Slide 1: TPG Telecom Limited Results for Full Year Ended 31 December 2021 – Investor Presentation
Market Announcements Office Australian Securities Exchange Level 4, 20 Bridge Street Sydney NSW 2000 Sydney, 24 February 2022 TPG Telecom Limited Results for Full Year Ended 31 December 2021 – Investor Presentation Please find attached for immediate release to the market an Investor Presentation con
Slide 2: TPG Telecom Limited 2021 Full-Year Results
1 TPG Telecom Limited 2021 Full-Year Results 24 February 2022
Slide 3: Acknowledgement of Country
2 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
Slide 4: Agenda
3 Agenda Results highlights and ● Iñaki Berroeta business update Chief Executive Officer and Managing Director Review of financial performance ● Grant Dempsey Chief Financial Officer Strategy and outlook ● Iñaki Berroeta Chief Executive Officer and Managing Director Q&A session
Slide 5: Results highlights and business update
4 Results highlights and business update Iñaki Berroeta Chief Executive Officer & Managing Director
Slide 6: Key messages: TPG ends FY21 with growing subscriber momentum
5 Key messages: TPG ends FY21 with growing subscriber momentum and well positioned to execute on strategic priorities FY21 EBITDA of Strong cash flow Declared fully franked Merger cost synergies $1,731 million performance final dividend of 8.5cps ahead of schedule Efficiencies lessen impact of Enabl
Slide 7: FY21 financial performance: cost discipline reduces impacts of market headwinds
6 FY21 financial performance: cost discipline reduces impacts of market headwinds; strong dividend increase Metric FY21 FY202 Change Commentary Service revenue $4,389m $4,570m (4.0%) COVID headwinds and other impacts in mobile Service revenue decline partially offset by hardware revenue Revenue
Slide 8: Mobile: net mobile subscriber adds of +33k indicate positive momentum
7 Mobile: net mobile subscriber adds of +33k in the three months to end of January 2022 indicate positive momentum returning TPG focused on sustainable subscriber growth as restrictions subside; recovery remains unpredictable TOTAL Market has TPG was Market is expected to recover TPG MOBILE historic
Slide 9: Fixed: strong wireless growth with material near-term opportunity
8 Fixed: strong wireless growth with material near-term opportunity requiring limited incremental capital investment Fixed wireless subscribers grew to 80k in 2021; targeting at least 160k by end of 2022 Fixed broadband Service type Subscribers Incremental AMPU Comments base composition vs NBN alter
Slide 10: Enterprise: ambition of more than $1 billion of revenue by FY25
9 Enterprise: Our ambition is to deliver more than $1 billion of revenue by FY25 across four key growth platforms Ambition ‘A trusted technology partner, connecting all Australian businesses to be at their best’ Growth Grow in enterprise Win small business Build network managed Enhance IoT and mobil
Slide 11: Realisation of $71m merger cost synergies drive net cost reduction
10 Realisation of $71m merger cost synergies drive net cost reduction of $86m in 2021; targeting $125-150m of cost synergies in 2022 Initiatives in place to establish sustainable cost base supported by simplified operating model MERGER SYNERGY PROGRAM TOTAL COSTS (COS + OPEX, $m) 2021 delivery 2022
Slide 12: Mobile network: Landmark MOCN agreement with Telstra
11 Mobile network: Landmark multi-operator core network (MOCN) agreement with Telstra a game changer for TPG Provides 4G and 5G coverage for data, calls and messaging from 3,700 Telstra sites in regional and urban fringe areas of Australia Will deliver 98.8% population coverage and give greater
Slide 13: Mobile network: Acceleration of metro 5G network investment
12 Mobile network: Acceleration of metro 5G network investment continues to strengthen our competitive position 5G rollout: targeting a further 1,000+ sites in 2022 after delivering 1,000+ in 2021; upgrade to be largely complete in 2025 Merger enabled disciplined approach to spectrum acquisition
Slide 14: TPG well positioned as industry evolves to unlock value from network infrastructure
13 TPG well positioned as industry evolves to unlock value and drive efficiency from network infrastructure Strategic review of TPG towers/rooftops well advanced in context of broader network strategy Examples of activities to unlock value 2022 focus areas Integration of Monetisation Strategic VHA a
Slide 15: Review of financial performance
14 Review of financial performance Grant Dempsey Chief Financial Officer
Slide 16: FY21 revenue reduction due to COVID, mobile subscriber loss and pricing
15 FY21 revenue reduction due to COVID, mobile subscriber loss and pricing, offset partially by growth in fixed REVENUE ($m) -$171m (-3.1%) ● Postpaid mobile ARPU stabilised in 2H21 ($/month) ARPU (76) -4.0% +0.5% 40.7 Subscribers 0.3 38.9 39.1 International 3.5 0.4 0.3 (60) roaming 2.5 2.8 Incoming
Slide 17: Gross margin lower despite growth in Corporate
16 Gross margin lower despite growth in Corporate as short-term COVID headwinds and NBN impacts weigh on Consumer REVENUE ($m) GROSS MARGIN ($m) FY20 4,472 992 5,464 2,181 722 2,914 Consumer Group -3.1% Corporate -3.7% FY21 4,308 985 5,293 Other 2,052 731 2,808 Total Mobile FY20 1,460 506 1,645 820
Slide 18: Synergies realisation and cost discipline reduces impact on EBITDA
17 Synergies realisation and cost discipline reduces impact on EBITDA of COVID, NBN headwinds and RBS levy EBITDA ($m) -$58m (-3%) -$30m incremental +$71m cost COVID impact in FY21 synergies (117) 32 57 (32) 1,789 (18) 14 28 (37) (8) 34 1,731 (11) FY20 Mobile COVID: COVID: COVID: COVID: non DSL to R
Slide 19: Merger benefit of avoided spectrum investment enabling acceleration of mobile network capex
18 Merger benefit of avoided spectrum investment enabling acceleration of mobile network capex over short to medium term CAPEX PROFILE INCLUDING SPECTRUM EXPENDITURE ($m) 1,394 1,200 Strong low-band spectrum holdings post merger have ~1,000-1,050 688 Spectrum enabled material reduction in spectrum
Slide 20: Robust financial position enables final dividend increase to 8.5cps
19 Robust financial position enables final dividend increase by 13.3% to 8.5cps (16.5cps for 2021 in total) RECONCILIATION OF STATUTORY TO ADJUSTED NPAT ($m) DIVIDENDS (cps) 583 +13.3% increase on 49 maiden dividend 8.0 8.5 7.5 Final Dividend 8.5cps 260 4 Fully Franked FY20 FY21 FY21 160 Final Inter
Slide 21: Strategy and outlook
20 Strategy and outlook Iñaki Berroeta Chief Executive Officer & Managing Director
Slide 22: Guiding principles of our strategy as we enter the next stage of transformation
21 Guiding principles of our strategy as we enter the next stage of TPG’s transformation We are well positioned to prosper as we evolve as a full services telecommunications company Key trends Focus Growing demand for and reliance on data and connectivity services across broad range of application
Slide 23: Streamlining of Executive Leadership Team was key first step in simplification
22 Streamlining of Executive Leadership Team was key first step in simplification of organisation structure CEO & Managing Chief Financial Group Executive Group Executive Chief Technology Group Executive Group Executive Group Executive Director Officer Consumer Corporate Officer Customer People Lega
Slide 24: We are creating a more responsible and sustainable business
23 We are creating a more responsible and sustainable business to support vibrant, connected communities TPG Telecom’s Sustainability Strategy sets out our approach to creating a responsible and sustainable business This strategy is critical to delivering on our purpose to build meaningful relat
Slide 25: Momentum continues to build and FY22 is about the next stage of transformation
24 Momentum continues to build and FY22 is about the next stage of transformation and achieving high-value market gains FY21 achievements FY22 objectives Deliver $125-150m merger cost synergies target 1. Integrate and Realised $71m merger cost synergies Transform operating model to remove comp
Slide 26: Q&A
25 Q&A
Slide 27: Supporting material
26 Supporting material
Slide 28: FY21 summary income statement
27 FY21 summary income statement Drivers of EBITDA movements set out in EBITDA bridge on slide 17 Decrease in 2021 net financing costs primarily due to refinancing of loan facilities at lower rates $m FY21 FY201 Change Service revenue 4,389 4,570 (4.0%) Handset, accessories & hardware 904 894 1.
Slide 29: Reconciliation of cost classifications from income statement to management view
28 Reconciliation of cost classifications from income statement to management view Income statement view is per slide 27. All other financial tables in this presentation show the management view The management view reclassifies technology costs from cost of sales into operating expenses, and mov
Slide 30: Gross margin fell by 3.7% with Corporate growth offset by declines in Consumer
29 Gross margin fell by 3.7% with Corporate growth offset by declines in Consumer primarily due to COVID and NBN impact CONSUMER SEGMENT CORPORATE SEGMENT OTHER GROUP Reported Pro forma Reported Pro forma Reported Pro forma Reported Pro forma $m Change Change Variance Change FY21 FY20 FY21 FY20 FY21
Slide 31: Strong cash flow arising from avoided spectrum investment and lower interest costs
30 Strong cash flow arising from avoided spectrum investment, working capital efficiency and lower interest costs, partially reinvested in network capex EBITDA TO FCF RECONCILIATION OCF TO OFCF RECONCILIATION FY21 FY20 Contribution to FY21 FY20 Contribution to $m $m Reported Proforma1 change in cash
Slide 32: Mobile subscribers: Rate of decline continued to slow in 2H21
31 Mobile subscribers: Rate of decline continued to slow in 2H21, with 33k net adds from 1 November 2021 to 31 January 2022 SUBSCRIBERS (‘000) -92k 5,249 23 5,113 5,021 3Q20 4Q20 1Q21 2Q21 3Q21 4Q21 +28k4 MVNO 15 16 +1k (8) net growth (40) (28) (40) since Nov-21 (80) Prepaid 1,973 1,905 1,857 -48k S
Slide 33: Mobile ARPU: Postpaid ARPU starting to lift with roaming to return
32 Mobile ARPU: Postpaid ARPU starting to lift with roaming to return; prepaid ARPU has remained stable POSTPAID MOBILE ARPU ($/month) PREPAID MOBILE ARPU ($/month) $0.0 +$0.2 90% reduction in roaming revenue (+0.1%) 43.1 (+0.5%) vs 2H19 due to COVID. Material International 2.6 41.0 40.7 19.7 roam
Slide 34: Fixed broadband subscribers: 26k net adds over 2H21
33 Fixed broadband subscribers: 26k net adds over 2H21, driven by ADSL and NBN migration to fixed wireless SUBSCRIBERS (‘000) +26k 2,222 2,195 19 – Only 2% of fixed broadband subscribers 2,172 19 52 -21k remain on ADSL as at 31 December 21. Other off-net 18 73 80 +61k In 2H21, on-net fixed wirel
Slide 35: Fixed broadband ARPU: NBN ARPUs lift as customers take up higher speed plans
34 Fixed broadband ARPU: NBN ARPUs lift as customers take up higher speed plans, and on-net ARPUs fall as heavy promotions drive on-net base growth NBN ($/month) ON-NET FIXED LINE AND FIXED WIRELESS ($/month) +$0.2 (+0.4%) -$4.1 (-7.0%) 64.7 65.0 65.2 62.3 Increase in promotional offers drive 58.3
Slide 36: Strong refinancing outcome during FY21; considering long-term funding options
35 Strong refinancing outcome during FY21; TPG considering long-term funding options ahead of FY24 bank debt refinancing $m DEBT MATURITY PROFILE ($m) Bilateral Syndicate Proforma net debt as at 31 December 2020 4,210 2,680 1H21 net debt movement 171 Net debt as at 30 June 2021 4,381 2,070 2H20 net
Slide 37: Disclaimer
36 Disclaimer This presentation contains certain forward-looking and unaudited information. Such information is based on estimates and assumptions that, whilst considered reasonable by the group at the date of preparation, are subject to risks and uncertainties. Actual results and achievements could