Shares of the ASX-listed TPG Telecom (AU:TPG) soared over 8% today as the company confirmed its full-year EBITDA guidance despite a significant decline in the profit for the first half of FY24. The company reported a 1.7% year-over-year rise in service revenue, reaching AU$2.3 billion. However, it recorded a 40% decline in its net profit of AU$29 million, partly due to depreciation and amortization costs resulting from higher capital investment in network and technology capability. TPG also announced layoffs to reduce costs.
TPG (formerly Vodafone Hutchison) offers fixed and mobile network services in Australia.
TPG Announces Job Cuts to Slash Costs
Along with its results, TPG announced 120 job cuts this month to reduce its costs and achieve flat operating costs overall. In the first half, the company’s finance costs surged by AU$64 million to AU$191 million as compared to H1 2023. This increase was attributed to higher expenses from a new tower lease agreement established in the second half of FY23 and higher interest rates on bank loans.
On the positive side, the company’s Mobile subscribers grew by 64,000 to 5.52 million. The higher subscriber base drove a rise in Mobile Services revenue by over 7% to $1.03 billion. Additionally, over 3,400 mobile sites were upgraded to 5G, with full metropolitan upgrades expected by 2026.
Moving forward, TPG confirmed its full-year EBITDA guidance, which ranges between AU$1.95 billion and AU$2.03 billion.
Are TPG Shares a Good Buy?
Following the results, UBS analyst Lucy Huang reiterated a Hold rating on TPG stock, predicting a downside of 3%. Earlier this month, Goldman Sachs downgraded its rating on TPG stock from Hold to Sell, forecasting a 12% decline.
According to TipRanks, TPG stock has a Moderate Buy consensus rating based on three Buy and three Hold recommendations from analysts. The TPG Telecom share price forecast is AU$5.23, which implies a growth rate of 5.6% from the current trading level.
