The TPG Telecom Ltd (ASX: TPG) share price could come under pressure today after news that David Teoh is resigning, it’s down more than 6%.
Why is David Teoh leaving?
Mr Teoh has been instrumental in building TPG into the business that it is today. TPG utilised a competitive approach for winning customers and disrupting the market.
It was announced today that David Teoh has resigned both as a director and chairman of the board, effective 25 March 2021. Canning Fok has been appointed as the new chairman. Shane Teoh has also resigned.
The board has appointed Jack Teoh and Antony Moffatt (who resigned from the company secretary role) to fill the vacancies.
Mr Teoh acknowledged that many shareholders have been on the investment journey with him for a very long time, he said he has been humbled by the support and belief in the vision for the company.
He said that TPG now has a remarkable suite of assets and that consumers in Australia have greatly benefited from TPG’s competitive business approach and that they’ll continue to do so.
Mr Teoh indicated that TPG and Vodafone Australia have come together better and faster than expected, that it has performed well and has clear strategic priorities to drive growth and long term shareholder value.
Regarding the reason for departure, he wrote in his letter to investors: “As such, now is the right time for me to step aside and pursue other interests.”
What now for TPG and Mr Teoh’s shares?
TPG said that Mr Teoh will remain one of the company’s major shareholders, which is a relief. If he were selling shares, that would be a worrying sign that he didn’t believe in the future of the business.
TPG CEO and Managing Director Iñaki Berroeta said that the integration is progressing well after last year’s merger. He said:
“We are already making a significant impact in the market, delivering for our customers and shareholders, and making strong progress on our strategic priorities.
“Our focus is on driving growth through convergence, bringing customers onto our own infrastructure and developing our enterprise unit, enabled by our network evolution to 5G and digital investment, and supported by our synergy and integration program.”
Summary thoughts
TPG has strongly benefited from Mr Teoh being a leader of the business – it won’t be the same without him. But the company is a different beast now, after the merger with Vodafone. Time will tell how a merger between two businesses with different cultures goes. It could truly challenge the other big telco players like Telstra Corporation Ltd (ASX: TLS).
I’m not sure how much long term profit growth TPG can generate, so I’m not looking to buy shares at the moment.
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