TPG predicts SG$300m spend on Singapore mobile network

Australian telecommunications provider TPG has announced its financial results for the first half of FY17, revealing that it is predicting capital expenditure spend of between SG$200 million and SG$300 million for the rollout of its Singaporean mobile network.

TPG was successful in procuring 2x 5MHz in the 900MHz spectrum band and 8x 5MHz in the 2.3GHz spectrum band for a total of SG$105 million -- far above the SG$35 million reserve price -- in December.

The spectrum buy will allow TPG to become the fourth provider in the Singaporean mobile market alongside operators Singtel, Starhub, and M1.

"TPG was the successful bidder in the New Entrant Spectrum Auction in December 2016," the telco said during its results presentation.

"Recruitment and network planning activities progressing well. Anticipated network rollout capital expenditure: SG$200-300 million."

TPG added that in the three months since winning the spectrum auction, it has made a "strong start to its mobile network rollout".

TPG is also currently fighting to become Australia's fourth mobile telecommunications provider alongside Telstra, Optus, and Vodafone Australia via the acquisition of the remaining 700MHz mobile broadband spectrum during the ACMA's auction next month.

The spectrum will be auctioned off in two lots: One lot of 2x 10MHz in the 738-748MHz frequency range paired with 793-803MHz; and one lot of 2x 5MHz in the 733-738MHz paired with 788-793MHz, with bids starting at AU$571.8 million and AU$285.9 million, respectively.

TPG has previously denied reports that it is similarly considering entering the New Zealand mobile market via an acquisition of New Zealand's third-largest mobile telco, 2degrees, however.

During its results presentation, TPG also reported earnings before interest, tax, depreciation, and amortisation (EBITDA) of AU$473.4 million in the half year to January 31, up 8 percent year on year due to growth in National Broadband Network (NBN) and fibre-to-the-basement (FttB) broadband services.

Net profit was AU$224 million, up 11 percent from the AU$202.5 million reported this time last year, on revenue of AU$1.24 billion, up 8 percent from AU$1.15 billion.

TPG's consumer business segment made AU$356 million in revenue during the six-month period, while its corporate business brought in AU$337.5 million and iiNet made AU$541.3 million.

TPG now has 1.91 million broadband subscribers in total -- 921,000 from TPG and 990,000 from iiNet -- and 453,000 mobile subscribers, 288,000 from TPG and 156,000 from iiNet. Of these, around 250,000 subscribers are now on the Vodafone network.

Average revenue per user (ARPU) is AU$67.10 for NBN users on TPG, and AU$72.60 for NBN users on iiNet.

TPG also said its fibre expansion project with Vodafone is "running to schedule and within budget".

Under the AU$900 million, 15-year dark fibre deal, announced in September 2015, TPG is building out an extra 4,000km of fibre to connect Vodafone's cell towers across Australia by mid-2018, which the companies forecast to cost between AU$300 million and AU$400 million in capex.

"For customers, it will mean a higher-performing, 5G-ready network," Vodafone Australia CEO Inaki Berroeta said at the time.

The last time TPG announced its results, its share price plummeted by AU$2.53 or 21.4 percent, resulting in its market capitalisation falling from AU$10 billion to AU$7.9 billion in the space of a day.

"An earnings miss will amplify the downward sentiment and cast a doubt over its ability to continue to grow, given its secretive nature and less local acquisition opportunities," Telsyte principal analyst Foad Fadaghi said in September.

"The losses today wiped a full year's growth off the stock, indicating a sharp correction, and might be a reflection of the increased competition in the lower end of both the mobile and fixed telecoms market in Australia."

TPG had reported underlying earnings before interest, tax, depreciation, and amortisation (EBITDA) of AU$775.3 million, up 60 percent from AU$485.3 million.

Analysts had expected EBITDA of AU$779 million, however.