TPG Telecom Boosts Mobile Growth, Plans $3B Capital Return Amid Strong Cash Flow
TPG Telecom reported solid half-year results with 2.2% revenue growth driven by mobile subscribers and a 35% surge in operating free cash flow. The company announced a $3 billion capital reduction and a maintained dividend policy, signaling confidence despite ongoing network expansion costs.
- Service revenue up 2.2%, led by mobile subscriber growth
- EBITDA rises 0.9% despite regional network expansion costs
- Operating free cash flow increases 35% on lower capex and working capital improvements
- $3 billion pro rata capital reduction proposed alongside $1.7 billion debt repayment
- Interim dividend of 9 cents per share declared; FY25 dividend target maintained at 18 cents
Strong Half-Year Performance Amid Strategic Network Expansion
TPG Telecom Limited has delivered a robust financial performance for the half year ended 30 June 2025, with service revenue climbing 2.2%, primarily fueled by growth in mobile subscribers. Despite incurring initial costs related to its ambitious regional network expansion, the company managed to increase EBITDA by 0.9%, underscoring effective cost management and operational resilience.
The company’s mobile segment added 100,000 net subscribers, driven by gains in both metropolitan and regional areas where TPG historically held lower market share. This subscriber momentum was supported by competitive postpaid offerings and digital-first brands such as felix, which continue to attract customers with attractive pricing and subscription models.
Cash Flow Strength and Capital Management Initiatives
Operating free cash flow surged 35%, benefiting from lower capital expenditure and improved working capital dynamics. This cash flow strength has enabled TPG to declare an interim dividend of 9 cents per share, maintaining its FY25 dividend target of 18 cents despite earnings pressure from the Vocus transaction integration.
In a significant capital management move, TPG announced a pro rata cash distribution of up to $3 billion, subject to shareholder approval. Complementing this, the company completed a $1.7 billion debt repayment in August 2025 and plans further reductions using proceeds from a reinvestment plan aimed at increasing minority shareholder ownership and maintaining its ASX index position.
Outlook – Cost Discipline and Network Rollout Progress
Looking ahead, TPG expects continued cost discipline with operating expenses growing well below inflation. Capital expenditure is forecast to decline further as the peak of the 5G rollout and IT modernization investments pass, targeting approximately $790 million for FY25 excluding spectrum payments.
The company’s network expansion is on track, with over 7,700 mobile network sites activated and 4,495 5G sites available, nearing its FY25 targets. The launch of next-generation Wi-Fi 7 modems and mesh devices under the Vodafone brand positions TPG as a converged mobile and fixed broadband player, enhancing its competitive edge in the high-speed connectivity market.
TPG’s balance sheet remains solid with a BBB flat credit rating from S&P Global Ratings, supported by ongoing deleveraging and strong cash flow generation. The company’s strategic focus on infrastructure sharing, brand revitalization, and customer experience simplification aims to sustain growth and shareholder returns in a competitive telecommunications landscape.
Bottom Line?
TPG’s disciplined execution and capital return plans set the stage for sustained shareholder value amid evolving market dynamics.
Questions in the middle?
- How will minority shareholders respond to the reinvestment plan discount and participation opportunity?
- What impact will the Vocus transaction have on TPG’s earnings and cash flow beyond FY25?
- Can TPG maintain its dividend growth ambitions amid ongoing network investments and competitive pressures?
