TPG reverses brief iiNet customer exodus

TPG has overseen a rebound in broadband subscriber numbers for iiNet, overcoming a small exodus following its $1.4 billion buyout of the group.

The David Teoh-owned ISP today said iiNet’s subscriber numbers increased to 990,000 in the first half of 2017.

This increase directly enabled TPG to book $14.7 million in organic earnings before interest, tax, depreciation and amortisation (EBITDA) growth in the first half.

Coupled with “the ongoing realisation of financial benefits from integration activities” and simply being on TPG’s books for longer, iiNet’s EBITDA margin grew to 26 percent for the half, compared to the same period last year.

The rebound in iiNet subscriber numbers is good news for TPG, which has been battling to maintain iiNet’s premium service image post-acquisition; the buyout was once tipped as “when two cultures clash”.

Complaints about iiNet to the Telecommunications Industry Ombudsman have soared since TPG’s takeover.

iiNet group companies also continue to stumble on redundant capacity and diverse routing around transmission network issues, which was exposed in the Basslink and Wollongong cable cuts.

However, the results appear to indicate that any hit to iiNet’s brand may just have been temporary.

TPG initially reported iiNet subscriber numbers at 989,000 post-buyout. The figure briefly dipped to 983,000 in July 2016 but now sits at 990,000.

The make-up of iiNet’s total subscriber number is drastically changed since acquisition.

Both on- and off-net ADSL services continue to shrink, but they were completely offset by NBN growth.

That is important for TPG, as average revenue per user (ARPU) for NBN services on iiNet exceeds that of NBN services on TPG.

In addition, iiNet’s NBN ARPU is rising – coming in now at $72.60 – compared to TPG’s, which has remained a steady $67.

TPG's meteoric rise continues

The 7000 subscriber rebound for iiNet pales in comparison to TPG’s own subscriber growth.

Between July 2016 and January 2017 TPG added another 36,000 broadband customers on its own brand, after similar gains going back to July 2014.

Group broadband subscribers – across all TPG-owned brands – is now 1.91 million, up from 1.868 million in July 2016.

The growth is strongly driven by gains in market share on the NBN. TPG now has 173,000 NBN customers, up 54,000 in just six months.

TPG’s latest results also break out customer numbers on its NBN-competitor fibre-to-the-basement (FTTB) service for the first time, noting it had 24,000 subscribers.

TPG reported an overall 11 percent increase in net profit after tax to $224 million for the six months ended January 2017, compared to the corresponding half last year.