How does TPG’s 1H FY21 earnings report compare to that of rival Telstra?
The post How does the TPG (ASX:TPG) earnings result compare to Telstra? appeared first on The Motley Fool Australia. –
Shareholders in TPG Telecom Ltd (ASX: TPG) will be flicking through the latest half-year results from the telco giant on Friday. Adding to the interest, today’s release marks TPG’s maiden reporting season since merging with Vodafone Australia.
Considering Telstra Corporation Ltd (ASX: TLS) reported just over a week ago, it’s likely investors will be in the trenches for the next few days – meticulously comparing the two fierce competitors.
To save yourself some time, let’s run through the results of both companies and see how they stack up.
TPG falls on the ASX despite revenue boost
If you didn’t catch TPG’s first-half FY21 report, here are some of the highlights:
Revenue increased 71% to $2,630 million
Earnings before interest, tax, depreciation and amortisation (EBITDA) up 67% to $886 million
Net profit after tax down 8% to $76 million
Fully franked interim dividend of 8 cents per share
750,000 5G-enabled devices on TPG network
In early trade, the TPG share price moved positively on these results. However, it appears after some further time to process, the market has progressively become more pessimistic. At the time of writing, shares are swapping hands for $6.17 – down 6.66%.
Ordinarily, a 71% jump in revenue would be considered a major positive for an ASX-listed company such as TPG. Though, the trick is in the accounting of the Vodafone merger. On a pro forma basis, the merged entities’ revenue fell 3% compared to the prior corresponding period.
How does this compare to the Telstra earnings result?
Telstra dished out its own numbers last week on 12 August, though these metrics were for a full year as opposed to TPG’s half-year. Despite the difference, we can still look at the shifts in growth to grasp a sense of how these two companies are performing.
Without a doubt, Telstra is the top dog in Australia when it comes to network providers. The company’s full-year numbers reflected a reduction in revenue and an increase in earnings. CEO Andy Penn described the period as “transformational”, with the company expected to return to growth in FY22.
Here’s a summary of what Telstra reported:
Total income fell 11.6% to $23.1 billion
Reported EBITDA fell 14.2% to $7.6 billion
Net profit after tax increased 3.4% to $1.9 billion
Fully franked final dividend of 8 cents per share, bringing full year dividend to 16 cents per share
1.6 million 5G-enabled devices on the Telstra network
$1.35 billion on-market share buyback
A notable line item on the above list is the $1.35 billion share buyback following Telstra’s InfraCo Towers transaction. While ASX-listed TPG is not conducting any buybacks, speculation has arisen around whether the smaller telco is contemplating the sale of some infrastructure assets of its own.
Additionally, where Telstra provided guidance for the year ahead, TPG left investors guessing for H2 FY21. Instead, the company simply shared its business focus for the second half. This could potentially be putting investors off the TPG share price today.
TPG share price snapshot
It has been a rocky 12 months for the TPG share price, with today’s session adding to the pain. Over the last year, shares in the Telstra competitor have fallen 14.9%. Meanwhile, the Telstra share price is up 32% over the same period.
However, it is worth keeping in mind that TPG is still in the process of realising synergies from its Vodafone acquisition. It will certainly be interesting to see the company’s full-year results, but we’ll have to wait for those.
Should you invest $1,000 in TPG Telecom right now?
Before you consider TPG Telecom, you’ll want to hear this.
Motley Fool Investing expert Scott Phillips just revealed what he believes are the 5 best stocks for investors to buy right now… and TPG Telecom wasn’t one of them.
The online investing service he’s run for nearly a decade, Motley Fool Share Advisor, has provided thousands of paying members with stock picks that have doubled, tripled or even more.* And right now, Scott thinks there are 5 stocks that are better buys.
*Returns as of August 16th 2021
Telstra (ASX:TLS) share price hits 52-week high amid diversification rumours
ASX 200 midday update: Cochlear & TPG sink, Inghams jumps
TPG (ASX:TPG) share price on watch after 71% jump in first half revenue
August has been a great month so far for the Telstra (ASX:TLS) share price
2 buy-rated ASX dividend shares
Motley Fool contributor Mitchell Lawler has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Telstra Corporation Limited. The Motley Fool Australia has recommended TPG Telecom Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.