TPG Telecom’s Mobile Pivot: Risks Ahead After $5.25B Asset Sale
TPG Telecom reported a 2% revenue increase and a significant profit rise in H1 2025, completing the sale of its fibre assets and declaring a 9-cent interim dividend.
- 2% revenue growth to $2.448 billion
- Profit after tax from continuing operations up to $32 million
- Completed sale of fibre network and fixed business to Vocus
- Mobile subscriber growth and ARPU improvements
- Interim dividend declared at 9.0 cents per share, unfranked
Financial Performance Highlights
TPG Telecom Limited has released its half-year results for the period ending 30 June 2025, showcasing steady growth and a strategic pivot in its business model. Revenue from continuing operations rose by 2% to $2.448 billion, while earnings before interest, tax, depreciation, and amortisation (EBITDA) edged up 1% to $813 million. Most notably, profit after tax from continuing operations surged to $32 million, a substantial increase from $7 million in the prior corresponding period, bolstered by lower financing costs and a favourable income tax benefit.
Strategic Asset Sale and Business Transformation
In a landmark move, TPG Telecom completed the sale of its fibre network infrastructure and Enterprise, Government, and Wholesale (EGW) fixed business to Vocus Group Limited on 31 July 2025 for an enterprise value of $5.25 billion. This transaction marks a decisive shift towards a capital-efficient, mobile-led integrated telecommunications company. The divestment has redefined TPG’s operational focus, with the company now concentrating on mobile services and leveraging network sharing arrangements such as the Multi-Operator Core Network (MOCN).
Operational Metrics and Subscriber Growth
TPG’s mobile subscriber base expanded to 5.62 million, driven by regional network expansion and increased market share in metropolitan and regional areas. Average revenue per user (ARPU) showed modest growth, with overall mobile ARPU rising to $34.97 per month. Fixed wireless subscribers also grew, offsetting declines in National Broadband Network (NBN) subscribers amid intense competition. The company’s fixed broadband average margin per user increased by 3.3%, reflecting pricing improvements and growth in fixed wireless services.
Capital Management and Dividend Policy
Capital expenditure decreased by 7.3% to $473 million, reflecting the completion of peak 5G network investments and IT system modernisation. TPG Telecom refinanced $2.086 billion of bank debt, extending maturities and reducing borrowing margins, maintaining net borrowings at approximately $4.1 billion. The Board declared an unfranked interim dividend of 9.0 cents per share, consistent with the company’s new dividend policy targeting sustainable growth in dividends aligned with profit and cash flow. Plans are underway to return up to $3 billion to shareholders via capital reduction and share buybacks, alongside a $2.4 billion debt reduction.
Outlook and Market Position
TPG Telecom’s half-year results reflect a company in transition, balancing operational growth with strategic capital management. The successful divestment of fibre and fixed assets positions TPG as a leaner, mobile-focused player in the Australian telecommunications market. With ongoing subscriber growth and improved margins, the company appears well-placed to capitalise on mobile network investments and evolving market dynamics.
Bottom Line?
TPG Telecom’s pivot to a mobile-led model and disciplined capital strategy set the stage for its next growth phase.
Questions in the middle?
- How will the sale of fibre assets impact TPG’s long-term revenue mix and profitability?
- What are the risks and opportunities associated with the company’s increased reliance on mobile network sharing?
- How might the new dividend policy influence investor sentiment and capital allocation going forward?
