SHAREHOLDERS NOT HAPPY WITH TPG, SHARE PRICE TAKES A BEATING

Written on the 18 April 2017 by David Simmons

SHAREHOLDERS NOT HAPPY WITH TPG, SHARE PRICE TAKES A BEATING After last week's announcement that TPG Telecom (ASX:TPM) had purchased a government contract to build Australia's fourth mobile network, the company's shares have been dumped by investors, wiping a billion dollars off its market value.

TPG paid $1.26 billion on the government contract for a high-quality chunk of the Australia's 4G mobile spectrum, and will spend a further $600 million on building their own mobile network.

The company entered a trading halt last Wednesday prior to the announcement and resumed trade on Tuesday morning.

At around 3pm Tuesday (AEST) TPG shares crashed 18 per cent, down to $5.41, suggesting shareholders are not too confident in the telco's ability to pull off the network.

The drop in share price follows TPG's attempt to tap shareholders for the $400 million required to complete the new network.

After TPG announced the purchase of the new network last week, Telstra's (ASX:TLS) shares dropped six per cent.

Currently, Telstra's share price is down 3.6 per cent to $4.01.

TPG's sharp decline implies that shareholders are not sure that its new network, which promises low prices and the utilisation of its fibre optic infrastructure, can compete with its rivals Telstra, Vodafone, and Optus.

Further uncertainty may be the result of an upcoming ACCC decision to force network providers to give consumers free access to the network, meaning the only distinguishing feature of each provider will be the price point.

If the domestic roaming regulations are put in place by the ACCC, Telstra is set to potentially lose $546 million.

TPG's network will take approximately three years to complete, and will cover 80 per cent of the Australian market.

Analysts have suggested that shareholders are spooked by the excessive price the telco paid for the network, as well as a lack of confidence that the implementation will ultimately be profitable.

Business News Australia

Author: David Simmons

Latest News

DARK DAYS AHEAD FOR AUSTRALIAN RETAIL AS REPORT FORECASTS MAJOR INDUSTRY ROUT

ALMOST 1,600 retail businesses are at risk of imminent collapse, including 21 major retailers with turnovers of more ...

GOODMAN TAKES PROFIT AND REVENUE DECLINE BUT LOOKS TO CASH IN ON AMAZON'S ARRIVAL

Commercial and industrial property group Goodman (ASX: GMG) has reported underlying full year net profit has dropped ...

ARIADNE CUTS DEMANDS FOR FOUR ARDENT BOARD SEATS TO TWO AHEAD OF EGM

REBEL shareholders have reduced their demands on embattled theme parks operator Ardent Leisure (ASX: AAD) to give the...

VITA GROUP POSTS STEADY RESULTS DESPITE ROUGH YEAR

IT'S no secret Vita Group (ASX: VTG) has had a testing year, however the company has still managed to deliver ...

Related News

DARK DAYS AHEAD FOR AUSTRALIAN RETAIL AS REPORT FORECASTS MAJOR INDUSTRY ROUT

ALMOST 1,600 retail businesses are at risk of imminent collapse, including 21 major retailers with turnovers of more ...

WESFARMERS BOOKS BUMPER PROFIT BUT SUPERMARKET WAR HITS COLES' BOTTOM LINE

SUPERMARKET giant Coles has posted its biggest slide in earnings since it was acquired by Wesfarmers (ASX: WES) 10 ye...

ANALYSTS PREDICT WHAT AUSSIE LIVING IS LIKELY TO BECOME IN THE NEXT CENTURY

AS THE Australian population continues to grow, analysts are predicting what the country is likely to look like wi...

SEVEN WEST REPORTS MASSIVE LOSS AND CUTS CEO TIM WORNER'S PAY PACKET BY $450K

SEVEN West Media (ASX: SWM) has posted a full-year loss of $744.3 million and cut CEO Tim Worner's pay packet by ...

BOOK YOUR FUNCTION SPACE HERE

 

 

 

Contact us

Email News Update Sign Up Contact Details
Subscriptions

PO Box 2087
Brisbane QLD 4001

LoginTell a FriendSign Up to Newsletter