Shares in cut-price telco TPG dived 20 per cent on Tuesday as investors fretted that future profit margins would be squeezed by NBN costs.

Major shareholder and chief executive David Teoh has lost hundreds of millions of dollars on paper. The value of Mr Teoh's 34.4 per cent stake has dropped by about $600 million in a few hours. Washington H Soul Pattinson [WHSP], which owns 25 per cent, has seen the value of its shares drop from $2.5 billion to $2 billion.

The market has had the four-day Easter break to digest Teoh's plan so it is hard to call the market losses a knee-jerk reaction. Credit:Daniel Munoz

After reporting underlying earnings of $775 million, TPG management said it expected to earn up to $830 million in 2016-17. But its shares fell 19 per cent to $9.58, its lowest price since January.

A major problem for future earnings was the higher cost of accessing and servicing customers on the NBN, according to New Street Research telco analyst Ian Martin.