TPG Telecom Limited (TPM) 2020年年度報告「ASX」.pdf

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1、AnnualReport2020ContentsChairman and CEOs letter 2Strategy and Performance 6Key Risks 12Operating and Financial Review 15Directors Report 23Remuneration Report 30Auditors Independence Declaration 60Financial Report 61Consolidated Income Statement 62Consolidated Statement of Comprehensive Income 63Co

2、nsolidated Statement of Financial Position 64Consolidated Statement of Changes in Equity 65Consolidated Statement of Cash Flows 66Notes to the Consolidated Financial Statements 67Directors Declaration 122Independent Auditors Report 123ASX Additional Information 132HighlightsREVENUE$4.35b24 per cent

3、from 2019 EBITDA$1.39b18 per cent from 2019NPAT$734mNET CASH FLOW$342mFirst six months post-mergerAnnual Report 20201Chairman and CEOs letterDear Shareholders,2020 was a year in which Australian society and the economy was subjected to significant unexpected shocks but also showed remarkable resilie

4、nce.Telecommunications services played an essential part in the everyday lives of Australians,with the COVID-19 pandemic and the bushfire crisis highlighting the critical role that the sector plays in our society.While supporting our customers and employees through these difficult times,we completed

5、 Australias largest corporate merger in 2020,carefully navigated COVID and regulatory challenges to our operations,introduced 5G technology into our network,provided great value and service to our customers,made good progress on our merger integration plans,and delivered a maiden dividend of 7.5 cen

6、ts per share to shareholders.We are better together as a merged company,delivering increased competition and innovation,and enhanced network services.TPG Telecom ends 2020 with its synergy program on track and a strong foundation for the future.We are pleased to share with you the details of our 202

7、0 achievements and our 2021 priorities.2020 highlightsFollowing the implementation of the merger between the companies formerly named Vodafone Hutchison Australia(VHA)and TPG Telecom on 13 July 2020,we set upon the important work of delivering the benefits to customers and shareholders.Customers beg

8、an benefiting from the integration of our complementary network assets from day one,with additional spectrum,small cells and fibre links boosting mobile performance and capacity.Under a unified and experienced senior management team,we are smoothly integrating the two legacy entities.In a demonstrat

9、ion of our capabilities as a merged company,we have already secured contracts with several large Australian companies for mobile and fixed network services and became the highest seller of NBN Enterprise Ethernet since July 2020.We are fast-tracking our 5G mobile rollout,with 5G services now availab

10、le in more than 350 suburbs in Sydney,Melbourne,Brisbane,Perth,Adelaide,Canberra,the Gold Coast and Newcastle.Customer take-up of 5G devices has been strong and we now have more than 425,000 5G enabled smartphones on our mobile network.Across our family of brands,we have brought innovation,and more

11、value to customers.During 2020,we achieved net growth of 117,000 fixed broadband subscribers and introduced highly competitive mobile and fixed products and offers.We also launched Infinite Data mobile plans with higher speed tiers and felix,our carbon neutral,digital-native brand.In 2H20,we also co

12、mpleted the rollout of Australias first city-wide 10 Gigabit network to 1,000 buildings in Adelaide in partnership with the City of Adelaide.We are also leveraging our extensive infrastructure to offer compelling NBN alternatives to increase fixed line margins.In the first half of 2021,we will begin

13、 offering 5G fixed wireless services to customers.We are pleased with the progress we have made,and we thank our employees for their hard work to deliver more every day for our customers.Financial performance Our results demonstrate that despite the impact of COVID,especially global travel restricti

14、ons,continued NBN headwinds,ongoing mobile competition and regulatory challenges,we have delivered for our customers and shareholders.While simultaneously completing the merger and managing these challenges,we were also regaining ground following uncertainty due to the merger delay and the 5G vendor

15、 restrictions.As a result of the merger,we have a stronger balance sheet.And it says a lot about the Groups underlying strength and resilience that we were able to produce a strong cash result and deliver a dividend in the current environment.As the merger was effective for accounting purposes from

16、26 June 2020,TPG Telecoms reported results for 2020 include a full twelve months of TPG Telecom Limited(formerly named VHA)and a contribution of six months and four days from TPG Corporation Limited(formerly named TPG Telecom).Reported revenue for the year increased 24 per cent from 2019 to$4.35 bil

17、lion and reported EBITDA increased by 18 per cent to$1.39 billion.We reported NPAT of$734 million,which includes a one-off,non-cash credit to income tax expense of$820 million.In the first six months post-merger,the Group has generated$342 million of net cash flow.The TPG Telecom Board resolved to p

18、ay a final dividend for 2020 of 7.5 cents per share.2We are better together as a merged company,delivering increased competition and innovation,and enhanced network services.Annual Report 20203Chairman and CEOs letter continuedBecoming one company We have always recognised that a successful integrat

19、ion would be critical for our customers,employees,shareholders,and the future of TPG Telecom.Its a big task,but we have taken it on with enthusiasm and urgency,leveraging the extensive experience and talent within our company.Every step of the way,we have made carefully considered decisions,while mo

20、ving at pace to deliver the benefits of the merger as quickly as possible.The company has come together as one organisation under a unified senior management team and we have made significant progress on our integration priorities.lOn the technology side,more than 1.8 million Australians are benefit

21、ing from enhanced mobile performance after we deployed 1800 MHz spectrum to around 320 sites around Australia.lWe are nearing completion of a program to integrate over 400 small cells into the mobile network in Sydney,Melbourne,Brisbane and Adelaide.lOur program to connect additional mobile sites to

22、 dark fibre is ahead of schedule.lAround 60 per cent of iiNet mobile customers have so far migrated to the companys mobile network.We have made good progress,but this is only the beginning.Our year ahead We head into 2021 with cautious optimism and a continued focus on delivering for customers and s

23、hareholders in the short,medium and long term.Our plans and targets for 2021 are ambitious and on track,which include reaching 85 per cent 5G population coverage in the top six cities,and delivering more than$70 million in cost synergies,excluding the contribution of 5G fixed wireless services and c

24、ross-sell revenue.Reduced roaming revenue and the absence of international visitors will continue to impact our business,as will ongoing NBN headwinds and the introduction of the Regional Broadband Scheme Levy.However,we are confident that our growth strategies and synergy program will work to offse

25、t these.As a merged company,we are in a stronger position to respond to ongoing COVID challenges and aggressive competition in the mobile market.We are encouraged by improved momentum in mobile in the last quarter of 2020 in response to Vodafones Infinite Data plans,Vodafones Summer of Cricket spons

26、orship and a strong iPhone 12 launch.Since November,more than three quarters of our postpaid handset sales were for 5G-capable devices.With our wider suite of brands,products and network infrastructure,we will continue to drive innovation in the market,maintain our competitive market positioning and

27、 simplify customer journeys.And our Enterprise team will continue to build on early success achieved in the business and government segments.As a result of COVID and greater flexibility in working arrangements,we expect to see continued increased take-up of higher speed NBN plans.Overall,we have inc

28、reased confidence about our year ahead.Thank you2020 was a year like no other in many ways.We are extremely pleased about the way the multiple and complex challenges have been navigated.We are especially proud that we have maintained our focus on our customers,working every day to enhance their netw

29、ork and service experiences with us.The merger has provided the Group with tremendous opportunities for the future,as well as increased ability to support customers with the services they rely on through the ongoing COVID pandemic.Through the combination of our fixed and mobile networks,we are now a

30、n integrated telecommunications company with the assets and skills to be a stronger competitor to benefit customers in all market segments,while delivering long-term value to shareholders.The TPG Telecom Board and senior management team thank you,our shareholders,employees and customers for the supp

31、ort during the year.David TeohChairman Iaki BerroetaChief Executive Officer and Managing Director 4Annual Report 20205Strategy and Performance2020 was a monumental year,and its incredible to see how much we have achieved in just six months following the completion of the merger.While coming together

32、 as a merged company and helping support Australians through COVID-19,we remained steadfast in our efforts to serve our customers needs.We have a family of award-winning brands that customers love.In 2020,we won a number of major customer satisfaction awards including iiNet for best NBN provider for

33、 the third year in a row from Choice,Vodafone for Best Fixed Broadband provider at the Edison Awards and TPG for Best High Speeds for NBN at the Finder Awards,while Internode was recognised as a Top 10 brand at the Canstar Blue 10-year Awards.In a further demonstration of customer sentiment,our majo

34、r brands,Vodafone,TPG and iiNet,have achieved consistently high Net Promoter Score results.There was also a substantial decrease in the number of customer complaints after the COVID peak,with all three brands recording Telecommunication Industry Ombudsman complaint rates below the industry average i

35、n the September and December quarters.As a stronger full-service telecommunications company,we are focusing on three growth opportunities increasing fixed and mobile converged household market share,bringing more customers onto products using our own infrastructure and developing our Enterprise&Gove

36、rnment and Wholesale business units.We are enabling growth in these three areas by investing in our 5G mobile network and in the transformation of our IT and digital infrastructure.The strength of our company is underpinned by our integration and synergy program and our work to unify our culture and

37、 organisation.Strategic PrioritiesCapitalising on strengths and opportunities to drive growthHow we willdrive growthBring more of our products into even moreAustralian householdsLaunch 5G fixed wirelessservices and bring morecustomers onto ourinfrastructure Increase focus on Enterprise,Government an

38、d WholesaleHow we willenable growthContinue rolling out 5G networkto reach scale in major citiesTransform IT&Digital to enhance and simplify the customer experienceHow we willbecome strongerDeliver more of the benefits of the merger to our customers and shareholdersUnify our culture,experience and o

39、rganisation as one company6How we will drive growthBring more of our products into even more Australian households Our first growth priority is to bring more of our products into more Australian households.As a merged mobile and fixed broadband company,we have a significant opportunity to grow our c

40、onverged households,and within those households,to grow our mobile customer base.In 2020,we launched new competitively priced and innovative products across our major brands,including Vodafones Infinite Data plans and mobile and NBN bundles,as well as new TPG and iiNet mobile offers.In 2021,we will

41、be launching new ways to encourage our customers to take up more services with us and new inclusions to enhance their at-home experience.This will include 4G backup on more NBN products across our brands,increased cross-selling initiatives,and improvements to sales,on-boarding and account management

42、 journeys.Launch 5G fixed wireless services and bring more customers onto our infrastructureOur second growth priority is to make the most of our extensive fixed and mobile infrastructure by bringing more on-net services to more customers,providing them with greater choice and value.We are especiall

43、y excited to be bringing 5G fixed wireless services to customers in the first half of 2021.We are currently testing devices using our 3.6 GHz spectrum to ensure we deliver an exceptional product to customers.We also have thousands of customers connected to 4G fixed wireless services through the Voda

44、fone brand in areas where we have spare 4G network capacity,and have started expanding this service to the TPG and iiNet brands.In 2021,we will continue investing in,and maximising the value from,our on-net fixed access infrastructure.Our Fibre to the Basement network,which delivers typical evening

45、speeds of 90 megabits per second,is available to almost 3,000 multi-dwelling buildings and over 200,000 premises across major metropolitan areas.Previously available on TPG and iiNet only,we recently launched FTTB products on Internode.Our HFC services are sold through the iiNet brand,and are superi

46、or to the majority of the alternative services offered in these locations.Our VDSL network delivers typical evening speeds of 74 megabits per second and covers around 90,000 premises in the ACT,with services offered through the iiNet brand.The NBN Connectivity Virtual Circuit(CVC)wholesale pricing m

47、odel continues to be a challenge for all NBN retailers.We continue to advocate to NBN Co and the Government for a flat rate and the removal of the CVC.Until a sustainable model is implemented,we will continue to manage our NBN plan mix to maximise margins.Increase focus on Enterprise&Government and

48、Wholesale The provision of combined mobile and fixed solutions to the enterprise,government and wholesale sectors is a significant growth opportunity for TPG Telecom.In 2020,we brought the Enterprise and Government teams together.Equipped with both solutions,know-how and deep customer focus,the Ente

49、rprise&Government team quickly won several major tenders.During the year,we announced an agreement to provide fixed and mobile network services to National Australia Bank.In partnership with the City of Adelaide,we completed the rollout of 10 Gigabit Adelaide,Australias first city-wide 10 Gigabit ne

50、twork to 1,000 buildings in the city.We are providing services exclusively to hundreds of business entities ranging from research institutes to eCommerce,medical,IT software engineering and educational institutions.In 2021,our Enterprise&Government priorities include providing products and services

51、that meet the needs of government agencies and businesses of all sizes,and deepening our focus on the total customer experience we provide.We will continue to:drive on-net data in our existing fibre footprint;connect new businesses to the high speed,dedicated and symmetric NBN Enterprise Ethernet fi

52、bre product;and provide mobiles,including mobile back up,to support fixed fibre networks.Our efforts will be supported by investment in building brand awareness of our full-service suite of telecommunications products and services to business,enterprise and government;and expanding our existing SD-W

53、AN,Managed Service,Security,5G and IoT propositions.In 2020,we also brought the legacy VHA and TPG wholesale sales and carrier teams into an independent business unit to maximise the potential for standalone growth in wholesale.The combination of legacy VHAs MVNO wholesale capability with the AAPT W

54、holesale business brings a third converged wholesale infrastructure challenger to the Australian market for the first time.The new TPG Telecom Wholesale business offers an extensive range of products and services ranging from MVNO access to Application-to-Person(A2P)SMS,FTTB,enterprise fibre service

55、s,consumer and enterprise NBN,and domestic and international capacity.Our Wholesale focus for 2021 is to grow the wholesale business,increase the utilisation of our extensive network assets,and drive synergies and long-term value in our carrier partner agreements.Annual Report 20207Strategy and Perf

56、ormance continuedHow we will enable growthContinue rolling out 5G to reach scale in major cities In 2020,we finalised the building blocks for our 5G future and commenced the rollout of our 5G mobile network with our RAN and transmission partner,Nokia.Our partnership with Nokia is underpinned by our

57、long-term arrangement to access Axicoms portfolio of tower assets and our joint venture agreement with Optus.These agreements,supported by our maintained level of capital expenditure,will enable us to deploy 5G efficiently,to more places and with a competitive cost structure.We know customers are ex

58、cited about 5G,and were excited to be rolling it out across Australia as the first of our key enablement priorities.Last year,total data traffic on our mobile network grew 12 per cent to 611 million Gigabytes(GB)from 545 million GB in 2019 as customers continued to stream,browse and share more on th

59、eir smartphones,mobile devices and tablets.We now have 5G services switched on in parts of Sydney,Melbourne,Brisbane,Adelaide,Perth,Canberra,the Gold Coast and Newcastle.5G is available in more than 350 suburbs across these major metro areas and we currently have around 1,600 sites in the planning a

60、nd design phase.Using our 3.6 GHz spectrum and 700 MHz spectrum,together with a new standalone core,we are targeting more than 85 per cent 5G network population coverage in the top six Australian cities by the end of 2021.Millimetre wave spectrum will accelerate the potential of 5G,especially for mo

61、bile services in high foot-traffic areas and for fixed wireless services.It will provide significantly increased capacity and enable faster data speeds.In 2020,we completed trials on the 28 GHz band,reaching speeds of around 2 Gigabits per second.The Australian Communications and Media Authority wil

62、l auction 2.4 GHz of spectrum in the 26 GHz band in April.As our 5G network reaches scale,we will offer new products and experiences so customers can make the most of the higher speeds,lower latency and more data connections that 5G supports.While we are accelerating our 5G rollout to bring next gen

63、eration services to customers as soon as possible,Australians will still be relying on 4G for some years to come.To continue meeting customer demand,we will be enhancing the 4G experience including expanding Voice over LTE capability and virtualising our mobile network for agility and scalability an

64、d to support new use cases.Transform IT and Digital to enhance and simplify the customer experience Consumer trends and COVID are changing the way customers want to interact with us.The transformation of our IT and digital infrastructure is our second enablement priority as we focus on enhancing and

65、 simplifying the customer experience.In 2020,the number of customer care enquiries on the Vodafone brand that involved web chat increased by more than 75 per cent from 2019.Take-up of the MyVodafone app continues to increase,with the app now downloaded to more than 1.6 million active devices.In 2020

66、,we also lifted online sales mix by three to five percentage points across our major Consumer brands.We refreshed our Vodafone website to improve the customer journey,with a particular focus on becoming more mobile-friendly.Improvements include enabling customers to compare plans more easily and a s

67、implified check-out experience.We also launched a new My TPG app and an improved iiHelp self-support online tool for iiNet customers.In 2021,we will continue to support the shift towards online activity across our brands to give customers more choice around how they engage with us and manage their a

68、ccount.We are also integrating our IT architecture to rationalise systems,and support cross-selling and on-net initiatives across our brands.This will enable us to improve our time-to-market,streamline the customer experience within and across our channels,simplify back-end processes,empower our emp

69、loyees and ultimately allow us to better understand and serve our customers.How we will become stronger Deliver more of the benefits of the merger to our customers and shareholdersWe are building a strong foundation for the future,with our continued focus on delivering our integration and synergy pr

70、ograms.Since day one of the merger,we have deployed our 1800 MHz spectrum to 318 mobile sites to benefit around 1.8 million Australians and migrated around 60 per cent of iiNet mobile customers onto our mobile network.We are pleased to share that our program to integrate almost 400 small cells into

71、the mobile network in major cities is nearing completion,and we are ahead of schedule in connecting dark fibre to over 700 mobile sites.In 2021,we expect to achieve approximately$70 million in cost savings,excluding the contribution of fixed wireless services and cross-sell revenue,as we continue to

72、 deliver the synergies from the merger.Our cost synergies ambition includes mobile network backhaul savings,the continued migration of iiNet customers,and other operating efficiencies across technology,infrastructure,property and marketing.By 2023,we expect our synergy program to deliver between$125

73、 to$150 million of annual cost savings.8Fixed wireless is expected to be an additional sizeable opportunity.Based on current NBN wholesale costs,the successful migration of every 100,000 NBN customers back onto on-net infrastructure would represent approximately$50 million of annualised cost savings

74、 for the Group.Further,we expect increased cross-selling activities to our fixed and mobile bases across Consumer and Enterprise to generate revenue synergies.Unify our culture,experience and organisation as one company The foundation of our company is our people.We now have a family of over 5,000 e

75、mployees across our operations.United by a challenger spirit,our legacy businesses share a common cause in driving competition and bringing innovation to the Australian telecommunications market.Across our company,we share a belief and confidence that we are better together.We are integrating our Gr

76、oup functions and senior management layer into a simplified structure which best serves our customer segments,as well as driving value and performance from our Group assets.Our executive team is now complete with the recent appointments of Kieren Cooney and Elizabeth Aris,who will lead our Consumer

77、and Enterprise segments through the next phase of growth.2020 presented no challenge too big to overcome in completing our merger.Our office-based workforce continues to work from the office or remotely,whichever helps our people to work effectively and be at their best.This has enabled us to bring

78、more teams together in an agile manner in common physical spaces,whilst beginning to consolidate our commercial office footprint.Ultimately,our goal is for TPG Telecom to be an employer of choice.Together,we are working on building a vibrant and inclusive environment for our people:one which acknowl

79、edges that we grow stronger with diversity,flexibility and respect in the workplace.We are progressively creating a common culture and way of working which capitalises on our organisational strengths and streamlines cross-functional collaboration.In 2021,we will increase our focus on growing future

80、leaders and attracting new talent,as well as harmonising the end-to-end employee experience.We are pleased with our progress so far and excited about the future as we continue the integration journey as one company.Annual Report 20209Strategy and Performance continuedSupporting our customers,employe

81、es and the communityOur strong actions to support Australians as they spent more time at home during 2020 ensured connectivity for our customers while also helping to protect the health and wellbeing of our community.Our customers 2020 was a challenging year for many of our customers as their circum

82、stances changed dramatically.It highlighted the critical role telecommunications plays in our society as Australians relied on our services more than ever to work and learn from home and for social connection.We worked hard to support our customers with a range of initiatives.On the Vodafone brand,t

83、hese included a temporary$10 Stay Connected plan for customers experiencing financial difficulty,additional data allowances,unlimited standard national calls,and pausing of late payment fees and collections.In addition,Vodafone provided two months free access for frontline health workers,and the fre

84、e rating of government and health websites.Vodafone also supported low-income families through NBN Cos Education Assistance Package so school-aged children could access home schooling.At the start of the year,when Australians faced the devasting summer bushfires,Vodafone offered a two-months free mo

85、bile service to a range of frontline volunteers,a free mobile Wi-Fi option to assist those who lost their homes and,additional data for customers in bushfire-affected areas,payment support or relief options,and a matched donation program.TPG helped keep schools,staff and students connected with high

86、-speed dedicated fibre.COVID-19 made us all think differently and we had to respond quickly to continue to support customers and their services.The enablement of remote working for contact centre employees and temporary redeployment of retail,support and field employees to contact centre roles helpe

87、d us to quickly restore service capacity levels following the impact from strict lockdowns in Mumbai,Pune,Manila and Cape Town.To continue supporting customers to stay connected during local lockdowns,Vodafone was the first provider to set up a non-contact click and collect model for its retail stor

88、es.This model enables us to continue providing diagnostic services for critical issues such as replacing a faulty SIM that cannot be done online.It worked well in the first Melbourne lockdown and we have used this model successfully in other states.We also accelerated our Digital strategy,including

89、boosting Vodafones web chat capability.As a result,the proportion of digitally assisted interactions doubled from 2019 to 2020.Our employeesWe continue to take an agile approach to working arrangements for office-based employees.This means we can respond immediately and with an abundance of caution

90、to any COVID-related health risks in the community.While COVID risks are low,there is no one-size-fits-all working model.We empower our people to make decisions about how to best structure their working week to suit their work responsibilities and personal circumstances.Some tasks and roles are best

91、 performed in a collaborative workplace environment,while others might be better suited to a home office.This year,we also enabled remote working for our contact centre employees for the first time,and now that the model has been proven,it gives us flexibility for the future.As telecommunications is

92、 considered an essential service,most Vodafone retail stores are open with social distancing and increased hygiene measures in place.To support our employees who may need time off to meet family commitments or for health reasons,an additional ten days of leave is available.Our community We take our

93、role and responsibilities in the community very seriously.In 2020,the Vodafone Foundation re-purposed its DreamLab app to support a research project by The Imperial College of London to fight COVID-19.The research is examining whether existing drugs and anti-viral molecules in foods can be used for

94、COVID treatments.The DreamLab app,which speeds up medical research sending tiny pieces of research puzzles to a users smartphone while they sleep for processing,recently reached one million downloads globally.As the first step in our broader sustainability strategy which focuses on the significant i

95、ssues for our society,we launched a new mobile brand,felix,in late 2020.felix is carbon neutral and 100 per cent powered by renewable electricity.In partnership with One Tree Planted,felix is planting one tree per month for every active customer.The company has also extended its sponsorship activiti

96、es to increase brand awareness to broader audiences.Among its suite of partnerships,Vodafone became the Official Platinum Partner of Cricket Australia,naming rights partner of Mens Test Match and League Partner of the Womens Big Bash League(WBBL).iiNet continued as the principal partner of the Hawth

97、orn Football Club and the Sydney Sixers,and Vodafone is proud to continue as the Official&Exclusive Mobile Service Sponsor of the Sydney Gay and Lesbian Mardi Gras Festival.10Annual Report 202011Key RisksOverviewAt TPG Telecom,we recognise that it is essential that risks are consistently and proacti

98、vely managed and we strike the right balance between managing risk and achieving business objectives.We are committed to the ongoing development of a strategic and consistent approach to risk management underpinned by a risk aware culture.By continually identifying,monitoring and assessing risks we

99、are able to put in place appropriate controls and actions to allow us to achieve our core objectives.We understand that identifying and managing risk is a fundamental duty to our shareholders,customers,employees and other stakeholders.While the board and board committees have oversight of risk issue

100、s,and the companys Executive has responsibility for managing risks,all TPG Telecom employees play a key role in ensuring effective risk management is in place.Below is a summary of the key risks that have been identified for TPG Telecom.These are not in priority order and are not an exhaustive list

101、of risks we have identified and monitor.Key RisksNetwork Capability and PerformanceCustomers rely heavily on the availability and performance of our mobile and fixed networks.Network congestion and outages lead to poor customer experience and negatively impact our reputation and customer trust.The C

102、OVID-19 pandemic has highlighted the critical role that our sector plays and has reinforced the importance of strong,resilient telecommunication companies.Our networks have kept family and friends connected,allowed businesses to continue operating through remote working arrangements and facilitated

103、online orders while offices and stores were closed.The potential of failures across our networks caused by human error,accidental damage,power loss,weather conditions,natural disasters including bushfires,physical or cyber security breaches or vandalism could cause significant disruption to our busi

104、ness resulting in financial loss,increased customer attrition and possible legal liability.Furthermore,our ability to operate a competitive telecommunications business is dependent upon access to sufficient spectrum,equipment and network infrastructure.If we were unable to acquire,renew or otherwise

105、 secure sufficient spectrum,equipment or network infrastructure at an acceptable price,our ability to provide services to customers economically and efficiently may limit revenue growth and profitability.We have,and continue to,invest significantly in network capability and performance.Our network p

106、erformance is closely and continually monitored,and we have a robust emergency and crisis management response plan in place to respond to incidents.Following the Australian Government restrictions on the use of perceived high-risk network vendors,we partnered with Nokia to build our 5G mobile networ

107、k.We are accelerating our rollout of the 5G network with a target to cover 85 per cent of the population in the top six cities by the end of 2021.We also work closely and proactively with the Australian Government and the Australian Communications and Media Authority(ACMA)to seek access to adequate

108、spectrum.Competitive Industry and Market Disruption We operate in a highly competitive marketplace where strong price competition,increasing demand for data and the high cost of network investment challenge our ability to sustain revenue growth,increase brand consideration and increase market share.

109、The telecommunications industry is particularly susceptible to rapid change,due to technological innovation,changing consumer trends and rapidly evolving industry practices.Innovation and disruptive technologies may cause market discontinuity which may in turn adversely impact our business models wh

110、ere there is a failure to transition and adapt quickly.We must continue to develop,adopt and integrate the latest technologies into our existing infrastructure or we may lose market share resulting in reduced revenue and profits.To mitigate this risk,we continuously review and update our products an

111、d services to maintain innovative and competitive offerings.We are also transforming our digital services to deliver an improved customer experience at a lower cost base.Our technology experts monitor technological developments and emerging trends and work with global technology providers to capital

112、ise on these opportunities.Cyber Security and Data Protection Cyber threats are constantly evolving,with heightened threats from international groups with sophisticated phishing scams and cyber attacks,who are targeting individuals and Australian companies.Legacy IT systems in particular may contain

113、 vulnerabilities and provide opportunities for cyber attacks.These attacks have the potential to cause significant service interruption or compromise customer data privacy.The COVID pandemic has heightened the general risk of cyber threats as opportunistic cyber criminals have quickly adapted their

114、methods to exploit an increase in the use of online services.TPG Telecom manages a significant volume of sensitive information.Customers,employees and third parties expect us to use the highest levels of security to protect their personal information.The legal and regulatory environment regarding in

115、formation security is increasingly 12complex and demanding.Failure to protect personal information could result in reputational damage,regulatory scrutiny and financial loss.This could result in compensation claims from customers,penalties by regulators or authorities and customer losses.We always s

116、eek to handle personal data honestly,ethically,with integrity and in accordance with applicable laws.We are committed to creating a strong security culture and provide mandatory annual training to ensure our people understand our obligations and are equipped to respond to cyber and privacy events ap

117、propriately.We conduct regular internal testing to ensure this training is effective.We take a Privacy-By-Design approach and seek to continuously improve our controls environment.We undertake multiple initiatives throughout the year to improve our cyber security and data security posture and contin

118、ue to implement strong compensating controls to manage risks associated with the transition of our workforce to remote working.Technology Stability and Resilience We rely heavily on information and communications technology for the delivery of our services and we have invested significantly in techn

119、ology to maximise the efficiency of operations.Issues such as service interruptions or unavailability may arise if these systems are inadequately maintained,secured and updated or are damaged due to accidents,deliberate attacks or natural disasters.In particular,legacy IT with unsupported software v

120、ersions may contain potential vulnerabilities and provide opportunities for cyber attacks.Additionally,our IT transformation programs may cause unexpected disruptions,fail to provide anticipated benefits or otherwise be unsuccessful.These disruptions could result in impacts on our reputation,custome

121、r retention,revenue,or costs.Our IT transformation program is aimed at increasing the resilience,stability,and performance of our architecture.The program is supported by a strong governance framework to minimise impacts to the business and ensure we meet our anticipated targets.We have implemented

122、target objectives for recovery of critical IT systems and our recovery plans that are regularly reviewed and tested.We are focusing on upgrading IT systems by removing outdated technologies and updating systems to supported versions.Legal and Regulatory RiskWe operate in a highly regulated industry

123、with complex and evolving legal requirements.We always seek to comply with all applicable legal and regulatory obligations.Through strong compliance and legal risk management we minimise the risk of reputational damage,fines and penalties,withdrawal or cancellation of licences,suspension or terminat

124、ion from trading on the ASX and litigation.The highly regulated environment exposes us to risks of changes to regulatory policy and other government interventions which could impact our financial performance or the commercial viability of existing or proposed projects or operations.As an example,the

125、 adoption of the Telecommunication Sector Security Reform and the subsequent Australian Government ban of Huawei in 5G networks continue to have an effect on our business.TPG Telecom has subject matter experts within key business areas who provide oversight,support compliance monitoring and are able

126、 to respond to emerging issues.A culture of compliance is established with policies,codes and training and awareness initiatives which ensure our people are adequately equipped to understand and manage our compliance obligations.We also have subject matter experts within our legal and regulatory tea

127、ms and external legal advisors to advise on emerging regulatory issues and advocate for our interests if legal or regulatory changes may impact our business.Macroeconomic RiskOur financial performance may be impacted by various macroeconomic factors.Unfavourable macroeconomic conditions,global trade

128、 conflicts and restrictions and major economic disruptions could result in reduced demand for our services,restrict our ability to develop,adopt and integrate the latest technologies,impact our key suppliers ability to provide services,increase borrowing costs or restrict the availability of debt fi

129、nancing.The COVID pandemic has impacted our business in several ways including reduced customer access to retail stores,lower international roaming revenues,lack of international students,revenue impact from customer support initiatives and suspension of late payment fees and collection activities d

130、uring the height of the pandemic.These impacts are likely to have a negative impact on our financial performance until the situation returns to pre-COVID conditions.To mitigate this risk,we take a conservative approach to financing and work effectively and proactively in partnership with lenders.Our

131、 annual budget and long-range planning processes also take into account potential changes to macroeconomic conditions.People RiskThe health,safety and wellbeing of our staff at our retail,corporate and technology sites is paramount.Physical security vulnerabilities,inappropriate behaviour towards fr

132、ont-line staff,failure to maintain and secure infrastructure,failure to comply with EME policies and regulations,and failing to provide an inclusive and respectful corporate environment all present potential health and wellbeing risks.Integrating business units and developing a Annual Report 202013K

133、ey Risks continuedstrong unified culture were identified as key requirements following the merger in mid-2020 and failure to achieve those objectives may result in loss of performance and lower staff retention.Failure to manage these risks could impact our reputation,inhibit our ability to attract a

134、nd retain talent and expose us to regulatory action or litigation.During the COVID pandemic,we moved quickly to protect the safety and wellbeing of our employees,customers and contractors including increasing working from home arrangements for most office-and contact centre staff,the temporary closu

135、re of at-risk retail stores,implementing social distancing measures and enhancing professional cleaning and hygiene measures at all locations.We continue to prioritise the mental health and well-being of our people particularly during the uncertainty of COVID restrictions and lockdowns.Careful monit

136、oring and increased Executive communication has assisted to minimise these health,safety and wellbeing risks.We are also committed to providing a safe,flexible and respectful environment for employees and customers,free from all forms of discrimination,bullying and sexual harassment.We focus on crea

137、ting a cohesive culture in the newly merged business and have policies and processes in place to attract and retain key talent.SustainabilityWe believe that managing environmental and social risks is important to maintaining long term value for shareholders.Climate change is a challenge creating ris

138、ks to industries,societies and economies across the globe.As an owner and operator of national telecommunications infrastructure we recognise that failure to manage and respond to the direct and indirect impacts of climate change presents risks to our business.Climate change will increase our exposu

139、re of damage to our infrastructure(for example,increases in extreme weather and bushfires),financial risk(for example,additional costs of regulation,potential litigation and increase in energy costs)and reputational risk(for example,failure to meet stakeholder expectations).Additionally,failure to a

140、dapt to meet changing societal,customer,employee and stakeholder expectations about corporate behaviour and standards may lead to reputational damage,regulatory inquiries or shareholder actions.Our operations teams build network resilience and redundancy against environmental risks.Our subject matte

141、r experts ensure our mobile and base stations comply with international and national safety limits.Our sustainability experts help to identify climate change risks that impact our business and plan appropriately for the future.We have been working on programs to reduce energy usage in our networks a

142、nd have contributed further to emissions reductions by launching felix mobile,Australias first telecommunications brand to be powered by 100 percent renewable energy.TPG Telecom has a strong corporate governance framework that complies with the legal and regulatory requirements.Our employee and boar

143、d policies,charters and codes are regularly reviewed to ensure our strong conduct,culture and governance framework meets the changing risk environment and increasing stakeholder expectations.14Operating and Financial Review1.Introduction and business overviewTPG Telecom is a provider of telecommunic

144、ations services to consumers,business,enterprise,government and wholesale customers in Australia.The Group owns significant network infrastructure throughout Australia(as well as a subsea cable connecting Australia to Guam with onward connectivity into the US and Asia)that facilitates the provision

145、of fixed and mobile telecommunications services.The Group markets its services through multiple well-known brands including Vodafone,TPG,iiNet,Lebara,Internode and AAPT.The Group has over 5,000 employees across Australia,New Zealand and the Philippines and the business is also supported by outsource

146、d service centres in India and South Africa.2.Merger with TPG CorporationThe merger of the Company and TPG Corporation became effective for accounting purposes on 26 June 2020 and was completed on 13 July 2020.The merger brings together two highly complementary businesses to create a leading integra

147、ted,full-service telecommunications company with a comprehensive portfolio of fixed and mobile products for its customers.The merger was implemented through a Scheme of Arrangement under which the Company acquired all of the shares in TPG Corporation in return for issuing shares in the Company to TP

148、G Corporation shareholders.The Scheme was approved by the Supreme Court of New South Wales on 26 June 2020 and became effective for accounting purposes on that day,being the deemed date of effective control.The Scheme was implemented on 13 July 2020 when the agreed number of shares in the Company we

149、re issued to TPG Corporation shareholders.TPG Corporation Limited changed its name from TPG Telecom Limited and was suspended from trading on the ASX on 29 June 2020,and the Company changed its name from Vodafone Hutchison Australia Limited to TPG Telecom Limited on 29 June 2020 and listed on the AS

150、X on 30 June 2020.3.Composition of reported results for the year ended 31 December 2020As a result of the structure and timing of the merger,the Groups Consolidated Income and Cash Flow Statements for the year ended 31 December 2020 include a full twelve months of results of the company formerly kno

151、wn as VHA plus a contribution of six months and four days from TPG Corporation(between the accounting effective date and 31 December 2020).The 2019 comparative year in the financial statements comprises just the results of the company formerly known as VHA,and therefore any comparison between the Gr

152、oups 2020 and 2019 results is impacted by the merger.Therefore,in order to assist users of the accounts to obtain a better understanding of the underlying performance of the Group,the Company has separately prepared pro forma results for 2020 and 2019 simulating what the Groups results would have be

153、en if the merger had been effective throughout both years.These pro forma results are included in a Financial Results Commentary and Investor Presentation that have been separately posted on the ASX on 25 February 2021 and are also available on the Groups website at .au/investor-relations.4.Analysis

154、 of reported results for the year ended 31 December 2020Whilst acknowledging the limitations described above of comparing the reported results of 2020 and 2019 due to the impact of the merger,the following sections provide an overview of the reported results.Users of the accounts seeking to obtain a

155、 better understanding of the underlying performance of the Group may like to also refer to the pro forma results included in the 2020 Financial Results Commentary and Investor Presentation available on the Groups website at .au/investor-relations.Annual Report 202015Operating and Financial Review co

156、ntinued4.1 Consolidated Income Statement Overview NOTE 2020$m2019$mCHANGE$mRevenueService revenue3,4792,4061,073Handset revenue8711,107(236)Total revenue4,3503,513837Other income11101Cost of telco services(1,388)(695)(693)Cost of handsets sold(855)(1,102)247Employee benefits expense(328)(232)(96)Oth

157、er operating expenses(399)(316)(83)EBITDA11,3911,178213Depreciation and amortisation2(1,188)(1,021)(167)Operating profit20315746Net financing costs3(289)(437)148Loss before tax(86)(280)194Income tax benefit/(expense)4820820Profit/(loss)after tax734(280)1,014Attributable to:Owners of the Company741(2

158、80)1,021Non-controlling interest(7)(7)Earnings per share(cents)64(68)132161.Earnings before net financing costs,tax,depreciation and amortisation(EBITDA)The Groups EBITDA,including six months and four days contribution from TPG Corporation,was$1,391 million,$213 million higher than 2019.Service reve

159、nue and operating expenses all increased substantially due to the inclusion of TPG Corporations results.However,handset revenue and the associated cost of handsets sold both decreased,reflecting a lower volume of mobile handsets sold by the legacy VHA business in 2020.TPG Corporation does not sell m

160、obile handsets.2.Depreciation and amortisation Depreciation and amortisation expense increased by$167 million in 2020.This increase includes$82 million of amortisation relating to the TPG Corporation acquired customer base that has been recognised as an intangible asset in the Groups balance sheet a

161、s a result of the merger acquisition accounting.This is an accounting expense that has no associated cash outflows.The remainder of the increase is driven by depreciation/amortisation of TPG Corporations property,plant and equipment and intangible assets(including spectrum licences)acquired through

162、the merger.Partially offsetting this increase was a decrease in depreciation expense in the legacy VHA business in the year largely due to the fact that a right-of use asset in respect of a fibre agreement that VHA had with TPG Corporation before the merger has now been eliminated on consolidation(r

163、efer to balance sheet commentary below).3.Net financing costs Net financing costs decreased by$148 million in 2020.This was driven primarily by the fact that,as reflected in the balance sheet below,the Groups borrowings were$2,668 million lower as at 31 December 2020 than at 31 December 2019.The red

164、uction in debt in the year was a function of(a)the debt restructure that occurred as part of the merger implementation in July 2020,under which$4,475 million of debt was removed from the Company and assumed by the Companys pre-merger shareholders;(b)the$2,526 million of debt that TPG Corporation had

165、 at date of acquisition(after paying the$479 million special dividend to its pre-merger shareholders);and(c)debt repayments made from cash generated from operations.The$289 million of net financing expenses for 2020 includes six months of interest incurred on the higher level of debt that existed pr

166、e-merger completion.4.Income tax The Groups 2020 income statement includes an$820 million accounting credit to income tax expense which has arisen due to the recognition of deferred tax assets in respect of carried forward tax losses not previously recognised in the Companys accounts and in respect

167、of temporary timing differences between book and tax accounting.As at 31 December 2019,the Company had not recognised any additional deferred tax assets beyond its deferred tax liabilities in its balance sheet because,as a loss making entity with no certainty of generating taxable profits in future

168、years,the Company didnt meet the accounting criteria necessary for recognition of deferred tax assets.Following the merger,the Group is generating(and is expected to continue generating)taxable profits,and these deferred tax assets have therefore been brought to account at 31 December 2020,giving ri

169、se to the one-off accounting credit to income tax expense.Annual Report 202017Operating and Financial Review continued4.2 Consolidated Balance Sheet OverviewSet out below is a condensed version of the Groups balance sheet as at 31 December 2020,summarised in a manner to highlight some key points.A c

170、omparison of the 31 December 2020 and 31 December 2019 balance sheets is materially affected by(a)the fact that the 31 December 2020 balance sheet includes TPG Corporations assets and liabilities acquired through the merger and(b)the issue of shares and debt restructure that occurred as part of the

171、merger implementation.Commentary on some of the material movements and balances is set out below the table.NOTE 2020$m2019$mCHANGE$mCash and cash equivalents1120734(614)Trade and other receivables43139140Derivative financial instruments1130(130)Assets held for sale222Other current assets130167(37)To

172、tal current assets6831,422(739)Property,plant and equipment33,2581,8651,393Right-of-use assets41,0121,454(442)Spectrum licences52,3251,1611,164Other intangible assets611,1442,7688,376Deferred tax assets7264264Other non-current assets 1387761Total non-current assets18,1417,32510,816Trade and other pa

173、yables9271,035(108)Borrowings15,255(5,255)Lease liabilities92848Other current liabilities437255182Total current liabilities 1,4566,629(5,173)Borrowings14,3301,7432,587Lease liabilities 41,0511,544(493)Other non-current liabilities953461Total non-current liabilities5,4763,3212,155Net assets11,892(1,2

174、03)13,095Contributed equity818,3996,04712,352Reserves(6,507)(7,250)743Total equity11,892(1,203)13,0951.Net debt As at 31 December 2020,the Group had net borrowings of$4,210 million(borrowings of$4,330 million less cash of$120 million)down from$6,264 million(borrowings of$6,998 million less cash of$7

175、34 million)as at 31 December 2019.This$2,054 million reduction in borrowings reflects(a)the debt restructure that occurred as part of the merger implementation in July 2020,under which$4,475 million of debt was removed from the Company and assumed by the Companys pre-merger shareholders;(b)the$2,526

176、 million of debt that TPG Corporation had at date of acquisition(after paying the$479 million special dividend to its pre-merger shareholders);and(c)debt repayments made from cash generated from operations.The$130 million of derivative financial instruments as at 31 December 2019 represented cross c

177、urrency swaps associated with the pre-merger borrowings that were assumed by the Companys pre-merger shareholders as part of the debt restructure upon merger implementation.182.Assets held for sale As at 31 December 2020,the Group,through TPG Corporation,held a 60%interest in the Tech2 Group Pty Ltd

178、.TPG Corporation had acquired this interest through its acquisition of iiNet in 2015.Tech2 is primarily in the business of providing installation services in the telecommunications and other technology space and in 2020 contributed a small loss to the Groups results.Following the merger,it was deter

179、mined that Tech2 was a non-core part of the Groups business and in February 2021 the Group completed a transaction to dispose of its interest in Tech2.The fair value of Tech2s net assets were therefore disclosed as held for sale as at 31 December 2020.The fair valuing of Tech2s net assets gave rise

180、to a$9 million impairment expense which is included within other operating expenses in the Groups 2020 consolidated income statement.3.Property,plant and equipment(PP&E)PP&E as at 31 December 2020 was$3,258 million,an increase of$1,393 million compared to 31 December 2019,driven by the fact that TPG

181、 Corporations acquisition balance sheet included PP&E fair valued at$1,491 million.Excluding the addition of TPG Corporation assets,the PP&E balance reduced by$98 million in the year,which is explained by net PP&E additions of$557 million,less transfers(to intangible assets)of$125 million and deprec

182、iation expense of$530 million.4 Right-of-use assets and lease liabilities Right-of-use assets and non-current lease liabilities declined by$442 million and$485 million respectively notwithstanding that the 31 December 2020 balances include the addition of TPG Corporation assets and liabilities.The r

183、eason for this unusual movement is that,prior to the merger,the Company recognised in its balance sheet a right-of use asset and corresponding liability in respect of a fibre agreement with TPG Corporation which,subsequent to the merger,has been eliminated on consolidation.5.Spectrum licences The ne

184、t book value of spectrum licences held by the Group as at 31 December 2020 was$2,325 million,an increase of$1,164 million compared to 31 December 2019,driven by the fact that TPG Corporations acquisition balance sheet included spectrum licences fair valued at$1,095 million.Excluding the addition of

185、TPG Corporation spectrum,the Groups spectrum balance increased by$70 million in the year,which is explained by a$257 million addition of 3.6 GHz spectrum acquired through the joint venture between the Company and TPG Corporation,less$187 million of amortisation expense.6.Other intangible assets Excl

186、uding spectrum licences,other intangible assets increased in the year by$8,376 million to$11,144 million.The three main components of this increase,all related to the merger acquisition accounting,are(a)the acquired TPG Corporation customer base fair valued at$1,607 million,(b)the$424 million fair v

187、alue of TPG Corporation brands acquired,and(c)goodwill arising from the merger of$6,155 million.7.Deferred tax assets As at 31 December 2019,the Company had not recognised any deferred tax assets(beyond the set off against deferred tax liabilities)in its balance sheet because,as a loss making entity

188、 with no certainty of generating taxable profits in future years,the Company didnt meet the accounting criteria necessary for recognition of deferred tax assets.Following the merger,the Group is generating(and is expected to continue generating)taxable profits,and a net deferred tax asset of$264 mil

189、lion has been recognised as at 31 December 2020,comprising the following principal components:(a)A deferred tax asset relating to carried forward tax losses,not previously recognised,of$590 million;(b)Deferred tax liabilities acquired through the business combination with TPG Corporation of$557 mill

190、ion;and(c)Other net deferred tax assets of$231 million primarily representing temporary timing differences between book and tax accounting.8.Contributed equity Contributed equity as at 31 December 2020 of$18,399 million is$12,352 million higher than as at 31 December 2019.This increase represents(a)

191、equity issued to the Companys pre-merger shareholders related to their assumption of part of the Companys debt as part of the pre-merger debt restructure($4,475 million),and(b)equity issued to TPG Corporation shareholders in respect of the Companys acquisition of all of the shares in TPG Corporation

192、($7,877 million).Annual Report 202019Operating and Financial Review continued4.3 Consolidated Cash Flow StatementA comparison of the Groups 2020 and 2019 cash flow statements is affected by(a)the fact that 2020 includes a six month and four day contribution from TPG Corporation compared to zero cont

193、ribution from TPG Corporation in 2019;and(b)cash flows in 2020 related to the merger transaction.A condensed version of the cash flow statement is set out below together with some commentary below the table highlighting some key points.NOTE 2020$m2019$mCHANGE$mOperating cash flow11,1881,296(108)Capi

194、tal expenditure2(612)(542)(70)Mobile spectrum payments3(204)(76)(128)Net cash acquired through merger49999Disposal of subsidiary(net of cash disposed)5(379)(379)Cash reclassified within assets held for sale6(7)(7)Transaction costs re merger(37)(17)(20)Net cash flow before financing activities48661(6

195、13)Net drawdown/(repayment)of borrowings186(171)357Lease repayments(130)(112)(18)Net finance costs paid 7(239)(287)48Pre-acquisition dividends paid to TPG Corporation shareholders8(479)(479)Net cash flow(614)91(705)1.Operating cash flow Operating cash flow of$1,188 million was$108 million lower than

196、 in 2019 despite the fact that 2020 included the six month and four day contribution from TPG Corporation.This is principally explained by the timing of material payments to suppliers of mobile handsets that were acquired by the Company in late 2019 but paid in early 2020.This boosted 2019 operating

197、 cash flows by approximately$207 million and correspondingly reduced 2020 cash flow by$207 million,a$414 million swing.This is consistent with the fact that,as shown in the summarised balance sheet above,trade and other payables were lower at 31 December 2020 than at 31 December 2019 by$108 million

198、despite the fact that the TPG Corporation acquisition balance sheet contained trade and other payables of$272 million(i.e.there was an underlying decrease in trade and other payables at 31 December 2020 of$380 million compared to 31 December 2019).2.Capital expenditure(capex)Capex comprises payments

199、 for property,plant and equipment and for intangible assets(excluding spectrum payments).Capex for 2020 of$612 million was$70 million higher than for 2019 due to the six month and four day contribution from TPG Corporation in 2020.The$612 million capex corresponds closely to the total$648 million of

200、 property,plant and equipment and intangible asset additions(excluding spectrum)in the balance sheet in the year and primarily represents investment in the Groups mobile and fixed telecommunications network infrastructure and business support systems.3.Mobile spectrum payments During the year,prior

201、to the merger,the Group made payments totalling$204 million for the acquisition of spectrum licences,comprising(a)a$132 million contribution to the joint venture between the Company and TPG Corporation for its 50%share of the 3.6 GHz spectrum acquired by the joint venture at the ACMAs December 2019

202、auction,and(b)a final$72 million instalment in respect of the 700 MHz spectrum acquired at the ACMAs April 2017 auction.4.Net cash acquired through merger This represents the cash held by TPG Corporation at the merger effective date.5.Disposal of subsidiary(net of cash disposed)As part of the debt r

203、estructuring required to implement the agreed merger debt structure,the Companys pre-merger shareholders assumed$4,475 million of the Companys debt.This was achieved by transferring the Companys financing subsidiary to the pre-merger shareholders which included$4,844 million of debt and associated c

204、ross currency swaps.A cash payment of$379 million was made to the pre-merger shareholders in order to achieve the required level of debt assumption and to repay all associated borrowing costs.206.Cash reclassified within assets held for sale As noted in the balance sheet commentary above,the Groups

205、interest in the Tech2 Group Pty Ltd was reclassified as held for sale as at 31 December 2020.This line item in the cash flow statement reflects the removal of Tech2s cash balance from the Groups consolidated cash balance.7.Net finance costs paid Net finance costs paid decreased in 2020 primarily due

206、 to the Groups reduced debt post-merger,coupled with lower average interest rates in 2020 compared to 2019.This decrease was partially offset by one-off establishment fees paid in respect of the new Merged Group debt facility entered into in July 2020.8.Pre-acquisition dividends paid to TPG Corporat

207、ion shareholders Between the merger accounting effective date of 26 June 2020 and the merger completion date of 13 July 2020,TPG Corporation paid a dividend of$479 million to its pre-merger shareholders to increase its debt to the level that had been agreed that it would bring into the merged Group.

208、4.4 SegmentsPrior to the merger,the Company reported results for a single operating segment.However,prior to the merger,TPG Corporation reported two operating segments,being its Consumer and Corporate Segments.TPG Corporations Consumer Segment comprised residential and small business customers,and i

209、ts Corporate Segment comprised corporate,government and wholesale customers.Following the merger,the merged Group now also recognises a Consumer and Corporate Segment.The Consumer Segment comprises the legacy TPG Corporation Consumer Segment plus the consumer customers of the legacy VHA business,whi

210、le the Corporate Segment comprises the legacy TPG Corporation Corporate Segment plus the enterprise,business and wholesale customers of the legacy VHA business.Merged Group Operating SegmentsConsumer Segment Fixed and mobile services to consumers and small business customers.Corporate Segment Fixed

211、and mobile services to business,enterprise,government and wholesale customers.Results by operating segment are set out below:CONSUMERCORPORATEUNALLOCATEDTOTAL2020$m2019$m2020$m2019$m2020$m2019$m2020$m2019$mRevenueService revenue2,8912,1255882813,4792,406Handset revenue8151,04256658711,107Total reven

212、ue3,7063,1676443464,3503,513Other income11101110Cost of telco services(1,219)(619)(169)(76)(1,388)(695)Cost of handsets sold(799)(1,037)(56)(65)(855)(1,102)Employee benefits expense(258)(208)(68)(24)(2)(328)(232)Other operating expenses(312)(268)(43)(29)(44)(19)(399)(316)EBITDA1,1181,035308152(35)(9

213、)1,3911,178The increase in revenue and EBITDA for both segments reflects the inclusion of TPG Corporation results for the six months and four days of 2020 post the merger effective date of 26 June 2020.The 2020 financial results commentary and investor presentation available on the Companys website

214、at .au/investor-relations set out the segment results for 2020 and 2019 on a pro forma basis(i.e.as if the merger had been effective since 1 January 2019)to assist users of the accounts to gain a better understanding of the underlying performance of the segments during the period.Annual Report 20202

215、1Operating and Financial Review continued4.5 Customer numbersGroup mobile subscribersAs at 31 December 2020,the Group had 5.25 million mobile customers,down from 5.99 million as at 31 December 2019.Postpaid and prepaid mobile customers decreased by 158,000 and 545,000 respectively.A significant prop

216、ortion of these declines is attributable to the effect that COVID has had on the number of international visitors and temporary visa holders in Australia which have historically been an important customer segment for the Group.However,the declines are also reflective of the competitive intensity of

217、the industry which has seen industry postpaid average revenue per user(ARPU)decline over the past year.In that regard,our Groups ARPU decline has been relatively modest but that relative ARPU discipline has come at the cost of subscriber losses in 2020.Group broadband subscribersBeing primarily a mo

218、bile telecommunications business prior to the merger,the Company had only a relatively small number of fixed broadband(NBN)customers,119,000 as at 31 December 2019.TPG Corporation,being a provider of fixed telecommunications services,brought approximately two million fixed broadband customers into t

219、he merged Group,and the Group finished 2020 with 2.17 million fixed broadband customers.4.6 OutlookTPG Telecom heads into 2021 with increased confidence amid continuing uncertainty due to COVID-19,as well as ongoing NBN headwinds and the introduction of the Regional Broadband Scheme(RBS)levy.While t

220、he merged company is in a stronger position to respond to aggressive competition in the market and mitigate headwinds,we expect financial performance will continue to be impacted by global travel restrictions,NBN margin erosion and the new RBS levy.In 2021,we expect an incremental negative impact of

221、 approximately$20 million from the impact of COVID on international roaming and international visitor revenue.We also expect total NBN headwinds of approximately$60 million and an$11 million negative impact from the RBS levy for the year.We plan to offset these headwinds by bringing more customers o

222、nto fixed wireless and other on-net services,continuing to improve performance in mobile,growing Enterprise and Government,and realising around$70 million in merger synergy cost savings.We are encouraged by improved momentum in mobile in the final quarter 2020 in response to Vodafones Infinite Data

223、plans,a strong iPhone 12 launch and Vodafones 5G TV and digital campaign as the naming rights partner of the Summer of Cricket.Building on this,we will continue to drive innovation and improve co-ordination across our brands,maintain our competitive market positioning,and deliver more compelling mul

224、ti-service incentives and simpler customer journeys to grow our converged households.To help offset the impact of fewer international visitors in the Australian market,we are upweighting our retention capabilities and strategies towards existing customers,and offering new customers great value propo

225、sitions across our family of brands.With many customers continuing to spend more time at home as a result of COVID and greater flexibility in working arrangements,we also expect the trend of increased customer take-up of high speed NBN plans will continue.Despite the ongoing challenges,we are cautio

226、usly optimistic about the year ahead and in a stronger underlying position as we continue to focus on delivering for customers and shareholders now and in the future.22Directors ReportThe Directors present their report,together with the Financial Report of TPG Telecom Limited(formerly named Vodafone

227、 Hutchison Australia Limited)for the financial year ended 31 December 2020 in compliance with the provisions of the Corporations Act 2001.Board of DirectorsDetails of Directors of the Company who held office at any time during or since the end of the previous year are set out below:CurrentThe follow

228、ing are the Directors who held office at 31 December 2020.David Teoh ChairmanDavid Teoh is the founder of the TPG Corporation group of companies,which was merged with VHA during 2020.He served as Executive Chairman and Chief Executive Officer(CEO)of TPG Corporation Limited(ASX:TPM)from 2008 until 13

229、 July 2020.Mr Teoh is also a Director of Tuas Limited.Mr Teohs appointment as Chairman of the merged Company commenced on 13 July 2020.Special Responsibilities:Chairman of the Board and Member of the Governance Remuneration and Nomination CommitteeIaki Berroeta Managing Director and Chief Executive

230、OfficerIaki Berroeta joined VHA as Chief Executive Officer in 2014.A 24-year veteran of the telecommunications industry,Mr Berroeta previously served as CEO of both Vodafone Romania and Vodafone Malta,and held various operational roles at Vodafone Spain,Global Star USA,AirTouch International Inc.(US

231、A)and Airtile Moviles(Spain).Mr Berroeta holds a Master of Science in Telecommunications from Bilbao Superior School of Telecommunications Engineering,Spain,and a Master of Business Administration from Henley Management College,UK.Mr Berroetas appointment to the Board commenced on 29 June 2020.Speci

232、al Responsibilities:Managing Director and Chief Executive OfficerFok Kin Ning,Canning Non-Executive DirectorFok Kin Ning,Canning has been a Director of TPG Telecom since 2001.He has been a Director of Hutchison Telecommunications(Australia)Limited since 1999.Mr Fok has been an Executive Director and

233、 Group Co-Managing Director of CK Hutchison Holdings Limited since 2015.He has been a Director of Cheung Kong(Holdings)Limited and Hutchison Whampoa Limited since 1985 and 1984 respectively,both of which became wholly-owned subsidiaries of CK Hutchison Holdings Limited in 2015.He has been Chairman a

234、nd a Non-Executive Director of Hutchison Telecommunications Hong Kong Holdings Limited since 2009 and of Hutchison Port Holdings Management Pte.Limited as the Trustee-Manager of Hutchison Port Holdings Trust since 2011,an Executive Director since 1985 and Chairman since 2005 of Power Assets Holdings

235、 Limited,and Chairman and an Executive Director of HK Electric Investments Manager Limited as the Trustee-Manager of HK Electric Investments and of HK Electric Investments Limited since 2013.He has also been an Executive Director and Deputy Chairman of CK Infrastructure Holdings Limited since 1997 a

236、nd a Director of Cenovus Energy Inc.since January 2021.He was a Co-Chairman from 2000 to December 2020 and has been a Director since 2000 of Husky Energy Inc.(delisted on 5 January 2021 following its combination with Cenovus Energy Inc.).He holds a Bachelor of Arts degree and a Diploma in Financial

237、Management,and is a Fellow of Chartered Accountants Australia and New Zealand.Special Responsibilities:Mr Fok served as a Member of the Governance Remuneration and Nomination Committee from 13 July 2020 until 19 August 2020.Annual Report 202023Directors Report continuedPierre Klotz Non-Executive Dir

238、ectorPierre Klotz is the Vodafone Group plc(Vodafone)Group Corporate Finance Director.He joined Vodafone in July 2011 and is responsible for the Vodafone Groups Mergers&Acquisitions and Treasury related activities.Previously,Mr Klotz held a number of senior executive positions at UBS Investment Bank

239、 and at HSBC Investment Bank.He holds a Master of Science in Business Administration from Gothenburg School of Economics and Commercial Law.Mr Klotzs appointment to the Board commenced on 12 May 2020.Special Responsibilities:Member of the Audit and Risk CommitteeDiego Massidda Non-Executive Director

240、Diego Massidda is CEO of Vodafone Partner Markets,and a Director of Vodafone Sales&Services Limited.Mr Massidda joined Vodafone in 2007 as Group Director of Broadband and Online,and subsequently he was Group Director of Video and Connected Home.From 2011 to 2016,he served as CEO of Vodafone Hungary.

241、Prior to joining Vodafone,Diego was CEO of the ISP Tiscali in South Africa and France,and of Telecom Italia wireline operations in France.He also spent 6 years with McKinsey&Company earlier in his career.He holds a degree in Hydraulic Civil Engineering from the Universit di Cagliari,Italy,and a Mast

242、er in Business Administration from INSEAD,France.Mr Massiddas appointment to the Board commenced on 12 May 2020.Special Responsibilities:Member of the Governance Remuneration and Nomination CommitteeRobert Millner Non-Executive DirectorRobert Millner served as a Non-Executive Director of TPG Corpora

243、tion from 2000 until the merger with the Company in 2020,and was the Chairman of TPG Corporation from 2000 until 2008.Mr Millner has over 30 years experience as a Company Director and is currently a Director of the following listed companies:Apex Healthcare Berhad,Brickworks Limited,BKI Investment C

244、ompany Limited,Milton Corporation Limited,New Hope Corporation Limited and Washington H.Soul Pattinson and Company Limited.Mr Millner was also an interim Director at Hunter Hall Global Value Limited from April 2017 to June 2017 and a Director of Australian Pharmaceutical Industries Limited from May

245、2000 to July 2020.Mr Millner is also a Director of Tuas Limited.Mr Millners appointment to the Board commenced on 13 July 2020.Dr Helen Nugent AO Non-Executive DirectorHelen Nugent is the Chairman of Ausgrid and the National Disability Insurance Agency,and a Non-Executive Director of IAG.She has bee

246、n a Company Director for over 20 years,and has over 40 years experience in the financial services sector.This includes having been Chairman of Veda Group,Funds SA,and Swiss Re(Australia),a Non-Executive Director of Macquarie Group,Director of Strategy at Westpac Banking Corporation,and a Partner at

247、McKinsey&Company.She has also been Chairman of Australian Rail Track Corporation and a Non-Executive Director of Origin Energy.Dr Nugent has given back to the community in education and the arts,having been Chancellor of Bond University;President of Cranbrook School;Chairman of the National Opera Re

248、view;Chairman of the Major Performing Arts Inquiry;and Deputy Chairman of Opera Australia.She is currently Chairman of the National Portrait Gallery of Australia.Dr Nugent is an Officer of the Order of Australia(AO)and received a Centenary Medal as well as an Honorary Doctorate in Business from the

249、University of Queensland and an Honorary Doctorate from Bond University.She holds a BA(Honours)and Doctorate of Philosophy from the University of Queensland and a Master of Business Administration with Distinction from the Harvard Business School.Dr Nugents appointment to the Board commenced on 13 J

250、uly 2020.Special Responsibilities:Chairman of the Governance Remuneration and Nomination Committee and member of the Audit and Risk Committee24Frank Sixt Non-Executive DirectorFrank John Sixt has been a Director of TPG Telecom Limited since 2001.He has been a Director and an Alternate Director to a

251、Director of Hutchison Telecommunications(Australia)Limited since 1998 and 2008 respectively.Mr Sixt has been an Executive Director,Group Finance Director and Deputy Managing Director of CK Hutchison Holdings Limited since 2015.Since 1991,Mr Sixt has been a Director of Cheung Kong(Holdings)Limited an

252、d Hutchison Whampoa Limited,both of which became wholly-owned subsidiaries of CK Hutchison Holdings Limited in 2015.He has been Chairman and a Non-Executive Director of TOM Group Limited since 1999 and an Executive Director of CK Infrastructure Holdings Limited since 1996.He has also been an Alterna

253、te Director to a Director of HK Electric Investments Manager Limited as the Trustee-Manager of HK Electric Investments and of HK Electric Investments Limited since 2015.He has been a Director of Cenovus Energy Inc.since January 2021.Mr Sixt has also been a Director of Husky Energy Inc.(delisted on 5

254、 January 2021 following its combination with Cenovus Energy Inc.)since 2000.He has almost four decades of legal,global finance and risk management experience,and possesses deep expertise in overseeing financial reporting system,risk management and internal control systems as well as sustainability i

255、ssues and related risks.Mr Sixt holds a Masters degree in Arts and a Bachelors degree in Civil Law,and is a Member of the Bar and of the Law Society of the Provinces of Qubec and Ontario,Canada.Special Responsibilities:Member of the Governance Remuneration and Nomination Committee from 20 August 202

256、0.Member of the Audit and Risk Committee until 12 July 2020.Arlene Tansey Non-Executive DirectorArlene Tansey is currently a Non-Executive Director of Aristocrat Leisure Limited,WiseTech Global Limited,Infrastructure NSW and Lend Lease Real Estate Investments Limited.She is also a Board Member of th

257、e Australian National Maritime Museum Foundation and Council.She is a former Non-Executive Director of Adelaide Brighton Limited and Healius Limited.Ms Tansey is a Member of Chief Executive Women and the International Womens Forum and a Fellow of the Australian Institute of Company Directors.She has

258、 a Juris Doctor(Law)from the University of Southern California and an MBA in finance and international business from New York University.Ms Tansey has worked in commercial and investment banking in Australia and the US.Her expertise covers a variety of disciplines including corporate advisory,M&A,co

259、mmercial banking,capital management and business turnaround.Ms Tanseys appointment to the Board commenced on 13 July 2020.Special Responsibilities:Chairman of the Audit and Risk Committee and Member of the Governance Remuneration and Nomination CommitteeShane Teoh Non-Executive DirectorMr Teoh has s

260、erved as a Non-Executive Director of TPG Corporation since 2012.He is Managing Director of Total Forms Pty Ltd,a leading developer of accounting and taxation software in Australia.Mr Teoh holds a Bachelor of Commerce and a Bachelor of Laws from the University of New South Wales.Mr Teohs appointment

261、to the Board commenced on 13 July 2020.Annual Report 202025Directors Report continuedFormer DirectorsThe following persons were Directors of the Company until the dates specified below,noting that 26 June 2020 and 13 July 2020 were respectively the effective date and the implementation date of the m

262、erger between the Company and TPG Corporation Limited.NAMEROLE FINAL DATE AS DIRECTORFrancesco BiancoNon-Executive Director28 June 2020Amanda HarknessNon-Executive Director28 June 2020Dominic Lai Non-Executive Director28 June 2020Miguel MarinNon-Executive Director28 June 2020Barry Roberts-ThomsonNon

263、-Executive Director12 July 2020Ronald SpithillNon-Executive Director28 June 2020Vivek BadrinathNon-Executive Director11 May 2020Thomas ReistenNon-Executive Director and Member of Audit and Risk Committee11 May 2020Kwan CheungAlternate Director for Mr Fok28 June 2020Cliff WooAlternate Director for Mr

264、 Lai28 June 2020Company SecretaryMr Tony Moffatt was appointed Company Secretary of the Company on 17 August 2020.Tony holds a Bachelor of Arts and Laws from the University of New South Wales and is a Member of Law Society of New South Wales.Mr Trent Czinner was Company Secretary of the Company for

265、the period of the financial year prior to 17 August 2020.Directors shareholdingsThe relevant interest of each director in the shares and options over such instruments issued by the companies within the Group and other related bodies corporate,as notified by the Directors to the Australian Stock Exch

266、ange in accordance with section 205G of the Corporations Act 2001,at the date of this report is disclosed in the Remuneration Report.Directors meetingsPrior to the implementation of the merger between the Company and TPG Corporation Limited(ASX:TPM),there were three Board meetings and two meetings o

267、f the Audit and Risk Committee.Since the implementation date,there were six meetings of the Board,four meetings of the Audit and Risk Committee and five meetings of the Governance Remuneration and Nomination Committee.26The number of Board and Committee meetings held during the financial year and th

268、e number of meetings attended by each of the Directors as a Member of the Board or relevant Committee were as follows:BOARD MEETINGSAUDIT AND RISK COMMITTEE MEETINGSGOVERNANCE REMUNERATION AND NOMINATIONCOMMITTEE MEETINGSDIRECTORABABABD Teoh6655I Berroeta66C Fok 6913P Klotz6744D Massidda7755R Millne

269、r66H Nugent664455F Sixt992222A Tansey664455S Teoh66F Bianco03A Harkness33D Lai33M Marin33B Roberts-Thomson33R Spithill33V Badrinath12T Reisten1222K Cheung(alternate)23C Woo(alternate)NOTE:A:Number of meetings attended by the Director/Alternate Director.B:Number of meetings held to which the Director

270、 was eligible to attend as a Member(or Alternate for a Director where the Director was not able to attend).Principal activities The principal activity of the Group is the provision of telecommunications services.Significant changes in the state of affairsThe following changes in the state of affairs

271、 of the Company occurred during the year:Merger with TPG CorporationThe merger of the Company and TPG Corporation became effective for accounting purposes on 26 June 2020 and was legally completed on 13 July 2020.The merger was implemented through a Scheme of Arrangement under which the Company acqu

272、ired all of the shares in TPG Corporation in return for issuing shares in the Company to TPG Corporation shareholders.The Scheme was approved by the Supreme Court of New South Wales on 26 June 2020 and became effective for accounting purposes on that day,being the deemed date of effective control.Th

273、e Scheme was implemented on 13 July 2020 when the agreed number of shares in the Company were issued to TPG Corporation shareholders.TPG Corporation Limited changed its name from TPG Telecom Limited and was suspended from trading on the ASX on 29 June 2020,and the Company changed its name to TPG Tel

274、ecom Limited on 29 June 2020 and listed on the ASX on 30 June 2020.Annual Report 202027Directors Report continuedCOVID-19Since the reporting date,containment policies by the Australian Government and governments around the world remain in force to prevent the spread of COVID-19.The level of restrict

275、ions and measures to limit movement into and out of Australia,and also domestically,continue to evolve.While there is prevailing uncertainty over the extent and duration of the COVID-19 pandemic,it is reasonably likely that the pandemic will continue to have an impact on the Groups operations and re

276、sults in future periods.Review of operationsThe Operating and Financial Review(OFR)provides details relating to the Companys operations and results for the financial year.DividendsThe Directors have declared a fully franked final 2020 dividend of 7.5 cents per share.The dividend has a record date of

277、 17 March 2021 and will be paid on 14 April 2021.For information regarding the special dividends declared by TPG Corporation Limited prior to the merger,refer to Note 12 in the notes to the consolidated financial statements.There were no other ordinary dividends paid or declared by the Company durin

278、g or since the current or previous corresponding periods.Likely developments The OFR provides details relating to the Companys business strategies and prospects for future financial years.This information in the OFR is provided to assist with informed decision making of shareholders.Events subsequen

279、t to reporting date Other than the matters described elsewhere,there has been no other matter or circumstance that has arisen after the reporting date that has significantly affected,or may significantly affect:(i)the operations of the Company and of the Group in future financial years,or(ii)the res

280、ults of those operations in future financial years,or(iii)the state of affairs of the Company and of the Group in future financial years.Corporate GovernanceThe Companys Corporate Governance Statement details its compliance with the Corporate Governance Principles and Recommendations(4th edition)pub

281、lished by the ASX Corporate Governance Council.Refer to .au/investor-relations for further details.Environmental and other sustainability risksTPG Telecom seeks to comply with all laws and regulations relevant to its operations.This includes obligations under the National Greenhouse and Energy Repor

282、ting Act 2007,which requires the Company to report its Australian greenhouse gas emissions,energy consumption and energy production on an annual basis to the Clean Energy Regulator.During the financial year,there have been no claims against TPG Telecom in respect of a breach of environmental regulat

283、ion.For more information on environmental performance,including environmental regulation,see the TPG Telecom Sustainability Report 2020,which will be available online at https:/.au/investor-relations.Proceedings on behalf of the CompanyNo person has applied to the Court under section 237 of the Corp

284、orations Act 2001 for leave to bring proceedings on behalf of the Company,or to intervene in any proceedings to which the Company is a party,for the purpose of taking responsibility on behalf of the Company for all or part of those proceedings.No proceedings have been brought or intervened in on beh

285、alf of the Company with leave of the Court under section 237 of the Corporations Act 2001.28Employees and OHSTPG Telecom manages varied levels of inherent risk within its health,safety and wellbeing(HSW)management systems.These risks are both direct and indirect in nature and are not limited to but

286、include inappropriate behaviour to our retail staff,structural risk and 5G deployment,employee wellbeing and associated risks within the Companys facilities,products and services.The Company adopts a risk based approach to how it actively monitors and manages its obligations and is aware that any fa

287、ilure to manage these risks could cause harm to its people,partners or members of the public.Over the past twelve months the Company has faced new challenges in supporting its employees and customers through the COVID-19 pandemic,the ongoing consolidation of the Companys safety management systems wi

288、th those of TPG Corporation and in the support it provided to communities through the 2019/2020 summer bushfire season.The Company will continue to evolve its approach to HSW in 2021 as it further embeds its businesses with a consistent approach to systems,monitoring and compliance.Indemnification a

289、nd insurance of officers and directorsIndemnificationThe Company has agreed to indemnify all directors of the Company,on a full indemnity basis and to the full extent permitted by law,against all losses or liabilities(including all reasonable legal costs,charges and expenses)incurred by the director

290、 as a director or officer of the Company or a related body corporate of the Company.Insurance policies The Group maintains directors and officers liability insurance for the benefit of persons defined in the policy which include current and former directors and officers,including senior executives o

291、f the Company and directors,senior executives and secretaries of its controlled entities to the extent permitted by the Corporations Act 2001.The terms of the insurance contract prohibit disclosure of the premiums payable and other terms of the policies.Auditor indemnityThe Company has agreed to rei

292、mburse its auditors,PricewaterhouseCoopers,for any liability(including reasonable legal costs)incurred by PricewaterhouseCoopers with connection with any claim by a third party arising from the Companys breach of the audit agreement between the Company and PricewaterhouseCoopers.The reimbursement ob

293、ligation is subject to restrictions contained in the Corporations Act 2001(Cth).No payment has been made to indemnify the auditors during or since the end of the financial year.Non-audit servicesDuring the financial year,PricewaterhouseCoopers(PwC),the Companys auditor,has been engaged to performed

294、certain other non-audit services in addition to their statutory duties.Details of the amounts paid to PwC for audit and non-audit services provided during the year are set out in Note 29 of the financial statements.The Board of Directors,in accordance with advice provided by the Audit and Risk Commi

295、ttee,is satisfied that the provision of the non-audit services is compatible with the general standard of independence for auditors imposed by the Corporations Act 2001.The Directors are satisfied that the provision of non-audit services by the auditor did not compromise the auditor independence req

296、uirements of the Corporations Act 2001 for the following reasons:lall non-audit services have been reviewed by the Audit and Risk Committee to ensure they do not impact the impartiality and objectivity of the auditor,and lnone of the services undermine the general principles relating to auditor inde

297、pendence as set out in APES 110 Code of Ethics for Professional Accountants.Auditors independence declarationA copy of the auditors independence declaration,as required under section 307C of the Corporations Act 2001,is set out on page 60.Rounding of amountsThe Company is of a kind referred to in th

298、e ASIC Corporations(Rounding in Financial/Directors Reports)Instrument 2016/191 dated 24 March 2016 and,in accordance with that instrument,all financial information presented in the consolidated financial statements and Directors Report has been rounded to the nearest million dollars,unless otherwis

299、e indicated.Annual Report 202029Executive SummaryThis,the first Remuneration Report of TPG Telecom Limited(TPG Telecom,the Company),reflects both the timing and nature of the merger between Vodafone Hutchison Australia(VHA)and TPG Corporation,as well as the progressive transition of the Companys Exe

300、cutive remuneration to a single approach in a publicly listed environment.More specifically,this Remuneration Report reflects the following observations:lOver the past year,TPG Telecoms remuneration approach supported delivery and initial implementation of the merger in a way that was consistent wit

301、h delivering value for shareholders.lGoing forward,changes to the current remuneration system for Executives will support short and longer-term alignment between employees and shareholders in a publicly listed environment.lNon-Executive Directors have exercised effective governance and are remunerat

302、ed in ways that support the retention of their independence and their commitment to shareholder performance.The Past YearFor TPG Telecom,2020 has been a year in two parts:pre and post the merger of 26 June 2020.Reflecting the structure of the merger,the consequence was that until the merger date,VHA

303、 rather than TPG Corporation was the reporting entity.This determined the composition of Executive Key Management Personnel(KMP),as did an organisational structure change and new fixed remuneration arrangements that took effect on 17 August 2020.The result is that three former senior VHA executives,

304、including the ongoing CEO Iaki Berroeta,are classified as KMP for the full year.Six former VHA executives ceased to be KMP during the course of the year;while three other senior executives became KMP at or after the organisation restructure on 17 August 2020.These changes affected fixed remuneration

305、,with new arrangements put in place on 17 August 2020,other than for the CEO,whose new arrangement took effect from 1 July 2020.The new organisation structure and fixed remuneration arrangements supported the mergers implementation,with fixed remuneration benchmarked to the median of ASX 11-50 peer

306、organisations.Thus,disclosed KMP Executive fixed remuneration for 2020 reflects both the period for which executives were KMP,and the fixed remuneration arrangements that came into effect on 17 August 2020.Short term incentive(STI)arrangements operated in a different way.This was because the VHA STI

307、 Plan was already in operation from the beginning of 2020,before the Court handed down its decision in relation to the merger and before it was known that the merger would proceed.VHAs Scheme,paid in cash following the end of the financial year,continued to operate.It was based on performance in rel

308、ation to Service Revenue(40%);Earnings before net financing costs,tax,depreciation and amortisation(EBITDA)(40%);and Operating Free Cash Flow(FCF)(20%),with a multiplier for individual performance from 0%to 150%affecting individual outcomes.Post-merger,performance metrics needed to be adjusted for e

309、ach of Service Revenue,EBITDA and Operating FCF.In addition,the new TPG Telecom Board approved the same Scheme operating for former senior TPG Corporation Executives,including incoming Executive KMP,so that incentives for all Executives were aligned for 2H 2020 during the early stages of the merger.

310、The STI outcomes for Executives are consistent with the performance of the company over the period.The assessment of performance comprised three elements.The first element related to the full year company performance metrics and targets previously approved by the VHA Board.These targets were assesse

311、d up to 30 June 2020 and the outcomes were weighted at 50%for 1H 2020.The second element related to revised financial forecasts approved by the TPG Telecom Board for the balance of the year.Performance relative to these forecasts was assessed on a quantitative and qualitative basis and the outcome w

312、as weighted at 50%for 2H 2020.The weighted performance outcomes for 1H and 2H were applied to the STI targets of the former VHA KMP.For former TPG Corporation KMP,2H performance was applied to their STI targets.The final performance element was the assessment of individual performance which was then

313、 applied to the business modified STI outcomes to determine the final STI payment.In addition,the 2020 VHA long term incentive(LTI)Plan continued to operate for former VHA executives who had received letters of offer for the Scheme in early 2020.This legacy Scheme,which operates over a three year pe

314、riod,has two equally weighted tranches:one tranche,tested annually,depends on meeting Operating FCF targets;the other tranche is service based,requiring the Executive to still be employed by the company at the payment date in February after the end of the third year.Prior to the merger,the then VHA

315、Remuneration Committee also approved the acceleration of the 2018 LTI Plan and a portion of the 2019 LTI Plan.This is disclosed in remuneration outcomes for former VHA Executive KMP.Remuneration Report30Going ForwardGoing forward,changes to the remuneration approach have been approved to create alig

316、nment between employees and shareholders in a way that is consistent with expectations for an ASX listed company.That approach links TPG Telecoms purpose,its strategic priorities,its remuneration principles,and its remuneration structure.Fixed remuneration consistent with the approach adopted for th

317、e latter part of 2020is set by reference to the median of the external market for comparable roles,taking into consideration the size and complexity of the role,skills and experience of employees and internal market relativities.The external market data consists of median benchmarks for comparable r

318、oles in ASX 11-50 peer organisations.Fixed remuneration consists of base salary plus superannuation.No fixed KMP remuneration increases are proposed for 2021.From 1 January 2021 a new STI approach,aligned to TPG Telecoms strategic priorities,has also come into operation.Subject to Group financial an

319、d risk gateways,and an individual behavioural gateway,the CEO will be eligible to earn a STI of up to 100%of base salary at target,and 150%at maximum;while the equivalent for other Executive KMP will be 65%at target and 100%at maximum of base salary.Performance outcomes will be assessed against a ba

320、lanced scorecard incorporating financial and non-financial measures,as well as individual performance achievement aligned to strategic priorities for the Executives specific role.STI will be paid in a mix of cash and Deferred Share Rights(DSRs),with the percent deferred increasing from 40%to 50%over

321、 the next three years,with the progressive increase reflecting the fact that currently no deferred component exists for any Executive.DSRs will vest in two equal tranches after one and two years,subject to continuing employment.Malus conditions will apply,and Executives will be unable to enter into

322、any arrangement that limits their economic exposure to unvested DSRs.A new LTI Plan also came into operation in 2021.Under this Scheme,the CEO will be eligible for an allocation of performance share rights valued at 100%of base remuneration at target,and 150%at maximum,with the equivalent for other

323、Executive KMP being 65%at target and 100%at maximum.Performance will be tested over a three year period against two equally weighted performance hurdles:namely,Operating FCF,and relative total shareholder return(TSR)against a nominated peer group of ASX 100 companies that excludes energy,financial,m

324、aterials and real estate sectors.The number of performance rights to be issued(reflecting the value allocated)will be determined by the face value of the volume weighted average share price(VWAP)of a TPG Telecom ordinary share over the five days following announcement of the annual results and befor

325、e the grant date.Malus conditions will apply and no arrangements can be entered into to limit the economic risk of the performance rights.Performance rights will generally be forfeited if the Executive leaves,except in special circumstances including redundancy,retirement,death or total and permanen

326、t disability.Total remuneration for Executive KMP has been set so that target total remuneration is at or below the median of the ASX 11-50 peer group,while maximum remuneration has been set to be close to target total remuneration at the 75th percentile of the ASX 11-50 peer group for a comparable

327、role.Executive KMP will also need to hold the value equivalent of one years base salary in shares or share equivalents,which can be accumulated over five years from the date of the merger or appointment,whichever is later.Non-Executive Directors Governance and Remuneration The timing and nature of t

328、he merger has also determined the Directors of the Board of Directors who are designated as KMP.As a consequence,two Non-Executive Directors held those roles for the entire year;another eight until various dates prior to the merger;two assumed office in May just prior to the merger;with another five

329、 taking office on 13 July 2020 at the time of merger implementation.Put another way,post merger,the Board consists of nine Non-Executive Directors,with two being Independent Non-Executive Directors,with the Board being chaired by Mr David Teoh,the previous CEO and Executive Chairman of TPG Corporati

330、on.Both pre and post-merger,the governance responsibilities of the Non-Executive Directors have been defined and are exercised in a way that preserves the independence from management.Management of conflicts of interest are rigorously enforced.Annual Report 202031Remuneration Report continuedNon-Exe

331、cutive Directors do not receive fees that are contingent on performance;shares in return for their service;retirement benefits,other than statutory superannuation;or any termination benefits.The exception was a payment made to Mr David Teoh as a final termination payment related to 12 weeks severanc

332、e pay($371,538)as CEO and Executive Chairman of TPG Corporation,prior to the merger.This payment was approved by the post-merger Board of TPG Telecom,based on legal advice,with Mr Teoh not receiving any papers and absenting himself from the meeting.As disclosed in the Scheme booklet,the Chairman is

333、eligible to receive an annual fee for his service of$450,000(plus a fee of$20,000 for being a member of the Governance,Remuneration and Nomination Committee(GRNC).The Chairman of the Audit and Risk Committee and the GRNC,both of whom are independent directors,respectively receive fees of$50,000 and$40,000 a year for those roles;while Non-Executive Directors(other than the Chairman)are eligible to