CANBERRA: TPG Telecom executive chairman David Teoh says he will stave off a looming profit crunch caused by the national broadband network by selling more products that use his own broadband infrastructure and finding new sources of revenue.
TPG on Tuesday reported that net profit reached $202.5 million for the six months ending January 31 – above analyst expectations and 90 per cent higher than the same period a year earlier. The market responded well, sending shares up 7.15 per cent to $11.09 per share.
But speaking to Fairfax Media, Mr Teoh acknowledged there were challenges ahead as the NBN rolls out across Australia. The NBN is set to replace Telstra’s copper network as the foundation of Australia’s fixed-line phone and internet connections.
It will also slash the profit margins of telecommunications that have installed their own equipment in Telstra’s telephone exchanges because the NBN’s wholesale prices will be more expensive. “There’s no doubt the profit is coming down but the growth is there,” he said. “In business there’s always challenges but we have to find a way to balance the impact of the NBN.
“It’s an industry problem so we’re trying to balance our profits and losses and if you look at our numbers we’re still growing.” In response Mr Teoh said he was looking to lift the sales of products that used TPG’s own infrastructure to cut down on costs. He added that TPG was speeding up the construction of its fibre-to-the-basement network, which actively competes against the NBN.
“It’s getting better because people are more receptive compared to before,” he said. “It’s actually quite beneficial to all the apartment owners.”
Washington H Soul Pattinson is one of TPG’s biggest shareholders and its chairman Robert Millner is also a director at TPG. He acknowledged the NBN profit crunch was a hurdle that TPG had to jump but said he was confident it would do so by selling new plans on “our wonderful network”.
“We’ve had almost a full six months of iiNet this half . . . so I think we’ll be very happy [in the full year],” he said. “I’m a very happy shareholder today.” Subscriber growth at iiNet, the Perth-based telco that TPG bought for $1.56 billion in 2015, has stopped at 989,000 customers over the past six months.
