth; operating cash result ahead of expectations Service revenue1 ($m) Gross margin ($m) EPS adjusted for customer base amortisation, material one-offs4 2,344 2,327 2,288 1.7% 1,526 1,579 1,585 3.9% 4.8c (22.6)% 2,249 on 1H23 1,461 o
Slide 8: Mobile: service revenue up 7.2% on sustained higher ARPU
Mobile: service revenue up 7.2% on sustained higher ARPU; subscriber base supported by milestone MVNO contract win Mobile service revenue ($) Mobile ARPU ($) Mobile subscribers (‘000) Service revenue growth reflects sustained higher ARPU and subscriber gains from past 7.2% pcp 6.1% pcp two years 3,2
Slide 9: Fixed: gross margin growth continues supported by strong Fixed Wireless offering
Fixed: gross margin growth continues supported by strong Fixed Wireless offering despite inherent challenges in NBN Fixed service revenue and Fixed broadband Fixed broadband Gross margin up 6.7% despite modest gross margin (excluding AMPU2($) subscribers2 (‘000) decline in service revenue, primarily
Slide 10: EGW: resilient performance in core Enterprise and Government business
EGW: resilient performance in core Enterprise and Government business amid challenging market conditions EGW service revenue and service gross margin ($m) Enterprise and Government service margin up modestly continued growth in TPG Fast Fibre, NBN Enterprise Ethernet, Mobile Private Network and IoT
Slide 11: Cost outlook: investment uplift peaked in FY23; flatter profile in 2H24
Cost outlook: investment uplift peaked in FY23; focused on delivering flatter profile in 2H24, FY25 and beyond Operating expense and cash capex excluding spectrum ($m) Investment growth in network, security and 6.7% pcp technology uplift now passed its peak Reduced c. 120 roles in August 2024 670 61
Slide 12: Business simplification: project underway, on track for $140m p/a cash benefits from FY27
Business simplification: project underway, cost consistent with expectations; on track for $140m p/a cash benefits from FY27 We are building Australia’s best telco by... Simplifying plans Increasing digitalisation Modernising IT and products of customer experience platforms FY23 Achievements 1H24 Pr
Slide 13: Business simplification: major improvement in customer experience enabling key updates to digital journeys
Business simplification: major improvement in customer experience enabling key updates to digital journeys from early FY25 Technology-agnostic Fixed products New multi-product experience New digital experience enabling customer flexibility to match value to unlocking greater value for customers with
Slide 14: Network update: proposed regional sharing agreement creates opportunity to build on 5G rollout
Network update: proposed regional sharing agreement creates opportunity to build on successful ongoing 5G rollout TPG to gain three times current network sites in regional Australia, subject to regulatory approval Network expansion 5G rollout Regional network sharing approval: ACCC 5G rollout: compl
Slide 15: Review of financial performance
Review of financial performance John Boniciolli Chief Financial Officer
Slide 16: 1H24 financial summary: solid result consolidating operating business momentum
1H24 financial summary: solid result consolidating operating business momentum of the past two years Metric ($m) 1H23 1H24 Change Service revenue 2,288 2,327 1.7% Gross margin 1,526 1,585 3.9% Operating expense (statutory basis) 585 611 (4.4%) EBITDA (statutory basis) 941 974 3.5% EBITDA (guidance b
Slide 17: Gross margin: strong Consumer performance driven by Mobile and Fixed Wireless
Gross margin: strong Consumer performance driven by Mobile and Fixed Wireless; core EGW remains resilient Gross margin movement ($m) Metric ($m) 1H23 1H24 Change Supported by plan Consumer Mobile service margin 794 864 8.8% refreshes and a larger Impacted by aggressive Prepaid subscriber base handse
Slide 18: Opex: action taken in 2H24 to reduce employee expense
Opex: action taken in 2H24 to reduce employee expense as part of focus on delivering flatter opex growth profile for FY25 Operating expense movement ($m) Metric ($m) 1H23 1H24 Change Superannuation expense (19) (24) (26.3)% Transfer of costs due to sale of Manila Redundancy costs (1) (2) (100.0)% co
Slide 19: EBITDA: strong gross margin result partially offset by opex growth
EBITDA: strong gross margin result partially offset by opex growth, but rate of cost inflation slowing EBITDA movement ($m) Metric ($m) 1H23 1H24 Change Supported by plan Consumer service gross margin 1,084 1,179 8.8% refreshes and high margin on-net fixed products Cessation of spectrum EGW ex Visio
Slide 20: Cash flow: strong outcome supported by working capital benefits and lower cash capex
Cash flow: strong outcome supported by working capital benefits and lower cash capex excluding spectrum Operating Free Cash Flow movement ($m) Metric ($m) 1H23 1H24 Change EBITDA 941 974 33 Lower network Working capital movement (13) 84 97 investment and change in supplier Handset receivables financ
Slide 21: Capex and D&A: rate of network investment slowing as 5G rollout continues
Capex and D&A: rate of network investment slowing as 5G rollout continues; D&A to grow more slowly in 2H24 Capital expenditure ($m) Depreciation and amortisation ($m) Cash capex ex spectrum down $103m vs 1H23 due to lower investment and change in supplier 2.6% pcp payment timing Spectrum payment of
Slide 22: Financing costs: increased impact consistent with expectations
Financing costs: increased impact consistent with expectations, reflecting anticipated peak of market interest rate cycle Net financing costs ($m) Gross bank debt and Net bank interest expenses up $26m reflecting lease liabilities ($m) increases in market rates and higher drawn bank debt Bank debt h
Slide 23: Dividends: 1H24 payout reflects confidence in medium-term cash flow
Dividends: 1H24 payout reflects confidence in medium-term cash flow; franking credits fully utilised as previously indicated Adjusted NPAT reconciliation ($m) Metric ($m) 1H23 1H24 Change NPAT 48 29 (39.6%) Spectrum amortisation 138 139 0.7% 11 264 5 Customer base amortisation 80 80 —% 80 Material o
Slide 24: Outlook
Outlook Iñaki Berroeta Chief Executive Officer and Managing Director
Slide 25: FY24 guidance: tracking towards mid-point of current EBITDA guidance range
FY24 guidance: tracking towards mid-point of current EBITDA guidance range; cash capex guidance lowered by $30m in April Updated Original FY24 guidance1 FY24 guidance EBITDA2 Excludes material $1,950m to $2,025m $1,950m to $2,025m one-offs Capital expenditure (cash basis) Approximately $1.02b Approx
Slide 26: Value drivers: TPG well positioned for the next phase of growth
Value drivers: TPG well positioned for the next phase of growth supported by benefits of recent investment focus Proved performance Telco market dynamics Management focus From 1H22 to 1H24.... Strong consumption growth Service Mobile Subscribers but subscriber growth Continued focus on revenue marke
Slide 27: Questions and answers
tpg races Questions and answers
Slide 28: Appendices
tpg races Appendices
Slide 29: Income statement summary
Income statement summary Change $m 1H23 2H23 1H24 (1H24 v 1H23) Service revenue 2,288 2,344 2,327 1.7% Handset, accessories & hardware 420 481 384 (8.6)% Total revenue 2,708 2,825 2,711 0.1% Other income 11 25 10 (9.1)% Cost of provision of telco services (784) (796) (754) 3.8% Cost of handsets sold
Slide 30: Balance sheet summary
Balance sheet summary $m 31 December 2023 30 June 2024 Change Cash and cash equivalents 116 77 (39) Trade and other receivables 968 973 5 Inventories 117 79 (38) Other current assets 83 73 (10) Total current assets 1,284 1,202 (82) Trade and other receivables 469 443 (26) Property, plant and equipme
Slide 31: EBITDA to cash flow reconciliation
EBITDA to cash flow reconciliation EBITDA to net cash flow reconciliation Cash flow from operating activities to operating free cash flow (OFCF) reconciliation $m 1H23 1H24 Contribution to $m 1H23 1H24 Contribution to change in cash flow change in cash flow EBITDA 941 974 33 Handset financing moveme
Slide 32: Historical financial metrics
Historical financial metrics EBITDA (guidance basis1, $m) Gross margin ($m) Operating expenses ($m) 1,579 1,585 1,526 628 611 965 979 1,461 565 585 958 547 543 900 1,397 1,389 1,380 513 891 845 851 1H21 2H21 1H22 2H22 1H23 2H23 1H24 1H21 2H21 1H22 2H22 1H23 2H23 1H24 1H21 2H21 1H22 2H22 1H23 2H23 1H
Slide 33: Revenue and gross margin by product
Revenue and gross margin by product Revenue ($m) Gross margin ($m) 1H24 2,216 495 2,711 Consumer 1,180 402 3 1,585 Group EGW 1H23 2,209 499 2,708 Unallocated 1,093 426 7 1,526 Total Mobile 1H24 767 262 839 3 345 2,216 Mobile Postpaid 864 315 1 1,180 Consumer Mobile Prepaid Fixed 1H23 723 233 871 5 3
Slide 34: Gross margin breakdown by half-year period
Gross margin breakdown by half-year period Consumer Enterprise, Government and Wholesale Reported Reported Reported Reported Change Change Reported Reported Reported Reported Change Change $m 2H22 1H23 2H23 1H24 vs 1H23 vs 2H23 2H22 1H23 2H23 1H24 vs 1H23 vs 2H23 Service revenue 1,796 1,832 1,886 1,
Slide 35: Operating expenses breakdown
Operating expenses breakdown $m 1H23 1H24 Change Superannuation expense (19) (24) (26.3)% Redundancy expense (1) (2) (100.0)% Other employee expense (185) (193) (4.3)% Employee benefits expense (205) (219) (6.8)% Technology expense (200) (186) 7.0% Advertising and promotion expenses (58) (67) (15.5)
Slide 36: Debt maturity profile
Debt maturity profile Bank debt maturity profile as at 30 June 2024 ($m) 60 900 1,300 500 750 500 500 250 FY24 FY25 FY26 FY27 FY28 FY29 FY30 Term facilities - drawn Asian Term Loan Revolving facilities - drawn Revolving facilities - undrawn 35
Slide 37: Return on Invested Capital
Return on Invested Capital $m 1H231 1H24 Statutory EBIT 219 233 Add back acquired customer base amortisation 80 80 Adjustment for towers gain, restructuring, transformation or transaction costs 17 5 EBIT adjusted for specific items 316 318 Notional tax (95) (95) Net operating profit after tax (NOPAT
Slide 38: Reconciliation of statutory NPAT to non-statutory NPAT and earnings per share
Reconciliation of statutory NPAT to non-statutory NPAT and earnings per share $m 1H23 1H24 Statutory NPAT 48 29 Add back spectrum amortisation 138 139 Add back Customer base amortisation 80 80 Adjustment for transaction costs 17 5 Add back non-cash tax 21 11 Adjusted NPAT for dividend calculation pu
Slide 39: Mobile and Fixed metrics
Mobile and Fixed metrics 1H22 2H22 1H23 2H23 1H24 Mobile (overall) Subs (‘000) 5,086 5,281 5,320 5,456 5,520 ARPU ($) $32.1 $32.4 $33.0 $34.4 $34.4 Mobile Postpaid Subs 2,886 2,950 2,956 2,967 2,920 ARPU $42.0 $42.7 $44.6 $47.0 $47.3 Mobile Prepaid1 Subs 1,881 2,016 2,054 2,183 2,196 ARPU $19.5 $19.
Slide 40: Glossary
Glossary Term Definition Term Definition 1H Six months ended/ending 30 June of the relevant financial year FY Financial year ended/ending 31 December of the relevant financial year 2H Six months ended/ending 31 December of the relevant financial year FWA Fixed Wireless Access ACCC Australian Competi
Slide 41: Disclaimer
Disclaimer Future performance and forward-looking statements Not financial product advice Forward-looking statements, opinions and estimates provided in this Presentation are based This Presentation is for information purposes only and is not financial product or investment on assumptions and contin