TPG Telecom Limited (Formerly the Details of Our 2020 Achievements Across Our Family of Brands, We Named VHA) and a Contribution of and Our 2021 Priorities
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Annual Report 2020 Contents Chairman and CEO’s letter 2 Strategy and Performance 6 Key Risks 12 Operating and Financial Review 15 Directors’ Report 23 Remuneration Report 30 Auditor’s Independence Declaration 60 Financial Report 61 Consolidated Income Statement 62 Consolidated Statement of Comprehensive Income 63 Consolidated Statement of Financial Position 64 Consolidated Statement of Changes in Equity 65 Consolidated Statement of Cash Flows 66 Notes to the Consolidated Financial Statements 67 Directors’ Declaration 122 Independent Auditor’s Report 123 ASX Additional Information 132 Annual Report 2020 1 Highlights REVENUE EBITDA $4.35b $1.39b 24 per cent from 2019 18 per cent from 2019 NPAT NET CASH FLOW $734m $342m First six months post-merger 2 Chairman and CEO’s letter Dear Shareholders, 2020 highlights will begin offering 5G fixed wireless services to customers. 2020 was a year in which Australian Following the implementation of society and the economy was the merger between the companies We are pleased with the progress subjected to significant unexpected formerly named Vodafone we have made, and we thank our shocks but also showed remarkable Hutchison Australia (‘VHA’) and employees for their hard work to resilience. TPG Telecom on 13 July 2020, we deliver more every day for our set upon the important work of customers. Telecommunications services played delivering the benefits to customers an essential part in the everyday lives and shareholders. Financial performance of Australians, with the COVID-19 pandemic and the bushfire crisis Customers began benefiting from the Our results demonstrate that highlighting the critical role that integration of our complementary despite the impact of COVID, the sector plays in our society. network assets from day one, with especially global travel restrictions, additional spectrum, small cells continued NBN headwinds, ongoing While supporting our customers and fibre links boosting mobile mobile competition and regulatory and employees through these performance and capacity. challenges, we have delivered for our difficult times, we completed customers and shareholders. Australia’s largest corporate Under a unified and experienced merger in 2020, carefully navigated senior management team, we are While simultaneously completing COVID and regulatory challenges smoothly integrating the two legacy the merger and managing these to our operations, introduced entities. In a demonstration of our challenges, we were also regaining 5G technology into our network, capabilities as a merged company, we ground following uncertainty due to provided great value and service to have already secured contracts with the merger delay and the 5G vendor our customers, made good progress several large Australian companies restrictions. on our merger integration plans, for mobile and fixed network services and delivered a maiden dividend of and became the highest seller of NBN As a result of the merger, we have a 7.5 cents per share to shareholders. Enterprise Ethernet since July 2020. stronger balance sheet. And it says a lot about the Group’s underlying We are better together as a merged We are fast-tracking our 5G mobile strength and resilience that we were company, delivering increased rollout, with 5G services now available able to produce a strong cash result competition and innovation, and in more than 350 suburbs in Sydney, and deliver a dividend in the current enhanced network services. Melbourne, Brisbane, Perth, Adelaide, environment. Canberra, the Gold Coast and TPG Telecom ends 2020 with its Newcastle. Customer take-up of 5G As the merger was effective for synergy program on track and a devices has been strong and we now accounting purposes from 26 June strong foundation for the future. have more than 425,000 5G enabled 2020, TPG Telecom’s reported results smartphones on our mobile network. for 2020 include a full twelve months We are pleased to share with you of TPG Telecom Limited (formerly the details of our 2020 achievements Across our family of brands, we named VHA) and a contribution of and our 2021 priorities. have brought innovation, and more six months and four days from TPG value to customers. During 2020, Corporation Limited (formerly named we achieved net growth of 117,000 TPG Telecom). fixed broadband subscribers and introduced highly competitive Reported revenue for the year mobile and fixed products and increased 24 per cent from 2019 offers. We also launched Infinite Data to $4.35 billion and reported mobile plans with higher speed tiers EBITDA increased by 18 per cent to and felix, our carbon neutral, digital- $1.39 billion. native brand. We reported NPAT of $734 million, In 2H20, we also completed the which includes a one-off, non-cash rollout of Australia’s first city-wide credit to income tax expense of 10 Gigabit network to 1,000 buildings $820 million. in Adelaide in partnership with the In the first six months post-merger, City of Adelaide. the Group has generated $342 million We are also leveraging our extensive of net cash flow. infrastructure to offer compelling The TPG Telecom Board resolved NBN alternatives to increase fixed line to pay a final dividend for 2020 of margins. In the first half of 2021, we 7.5 cents per share. Annual Report 2020 3 We are better together as a merged company, delivering increased competition and innovation, and enhanced network services. 4 Chairman and CEO’s letter continued Becoming one company Reduced roaming revenue and the The merger has provided the Group absence of international visitors will with tremendous opportunities We have always recognised that continue to impact our business, as for the future, as well as increased a successful integration would be will ongoing NBN headwinds and ability to support customers with critical for our customers, employees, the introduction of the Regional the services they rely on through the shareholders, and the future of Broadband Scheme Levy. However, ongoing COVID pandemic. TPG Telecom. we are confident that our growth strategies and synergy program will Through the combination of our fixed It’s a big task, but we have taken it work to offset these. and mobile networks, we are now on with enthusiasm and urgency, an integrated telecommunications leveraging the extensive experience As a merged company, we are in company with the assets and skills to and talent within our company. a stronger position to respond to be a stronger competitor to benefit ongoing COVID challenges and customers in all market segments, Every step of the way, we have made aggressive competition in the while delivering long-term value to carefully considered decisions, while mobile market. shareholders. moving at pace to deliver the benefits of the merger as quickly as possible. We are encouraged by improved The TPG Telecom Board and senior momentum in mobile in the last management team thank you, The company has come together quarter of 2020 in response to our shareholders, employees and as one organisation under a unified Vodafone’s Infinite Data plans, customers for the support during senior management team and we Vodafone’s Summer of Cricket the year. have made significant progress on sponsorship and a strong iPhone our integration priorities. 12 launch. Since November, l On the technology side, more more than three quarters of our than 1.8 million Australians are postpaid handset sales were for benefiting from enhanced mobile 5G-capable devices. performance after we deployed 1800 MHz spectrum to around With our wider suite of brands, 320 sites around Australia. products and network infrastructure, we will continue to drive innovation in l We are nearing completion of a the market, maintain our competitive program to integrate over 400 market positioning and simplify David Teoh small cells into the mobile network customer journeys. Chairman in Sydney, Melbourne, Brisbane and Adelaide. And our Enterprise team will continue l Our program to connect additional to build on early success achieved mobile sites to dark fibre is ahead in the business and government of schedule. segments. l Around 60 per cent of iiNet mobile As a result of COVID and greater customers have so far migrated to flexibility in working arrangements, the company’s mobile network. we expect to see continued increased take-up of higher speed NBN plans. We have made good progress, but Iñaki Berroeta this is only the beginning. Overall, we have increased Chief Executive Officer and Managing confidence about our year ahead. Our year ahead Director Thank you We head into 2021 with cautious optimism and a continued focus 2020 was a year like no other on delivering for customers and in many ways. We are extremely shareholders in the short, medium pleased about the way the multiple and long term. and complex challenges have been navigated. We are especially proud Our plans and targets for 2021 are that we have maintained our focus ambitious and on track, which include on our customers, working every day reaching 85 per cent 5G population to enhance their network and service coverage in the top six cities, and experiences with us. delivering more than $70 million in cost synergies, excluding the contribution of 5G fixed wireless services and cross-sell revenue. Annual Report 2020 5 6 Strategy and Performance 2020 was a monumental year, and it’s Best High Speeds for NBN at the As a stronger full-service incredible to see how much we have Finder Awards, while Internode was telecommunications company, achieved in just six months following recognised as a Top 10 brand at the we are focusing on three growth the completion of the merger. Canstar Blue 10-year Awards. opportunities – increasing fixed and mobile converged household While coming together as a merged In a further demonstration of market share, bringing more company and helping support customer sentiment, our major customers onto products using our Australians through COVID-19, we brands, Vodafone, TPG and iiNet, own infrastructure and developing remained steadfast in our efforts to have achieved consistently high Net our Enterprise & Government and serve our customers’ needs.