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TPG says offer for iiNet is a great deal

TPG Telecom has booked a solid lift in first half net profit and is keen to woo investors opposed to its $1.


4 billion bid for internet provider iiNet.

TPG chief financial officer Stephen Banfield insists that TPG’s offer is good for iiNet shareholders.

“We’re disappointed by the reaction of certain shareholders given our genuine belief that we’re proposing a great deal for iiNet shareholders,” Mr Banfield said on Tuesday.

“TPG has offered a full and fair value for iiNet.”

iiNet’s founder and former chief executive Michael Malone, who remains an iiNet shareholder, is among critics of the proposed takeover, claiming the iiNet board has run out of ideas.

Mr Banfield said TPG had only become aware of Mr Malone’s concerns late on Sunday.

“We’d be very happy to meet with Michael, who’s somebody we respect greatly,” he said.

iiNet admitted on Monday that it is concerned that the proposed takeover by low-cost rival TPG could hurt its customers and staff.

The company is facing a backlash from shareholders worried about the impact of the deal on iiNet’s one million customers and their level of service, and criticised management for a lack of information on the proposed takeover.

It has been recommended by iiNet’s board but requires the support of at least 75 per cent of iiNet shareholders, who will vote on the deal in June.

Meanwhile, a solid lift in first half profit has put TPG on track to increase its full year earnings by up to a third.

TPG upgraded its forecast for underlying earnings to rise to $480-$483 million, from $363.6 million in 2013/14.

It had previously forecast its earnings to rise to between $455 million and $460 million.

TPG also unveiled a first half net profit of $106.7 million, up 18 per cent from a year earlier.

Investors were impressed, with TPG’s shares up 31 cents, or 3.51 per cent, to $9.14.

IG market strategist Evan Lucas said TPG’s results were really solid, and the fact that the company had upgraded guidance was very positive.

The telco’s consumer division, which provides retail telecommunications services to residential and small business customers, lifted earnings by 16.9 per cent to $117.1 million, driven by its broadband subscriber base rising by 38,000 in the half year to January 31.

TPG’s home phone fixed line product grew from 477,000 subscribers to 535,000.

But mobile subscribers fell to 342,000 from 362,000 due to a price increase and a 3G-only product.

The group’s acquisition of AAPT in February 2014 helped TPG’s corporate division lift earnings by 84 per cent to $117.7 million. The corporate division provides services to corporate, government, and wholesale customers.


* First half net profit $106.7m, up 18pct from $90.1m

* Revenue of $627.3m, up 59pct from $394.5m

* Interim dividend of 5.5 cents a share, fully-franked, up from 4.5 cents

AAP tsc/gfr


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