TPM 0.00% $8.93 tpg telecom limited

I disagree with most of the analysts and some of the comments on...

  1. 29 Posts.
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    I disagree with most of the analysts and some of the comments on TP for TPM.

    FTTP is not a drop in the bucket, most of the small FTTB cost is upfront capex and hence most revenue goes to the bottom line. Depreciation is low as well since the cost to light up a building is low as TPM often have fibre close by for their corporate networks. That makes FTTB a big winner for TPM (caveat 50m rule). I have the service at home and its fantastic. Shareholders also need a full 12 months revenue numbers to get an idea of the real picture and If TPM work on increasing their adoption of FTTP in on-net buildings the revenues quickly become quite material as at the end of the day when a building first comes online there are many residents that are still in third party contract or rental leases ending etc that impacts initial takeup . TPM do not have to pay other telcos (TLS & NBN) backhaul, CVC, exchange rentals etc on FTTB and boasts great ongoing $$ with low opex for TPM. Unlike NBN they are using the same cables that their Corporate Division uses & while Corporate keep going from strength to strength, increased coverage increases FTTP feasibility & $$. Even with a $7 levy (only suggested as the government knows that FTTB is the only way to go and TPM has a first to market advantage in many locations), like TPM said in the presentation yesterday non-terrestrial services are an even bigger threat to NBN Ltd, so are they also going to be charges a $7 levy...

    Secondly Corporate will continue to grow, their prices and service are market leading with >40% margin. If you are not sure how fibre works, it’s usuaully a multi service per strand technology so you can get lots of services delivered to one building or even lots of buildings on just 1 fibre pair. That means that their margins should not go down. Other carriers seem to be distracted with M&A & other priorities. The poor historic customer service issues TPM had, have been addressed and this will also play well for them as they enter Singapore.

    Thirdly the Singapore venture is already costed, underway, on track and funded from Op-Cash Flow. Their customer service already handles mobile and bolting-on Singapore will be seamless & contribute to the very low opex to run that business. The Depreciation over the spectrum licence terms is another plus. TPM cash flow, reserves and facilities are more than adequate even if they progress the all AU mobile play. Remember that VHA is paying TPM to light up most/all towers (caveat reg/access/rental charges on towers). TPM has also already expended vast amounts of capex on this VHA project while not reflecting the revenues yet, these VHA revenues will overwhelmingly offset any “bump” created by Singapore coming online.

    I get that analysts are a bit bitter and hold a negative view on the industry. I think this is because many had BUYS when they should have been HOLDS at peak prices, let face it analysts have known about the NBN for quite a while…

    Roger at CLSA is the person I am backing on this stock and with a TP of mid to higher $7-$8. Personally I think it will be back to all new highs by mid 2018 (maybe sooner) when the above starts to play out and Singapore starts to earn revenues. Yes that’s a bit of a long trade but at these prices and even if there is a big general stock market correction, TPM’s revenues are quiet stable and after all every home and business needs comms.

    DYOR & Looking forward to seeing the price in mid 2018 & Good luck to all.
 
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