City-centric TPG Telecom is losing market share as the national broadband network rollout accelerates, according to investment bank UBS.
The telco may have shed more than one per cent of market share in the year to December 2016, thanks to the regional focus of the NBN rollout, UBS analyst Tom Beadle said.
Data collated by the competition watchdog suggests TPG, with a metropolitan-skewed subscriber base of 1.9 million fixed-line broadband subscribers, may have lost even more market share in the June half - largely due to higher broadband penetration in regional areas.
Consequently, UBS has downgraded the company's FY18 earnings forecast and valuation from $A6.00 to $A5.75 per share on Monday.
Market share gains have almost been a given for TPG, Mr Beadle says, but the acceleration of the NBN rollout will result in lower consumer margins due to higher input costs, higher one-off costs to connect customers to the NBN, and further pressure on iiNet voice revenues.
TPG, which acquired iiNet in 2015, will announce its FY17 result next Tuesday.
On Friday, federal Communications Minister Mitch Fifield welcomed a Senate committee recommendation to pass the Telecommunications (Regional Broadband Scheme) Charge Bill 2017, proposing a $A7 monthly charge to retail providers' fixed-line broadband customers to help subsidise the NBN's regional customers,
TPG previously has argued the subsidy is anti-competitive and could damage smaller carriers, like iiNet.
At 1335 AEST, shares in TPG were down seven cents, or 1.3 per cent, at $5.25.
