TPG Telecom is in the line of fire as it awaits the decision from the ACCC on its merger with Vodafone Australia. Brokers suspect downside risk to the share price is considerable if the merger is disallowed.
FY19 results were in line with UBS estimates. The broker suggests the NBN aspirations could begin to affect forward earnings. The company expects FY20 to be the peak in headwinds from the NBN with the drag on earnings lifting to -$110m.
At first glance FY19 operating earnings (EBITDA) beat estimates with more cost reductions and better income in the enterprise division. First-time FY20 operating earnings guidance is $735-750m, also ahead of Morgan Stanley's forecasts.
First half results were in line with expectations. Excluding mobile network impairments, underlying operating earnings (EBITDA) were up 3%. Morgans believes this was a strong result in the face of NBN margin pressure.
On balance, UBS had expected the merger with Vodafone would proceed, although acknowledges the ACCC has raised concerns that it would substantially lessen competition in the market for retail mobile services.