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 to 98.4% of the population and driving strong customer response and market share gains.

• Announced 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.

• Advanced business simplification, digitalisation, and IT modernisation, reducing product plans by 69% and IT applications by 15%.

• 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, due to impairments.

• Operating free cash flow improved by $474 million to $672 million, reflecting lower capex and improved working capital.

• Final dividend of 9.0 cents per share, total 18.0 cents per share for FY24, unchanged from FY23.

Outlook and guidance

• FY2025 EBITDA guidance (excluding one-offs): $1,950–$2,025 million, flat year-on-year, with growth skewed to the second half.

• Capex guidance for FY2025: approximately $900 million, with further reductions to $550–$650 million per annum from FY2027 post-Vocus transaction.

• Opex expected to be flat in real terms in FY2025; further $100 million annual opex efficiencies targeted post-Vocus.

• Anticipates strong free cash flow in FY2025, supported by lower capex and spectrum payments.

• Separation costs of $80–$120 million related to the asset sale will be treated as one-offs in FY25.