TPG Telecom (TPG) H2 2024 earnings summary

Executive summary

• Achieved strong financial results in FY2024, with 5.4% Mobile Service Revenue growth, improved EBITDA margins, robust cash flow recovery, and higher return on capital, despite a challenging market environment.

• Strategic milestones included regional network sharing with Optus, doubling mobile coverage and driving strong customer response, as well as business simplification and IT modernization initiatives that reduced product plans by 69% and IT applications by 15%.

• Announced the sale of fibre and EGW fixed assets to Vocus Group for $5.25 billion, expected to close in H2 2025, enabling capital structure optimisation and cost efficiencies.

• Entered FY2025 with confidence, focusing on accelerating market share growth, capital efficiency, and further cost optimisation.

Financial highlights

• Group service revenue rose 1.5% to $4,702 million, driven by 5.4% growth in mobile service revenue to $2,272 million, offsetting a 2.6% decline in fixed service revenue.

• EBITDA (excluding one-offs) increased 3.4% to $1,988 million; statutory EBITDA was $1,712 million, down 8.7% due to a $250 million non-cash impairment.

• Adjusted NPAT (excluding one-offs) was $87 million, up 4.8%; statutory NPAT was $(107) million, down from $49 million, primarily due to the impairment.

• Operating free cash flow improved to $672 million from $198 million, reflecting lower capex and improved working capital.

• Final dividend of 9.0 cents per share, total 18.0 cents per share for 2024, unfranked.

Outlook and guidance

• FY2025 EBITDA guidance (excluding one-offs): $1,950–$2,025 million, with cash capex (excluding spectrum) of ~$900 million.

• Further improvement in operating free cash flow expected in 2025 due to lower capex and improved working capital.

• Targeting capex (ex-spectrum) of $550–$650 million from 2027 and $100 million incremental annual opex efficiencies post-Vocus transaction.

• Board to optimise capital structure following Vocus transaction completion.

• OPEX expected to be flat in real terms in FY2025; second half performance anticipated to be stronger.