TPG Telecom (TPG) H2 2024 earnings summary

Executive summary

• Achieved strong financial results in FY24, with 5.4% Mobile Service Revenue growth, improved gross margin, robust cash flow, and higher return on capital, while maintaining stable dividends at 18.0 cents per share.

• Strategic milestones included regional network sharing with Optus, doubling mobile coverage to 98.4% of the population and driving strong customer response.

• 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.

• Transformation and simplification initiatives reduced product plans by 69% and IT applications by 15%, advancing digitalisation and operational efficiency.

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 revenue.

• Group gross margin increased 3.5% to $3,213 million.

• 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.

• Operating free cash flow surged to $672 million, up $474 million year-over-year, reflecting lower capex and improved working capital.

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

• Return on invested capital improved by 40 basis points to 6.1%.

Outlook and guidance

• FY25 EBITDA guidance (excluding one-offs): $1,950–$2,025 million, flat year-on-year, with growth skewed to the second half due to initial regional sharing costs.

• Capex (excluding spectrum) forecast at ~$900 million for FY25, with further reductions to $550–$650 million per annum from FY27 post-Vocus transaction.

• Operating costs expected to remain flat in real terms in FY25; further opex efficiencies of $100 million annually targeted post-Vocus deal.

• Anticipates strong free cash flow in FY25 and significant capital management flexibility post-Vocus transaction.