TPG Telecom (TPG) H1 2024 earnings summary

Executive summary

• Solid trading and strong cash performance in H1 2024, with increased focus on cost efficiency and strategic initiatives for H2 and 2025.

• Mobile service revenue grew 7.2% year-over-year, driven by higher ARPU, consumption, and a major MVNO contract win.

• Fixed Broadband ARPU/AMPU increased 6.3%, supported by Fixed Wireless growth and improved on-net margin despite NBN competition.

• Operating free cash flow improved by $340 million to $278 million, reflecting better working capital and lower capex.

• Tracking toward the mid-point of FY24 EBITDA guidance, with cash capex guidance reduced to $1.02 billion.

Financial highlights

• Service revenue reached $2,327 million, up 1.7% year-over-year; gross margin up 3.9% to $1,585 million.

• EBITDA (guidance basis) was $979 million, up 2.2% year-over-year; statutory EBITDA up 3.5% to $974 million.

• Statutory NPAT was $29 million, down from $48 million year-over-year; adjusted EPS was 4.8c, down from 6.2c.

• Operating free cash flow rose to $278 million from $(62) million in 1H23; interim dividend of 9.0cps, 87% franked.

• Return on Invested Capital was 5.6%, down from 5.8% year-over-year.

Outlook and guidance

• FY24 EBITDA guidance maintained at $1,950–2,025 million, tracking toward the mid-point.

• Cash capex guidance lowered to $1.02 billion for 2024; expected to fall further in FY25 and FY26.

• Focus on delivering flatter opex growth profile, with workforce reduction of ~120 roles in August 2024.

• Regional network sharing with Optus pending ACCC approval, decision due 13 September 2024.

• Expect material improvement in cash earnings over the medium term, enabling debt reduction.