Australian telecoms operator TPG Telecom reported a sharp decline in profit for the first half of its fiscal 2019 due to recognising an impairment expense of AUD227 million ($161 million) arising from its decision to halt the rollout of its Australian mobile network.
The operator’s net profit fell 76.4 per cent year-on-year to AUD46.9 million in the six-month period ending 31 January. Total revenue dipped 1.5 per cent to AUD1.255 billion from a year ago.
The impairment costs included AUD91.8 million spent on spectrum licences, AUD76 million on mobile network assets, and AUD59.5 million on capitalised interest related to spectrum licences and mobile network assets.
In late January the operator stopped the rollout of a mobile network due to a government ban on Huawei, its principal equipment vendor.
Its first-half results also included an AUD4.4 million one-off transaction cost relating to the planned merger with Vodafone Hutchison Australia (VHA).
In August 2018, TPG Telecom and Vodafone Hutchison Australia (VHA) announced they agreed to merge, in a deal valued at an estimated AUD15 billion. The deal has not been finalised. The Australian Competition and Consumer Commission earlier this month said it is still waiting to receive information from the two companies regarding the proposed merger.
H1 capex totalled AUD557 million and included a AUD352 million payment for the 2x10MHz of 700MHz spectrum acquired at auction in 2017, AUD66 million invested in the (now ceased) Australian mobile network build, and AUD39.8 million in its Singapore mobile network. The remaining capex of AUD98.4 million was AUD64.7 million lower than in H1 2018 following the near completion of the fibre expansion for the VHA fibre contract.
TPG, awarded the fourth mobile licence in Singapore in December 2016, said its network buildout has achieved 99 per cent nationwide outdoor coverage, exceeding the 95 per cent target it was required to meet by the end of 2018.
A service trial was launched in late December allowing customers to trial the network for free for 12 months, while work continues to enhance network coverage, performance and features, it said.