TPG Telecom’s Bold Asset Sales and Network Expansion Pose New Risks

Strategic Asset Sales and Capital Management

TPG Telecom’s 2025 financial year marked a pivotal transformation, highlighted by the sale of its fibre network assets and Enterprise, Government and Wholesale (EGW) fixed operations to Vocus Group. This transaction, completed in July 2025, generated net cash proceeds of approximately $4.7 billion. The proceeds funded a $3 billion capital return to shareholders and enabled a substantial $2.7 billion reduction in bank borrowings, significantly strengthening the company’s balance sheet and financial flexibility.

Network Expansion Drives Subscriber Growth

In January 2025, TPG Telecom launched a regional mobile network sharing arrangement with Optus, effectively doubling its mobile network coverage to over one million square kilometres and reaching 98.5% of the Australian population. This expansion was a key driver behind the addition of 228,000 mobile subscribers during the year, outpacing competitors and boosting market share. The company also reported growth in Average Revenue Per User (ARPU), supported by simplified and refreshed product offerings.

Financial Performance and Dividends

Revenue from continuing operations rose 3% to $5.04 billion, while EBITDA increased 18% to $1.66 billion. Net profit after tax from continuing operations improved to $52 million, reversing the prior year loss. Despite the sale of fixed assets, TPG Telecom maintained its ordinary dividend at 18 cents per share for the year, with a newly declared 30% franked final dividend of 9.0 cents per share payable in April 2026. The Board also introduced a new dividend policy aimed at sustainable growth in dividends aligned with profit and cash flow.

Sustainability and Regulatory Focus

TPG Telecom achieved its 2025 target of sourcing 100% renewable electricity for its Australian operations, supported by long-term power purchase agreements and renewable energy certificates. The company has set ambitious science-based targets to reduce greenhouse gas emissions across its value chain by 2030 and 2050. On the regulatory front, TPG is cooperating with the Australian Communications and Media Authority (ACMA) in ongoing investigations related to emergency call connectivity issues, underscoring its commitment to network resilience and customer safety.

Leadership and Governance

The Board welcomed John Otty, a seasoned telecommunications finance executive, as a Non-Executive Director in August 2025, enhancing governance expertise. The company’s remuneration framework adapted to the transformational year, with executive incentives aligned to pro forma financial results excluding one-off impacts. TPG Telecom continues to focus on operational efficiencies, aiming to reduce costs by $100 million by FY29 and maintain capital expenditure at sustainable levels as 5G rollout matures.

Looking Ahead

For FY26, TPG Telecom expects EBITDA growth to between $1.665 billion and $1.735 billion, driven by continued mobile business expansion and disciplined cost control. Capital expenditure is forecast to decline to approximately $750 million, reflecting the peak of recent network investments passing. The company remains focused on leveraging its expanded network, enhancing customer experience, and delivering sustainable shareholder returns.