TPG forecast to earn even with 5-6% initial market share in Singapore

Engineers and managers are already onboard to oversee its mobile network rollout.

Looking at TPG Telecom's latest report, it would seem like it’s on the right footing to start operations in Singapore, according to UOB KayHian.

For the past six months ending last January, the Australian telco has achieved an 8% growth in revenue, and all its business units reported significant gains.

"It declared an interim dividend of 8 Australian cents per share, representing an increase of 14% year-on-year. Management also reaffirmed guidance of EBITDA at A$820-830m for FY17," reported UOB KayHian.

Meanwhile, TPG’s share price has gradually recovered recently after the crash in mid-September
post announcement of results for the financial year ending July 2016.

To recall, TPG has already acquired two lots of 2x5MHz of 900MHz (20MHz) and eight lots of 5MHz of 2,300MHz (40MHz) at an aggregate price of $105m during the New Entrant Spectrum Auction conducted last December.

"TPG has already set up its local office in Singapore. Recruitment and network planning activities are progressing well. It has hired network engineers and project managers to oversee the rollout of its mobile network in Singapore," said UOB KayHian, noting that the telco plans to start delivering mobile services next year.

For this rollout, the telco is expecting to incur a capex of up to $300m. It has guided capex for
Singapore at $128-171m for FY17, including cost of acquisition for spectrum. UOB KayHian estimates capex to reach $45m in FY17 and $205m in FY18.

TPG also said that even with just an expected initial market share of 5 to 6%, its upcoming mobile business in Singapore could become earnings-positive.

"It is able to break even within a short period of time due to the excellent value of its service offerings," commented UOB KayHian.