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TPG profit up on strong iiNet performance

 

Internet provider TPG Telecom has delivered strong interim financial results - thanks largely to the contribution of its iiNet operations - and has reaffirmed its underlying earnings guidance for the year.

The company on Tuesday posted an 11 per cent rise in net profit to $224 million for the six months ended January 31 on the back of an eight per cent rise in revenue to $1.24 billion.

First-half underlying earnings rose 13 per cent to $417.6 million, with the company reiterating that it expects to deliver full-year underlying earnings of between $820 to $830 million.

iiNet delivered earnings growth of $34.6 million over the six month period, with the $141.7 million earnings result helped by the absence of integration costs that affected results in the previous half, and by improved margins.

TPG completed the iiNet acquisition in September 2015, making it Australia's second biggest fixed-line internet provider after Telstra.

The strong financial results were well received by investors, with the stock up 39 cents, or 5.9 per cent, at $7.01 in a lower Australian share market at 1041 AEDT.

TPG said it has made a "strong start" to the rollout of its mobile network in Singapore by setting up a local office and hiring some staff after recently securing spectrum in an auction run by the Singapore government's info-communications agency.

The group expects to spend up to $381 million to become the fourth mobile network operator in Singapore.

TPG - which is run by low-key founder David Teoh - has also indicated a strong interest in entering the Australian mobile market, which is dominated by Telstra, Singapore Telecommunication's Optus and Vodafone Hutchison.

Chief financial officer Stephen Banfield was tight-lipped on whether the group planned to bid for spectrum in next month's Australian government-run auction, but dismissed speculation of a possible capital raising.

"It's well known that the 700 megahertz spectrum auction is very soon - we're not willingly to confirm at this time whether we will be bidding, but we are conscious that it has been widely speculated that we may need to raise capital to pursue such a strategy.

"So we'd like to state that it is our strong desire not to raise capital," Mr Banfield said during the group's earnings results presentation to analysts.

If TPG was to secure spectrum, it could become the fourth mobile operator in Australia.

TPG increased its interim dividend by 14 per cent to eight cents a share, fully franked, citing its strong cashflow and earnings growth.

TPG INTERIM PROFIT JUMPS

*Revenue rose 8pct to $1.24b vs $1.15b

*Net profit jumped 11pct to $224m vs $202.5m

*Interim dividend rose 14pct to 8c a share fully franked from 7.0c a share