Slide 1: ASX cover letter: FY23 Results Investor Presentation
Market Announcements Office Australian Securities Exchange Level 4, 20 Bridge Street Sydney NSW 2000 Sydney, 26 February 2024 TPG Telecom Limited Results for Full Year Ended 31 December 2023 – 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 26 February 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 Chief Executive Officer and Managing Director Review of financial performance • John Boniciolli Chief Financial Officer Strategy 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
Slide 6: Result highlights: strong growth in FY23 driven by Mobile
Result highlights: strong growth in FY23 driven by Mobile as TPG’s multi-year transformation continues Key commercial initiatives supporting earnings growth • Mobile service revenue up 9.3%, driven by subscriber growth and plan refresh in premium Postpaid products broader product rationalisation and
Slide 7: FY23 financial summary
FY23 financial summary: EBITDA delivered in line with updated guidance, improvement in Operating Free Cash Flow Metric 2023 2022 Change Service revenue $4,632m $4,439m 4.3% EBITDA (statutory basis – includes $402m tower sale gain in FY22) $1,875m $2,135m (12.2%) 1 2 EBITDA (August 2023 guidance basi
Slide 8: Delivering a premium experience on Australia's #1 Global 5G Network
Delivering a premium experience: superior service, features and exceptional value on Australia's #1 Global 5G Network 7
Slide 9: Proud to be value leader
Proud to be value leader: simple value-led telco offering from the home of high-speed broadband 8
Slide 10: Simplification: program on track to reduce plans and products
Simplification: program on track to deliver transformational reduction in plans and products We are building Australia’s best telco by... Simplifying plans Increasing digitalisation Modernising IT and products of customer experience platforms FY23 progress FY24 focus • Stopped selling Internode and
Slide 11: Mobile: subscriber growth and strong ARPU improvement in Postpaid
Mobile: subscriber growth, and strong ARPU improvement in Postpaid, drives 9.3% year-on-year growth in service revenue Service revenue ARPU ($) Subscribers (’000) Commentary 1,673 2,967 • Service revenue up 9.9% vs FY22 driven by higher subscriber 1,522 45.8 2,950 base, refresh of premium plans, roa
Slide 12: Fixed broadband profitability: AMPU continues to grow
Fixed broadband profitability: AMPU continues to grow in competitive market, supported by Fixed Wireless offerings Total Fixed service revenue Fixed broadband Fixed broadband (incl. data and internet) ($m)1 AMPU ($)2 subscribers (‘000)2,3 Commentary • Total Fixed service revenue flat 2,218 2,372 2,3
Slide 13: Enterprise, Government & Wholesale: revenue and margin growth continues
Enterprise, Government & Wholesale: revenue and margin growth continues in a challenging market Revenue and gross margin ($m) Commentary Revenue Gross margin • Enterprise & Government revenue up 2.8%, gross margin 712 732 up 6.1% driven by cost savings Handset 99 94 506 537 • Supported by recurring
Slide 14: Mobile network: 5G rollout on track
Mobile network: 5G rollout on track, Australian-first implementation of advance 5G dual-core network • 5G rollout: more than 3,000 TPG sites now converted to 5G, over half of TPG network • Network modernisation: Huawei transmission equipment decommissioned in all metro areas1 • Next era of communica
Slide 15: Spirit of TPG: nurturing a strong company culture
Spirit of TPG: nurturing a strong company culture around our ambition to be Australia’s best telco Attracting, Strengthening and retaining Investing in our leadership group female leaders in Technology • Leading with Spirit program attended by 831 leaders over • AccelerateHer Program launched in 202
Slide 16: Sustainability: continued progress on commitments and targets
Sustainability: continued progress on delivering our commitments and targets Customer wellbeing Environmental Responsibility Cross-industry collaboration Emissions reduction Supplier Engagement Renewable electricity initiatives to protect customers’ targets validated by the Program launched to addre
Slide 17: Review of financial performance
Review of financial performance John Boniciolli Chief Financial Officer
Slide 18: FY23 result vs. guidance
FY23 result vs. guidance: operating performance drives strong outcome despite higher transaction costs FY23 Guidance FY23 Result FY22 Result (August 2023)1 Statutory EBITDA $1,875m n/a $2,135m One-off losses/(gains) $17m n/a $(402)m Transformation costs $38m $35-40m $60m EBITDA $1,930m $1,925 to $1,
Slide 19: Revenue: service revenue up 4.3%
Revenue: service revenue up 4.3%, driven by 9.3% growth in Mobile, partly offset by decrease in low-margin hardware revenue Total revenue ($m) Cumulative subscriber base growth and benefit of premium Postpaid plan refresh 15 175 4 (1) 5,533 EGW revenue (75) Lower NBN continues to grow subscribers su
Slide 20: Gross margin: strong growth of 9.3%
Gross margin: strong growth of 9.3% resulting from service revenue growth and reduction in direct costs Gross margin ($m) Benefit from $56m Initial recognition of saving in telco costs wholesale margin following functional separation 27 15 3,105 108 (14) (7) 135 Includes $30m benefit from suspension
Slide 21: Opex: investment in simplification and IT modernisation
Opex: reflects investment in simplification, IT modernisation and critical capabilities amid higher cost of doing business Operating expense (opex) ($m) Employee expense Other operating expenses $13m payroll-related transformation costs $1m transaction- related payroll cost 10 6 1,213 42 (3) (1) 1,1
Slide 22: Capex and D&A: outlook to FY26
Capex and D&A: outlook to FY26 continues to reflect elevated investment for 5G, simplification and IT modernisation Excludes spectrum Capital expenditure ($m) funding of $128m per • FY23 cash capex of $1,126m (accruals capex $1,082m), Nov 23 auction outcome broadly in line with Aug 23 guidance paid
Slide 23: Interest costs: impact of higher market rates
Interest costs: impact of higher market rates in F23 continuing into FY24 but TPG well positioned for expected lower rates Bank debt and borrowing expense ($m) • Bank debt expected to Leases and lease interest increase marginally over 2024 expense ($m) 4,460 2,234 3,970 4,076 • Interest cost for 1Q2
Slide 24: Operating Free Cash Flow: improvement in FY23
Operating Free Cash Flow: improvement in FY23 despite elevated capex and change to handset financing strategy Year-on-year change in Operating Free Cash Flow ($m)1 Reduction in inventory levels and lower trade receivables from lower handset sales; 376 543 Capex growth reflects significant 223 invest
Slide 25: Dividends: FY23 payout and franking balance
Dividends: FY23 payout reflects confidence in medium-term cash flows; franking balance expected to be fully utilised in FY24 Reconciliation of FY23 statutory NPAT to Franking credit and tax loss balance ($m) • Total FY23 dividend of 18.0 Adjusted NPAT ($m) cents per share is ~57% of Adjusted NPAT an
Slide 26: Medium-term outlook: cash earnings expected to improve
Medium-term outlook: cash earnings expected to improve as working capital, capex and interest costs normalise • Pressure on cash earnings expected to moderate from FY25 onward as working capital, capex and interest costs trends improve • Improving cash conversion expected to support ongoing investme
Slide 27: FY24 guidance
FY24 guidance: positive operating earnings performance expected to support continued EBITDA growth FY24 guidance1 FY23 comparison3 EBITDA2 Includes transformation costs $1,950m to $2,025m $1,923m Excludes material one-offs Capital expenditure (cash basis) excluding Approximately $1.05b $1,126m spect
Slide 28: Strategy and outlook
Strategy and outlook Iñaki Berroeta Chief Executive Officer and Managing Director
Slide 29: Driving growth and value: positioning TPG for long-term growth
Driving growth and value: positioning TPG for long-term growth and creating a simpler, smarter company FY24: continued focus on Longer term: supporting growth and simplification sustainable growth Continued growth in Mobile subscribers and Population growth and increase in data service revenue consu
Slide 30: Questions and Answers
tpg races Questions and Answers
Slide 31: Appendices
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Slide 32: Revenue and gross margin by product
Revenue and gross margin by product Revenue ($m) Gross margin ($m)1 Consumer FY23 4,525 1,008 5,533 2,236 849 20 3,105 Enterprise, Group Government & Wholesale FY22 4,417 998 5,415 2,090 724 27 2,841 Unallocated Total Mobile FY23 1,489 482 1,737 10 807 4,525 Mobile postpaid 1,635 591 10 2,236 Mobile
Slide 33: Gross margin breakdown by half-year period
Gross margin breakdown by half-year period CONSUMER ENTERPRISE, GOVERNMENT & WHOLESALE Reported Reported Reported Reported Change Change Reported Reported Reported Reported Change Change $m 1H22 2H22 1H23 2H23 vs 2H22 vs 1H23 1H22 2H22 1H23 2H23 vs 2H22 vs 1H23 Service revenue 1,744 1,796 1,832 1,88
Slide 34: Income statement summary
Income statement summary $m 2023 2022 change Service revenue 4,632 4,439 4.3% Handset, accessories & hardware 901 976 (7.7)% Total revenue 5,533 5,415 2.2% Other income1 36 438 (91.8)% Cost of provision of telco services (1,580) (1,636) (3.4)% Cost of handsets sold (884) (974) (9.2)% Gross Margin 3,
Slide 35: Operating expense breakdown
Operating expense breakdown $m 2023 2022 Change Superannuation expense 40 33 21.21% Redundancy expense 2 18 (88.9)% Other employee expense 386 326 18.4% Employee expense 428 377 13.5% Technology costs 405 363 11.6% Advertising and promotion expenses 132 122 8.2% Consulting and outsourced services co
Slide 36: EBITDA: non-recurring items and material one-offs breakdown
EBITDA: non-recurring items and material one-offs breakdown 2023 (on FY23 2023 (on FY24 $m 2022 2023 guidance basis) guidance basis) Statutory EBITDA 2,135 1,875 1,875 1,875 Transformation costs 60 38 38 Transaction costs — 31 31 Material one-offs Towers gain (402) Internode brand impairment — 17 17
Slide 37: Balance sheet summary
Balance sheet summary $m 2023 2022 Change Cash and cash equivalents 116 114 2 Trade and other receivables 968 681 287 Inventories 117 155 (38) Other current assets 83 83 — Total current assets 1,284 1,033 251 Trade and other receivables 469 358 111 Property, plant and equipment 3,795 3,580 215 Right
Slide 38: Depreciation and Amortisation profile
Depreciation and Amortisation profile $m 2023 2022 Change vs 2022 Depreciation of PPE (570) (554) 2.9% Depreciation of Right of Use assets (195) (143) 36.4% Total depreciation (765) (697) 9.8% Amortisation of Spectrum licence (276) (269) 2.6% Amortisation of Customer base (160) (160) —% Amortisation
Slide 39: Debt maturity profile
Debt maturity profile Bank debt maturity profile as at 31 December 2023 ($m) 120 840 1,500 750 750 500 500 FY23 FY24 FY25 FY26 FY27 FY28 FY29 FY30 Term facilities - drawn Asian Term Loan Revolving facilities - drawn Revolving facilities - undrawn 38
Slide 40: Return on Invested Capital
Return on Invested Capital $m 2023 2022 Statutory EBIT 403 746 Add back acquired customer base amortisation 160 160 Adjustment for towers gain, restructuring, transformation or transaction 86 (342) costs EBIT adjusted for specific items 649 564 Notional tax 195 (169) Net Operating Profit After Tax (
Slide 41: Reconciliation of statutory NPAT to non-statutory NPAT and EPS
Reconciliation of statutory NPAT to non-statutory definitions of NPAT and Earnings per Share $m 2023 2022 Statutory NPAT 49 513 Add back spectrum amortisation 276 269 Add back Customer base amortisation 160 160 Adjustment for transformation costs 38 60 Adjustment for transaction costs 31 — Add back
Slide 42: 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 Contribution to Contribution to $m 2023 2022 $m 2023 2022 change in cash flow change in cash flow EBITDA ex towers gain 1,875 1,733 142 Non-
Slide 43: Mobile subscribers
Mobile subscribers SUBSCRIBERS (‘000) 5,320 5,456 5,086 5,281 7 14 13 15 298 299 301 135 129 304 90 38 Prepaid net adds ('000) 2,016 2,054 2,183 1,881 1H22 2H22 1H23 2H23 64 2,886 2,950 2,955 2,967 22 12 5 Postpaid net adds ('000) 1H22 2H22 1H23 2H23 1H22 2H22 1H23 2H23 1,2 Postpaid excl.data sims P
Slide 44: Mobile ARPU breakdown
Mobile ARPU breakdown Overall Mobile Postpaid Mobile ARPU Prepaid Mobile Data sims ARPU ($/month) ($/month) ARPU ($/month)1 ARPU ($/ 47.0 month) 44.6 2.2 34.4 19.5 19.6 18.9 19.4 42.7 2.1 2.8 42.0 1.5 1.3 1.3 33.0 1.2 15.5 15.2 14.8 32.4 2.3 2.2 14.7 32.1 2.8 42.0 18.0 18.3 17.7 18.1 2.2 40.3 1.2 38
Slide 45: Fixed broadband ARPU breakdown
Fixed broadband ARPU breakdown NBN ARPU1 Vision network ARPU Fixed Wireless ARPU ($/month) ($/month) ($/month) 68.7 66.1 47.8 67.7 66.8 43.9 59.3 42.8 42.6 64.4 57.6 58.1 1H22 2H22 1H23 2H23 1H22 2H22 1H23 2H23 1H22 2H22 1H23 2H23 1. Multi-service credits are proportionately allocated between produc
Slide 46: 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