September 18, 2017 / 11:27 PM / 10 months ago

CORRECTED-UPDATE 1-Australia's TPG Telecom slashes annual dividend, flags FY18 profit fall

(Corrects year-end date in 2nd graf)

Sept 19 (Reuters) - Australian telecoms company TPG Telecom Ltd cut its final dividend and warned pre-tax profit would fall in the current fiscal year due to rising competition as the government takes over as the country’s main broadband wholesaler.

TPG on Tuesday posted a 9 percent rise in net profit in the year to July 31, 2017. The A$413.8 million ($329.30 million) profit beat analyst forecasts of A$377.9 million, according to Thomson Reuters I/B/E/S.

But the company said fierce competition sparked by a new government-owned broadband network would offset earnings growth in the current fiscal year, and it now expects pre-tax profit of between A$800 and A$815 million in the year to June 30, 2018, down from the A$835 million it reported in fiscal 2017.

It cut its final dividend to 2 Australian cents per share, down from 7.5 cents a year earlier and its lowest dividend since 2011.

“The board has concluded that it is in the best interests of shareholders that a greater proportion of profits be retained in the company to be deployed in the mobile rollouts,” Chairman Executive Chairman David Teoh said in a statement.

“The board is confident that this course will prove in the long run to be the right decision for shareholders,” Teoh added.

The new government-owned National Broadband Network (NBN) will take over from No. 1 telco Telstra Corp Ltd as the nation’s primary telecommunications wholesaler by about 2021, when the fiber-optic wire replaces Telstra’s copper system.

But telecoms providers have found it harder than expected to turn a profit using the new infrastructure because of aggressive discounting sparked by the rollout.

TPG’s dividend cut follows similar moves from rivals Vocus Group Ltd and Telstra itself. Vocus did not declare a final dividend for fiscal 2017 and said it did not expect to pay dividends in fiscal 2018, while Telstra said it would cut its dividend by 30 percent this financial year.

$1 = 1.2566 Australian dollars Reporting by Hanna Paul and Christina Martin in Bengaluru; Editing by Byron Kaye and Stephen Coates

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