TPG adds 38,000 customers ahead of iiNet bid
Ahead of the company's battle to take over rival ISP iiNet, TPG has posted a AU$106.7 million profit for the first half of the 2015-16 financial year.
The company saw an increase in half-year profit of 18 percent compared to the previous half, and increased earnings before interest, tax, depreciation, and amortisation (EBITDA) by 43 percent for the half to AU$236.2 million.
There was strong growth in the company's corporate division, which TPG put down to the acquisition of AAPT. Corporate EBITDA improved from AU$64.5 million in H1 of FY2014, to AU$117.7 million in H1 of FY2015.
TPG said that the return on AAPT had been better than expected, because the EBITDA half-yearly run rate had been AU$35 million, but it actually returned AU$58.8 million in the half.
The consumer division added 38,000 new broadband customers in the half, largely on ADSL bundles, with ADSL stand-alone and the company's off-net product seeing declines in subscribers.
Although TPG had trialled some customers on its fibre-to-the-basement, National Broadband Network (NBN) rival service before the half, the product wasn't officially launched until September last year.
The company has not broken out the fibre-to-the-basement and NBN customers separately, but TPG added 19,000 customers on the two services in the half.
TPG had to temporarily withdraw the product from sale between December and January, after Communications Minister Malcolm Turnbull rushed to implement new rules forcing TPG to offer a similar wholesale product as NBN Co on the fibre-to-the-basement service.
TPG will also need to structurally separate its wholesale and retail divisions under the condition imposed by the minister.
TPG also announced on Tuesday that it would have two new NBN plans with 500GB for AU$69.99 on the 25Mbps down, 5Mbps up tier, or AU$79.99 on the 50Mbps down, 20Mbps up tier.
The results come as TPG is facing backlash for its AU$1.4 billion offer for rival iiNet.
The company on Tuesday said the offer was a 31 percent premium for iiNet shareholders, but iiNet's board has been slammed for accepting the deal by former CEO and founder Michael Malone. Malone, who still owns 4 percent of shares in the company, said that the deal would be bad for investors, the company, its staff, and its customers.
iiNet chair Michael Smith yesterday said he "seriously contested" the claim, but admitted there is concern that TPG's low-cost company culture might seep into iiNet, which has traditionally been focused on customer service at a premium price.
"Whatever we might like to think, there's clearly some risk about this, regardless of who the purchaser is. I would think that we all are seriously concerned," he said.
"I can't pretend for a moment that we're not seriously concerned about it, as anyone in a business would."
TPG told investors on Tuesday that it too is "focused on customer service [and] more than just price" as the company reported a slight improvement in its net promoter score (NPS) to close to 30. iiNet's net promoter score averaged 62 for the same half.
The takeover needs the support of at least 75 percent of all shareholders, and 50 percent of shareholder headcount to proceed.