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Highlights
- Share Price Boost: TPG Telecom Ltd (ASX:TPG) shares rose 6% to $4.79 following its FY 2024 financial results.
- Revenue Growth: Service revenue increased by 1.5% to $4.7 billion, driven by a robust mobile segment.
- Profit Performance: Gross profit climbed 3.5% to $3.2 billion, while underlying EBITDA rose 3.4% to $1.99 billion.
- Cost Management: Operating expenses fell 3.6% to $1.2 billion, supporting cash flow.
- Dividends Unchanged: Total dividends remained at 18 cents per share, with the final dividend unfranked.
- Outlook for FY 2025: TPG forecasts EBITDA between $1.95 billion and $2.025 billion, alongside a reduction in capital expenditure.
Shares of TPG Telecom Ltd (ASX:TPG) surged 6% to $4.79 on Friday morning after the company reported solid financial results for the full year ended 31 December 2024. The market response highlights investor confidence in TPG’s revenue growth, cost management, and outlook for 2025.
Mobile Segment Drives Revenue Growth
TPG’s service revenue rose 1.5% to $4.7 billion, mainly driven by its mobile division, which saw a 5.4% increase in revenue to $2.27 billion. This growth was fueled by:
- Higher average revenue per user (ARPU).
- An increase in Prepaid subscribers, despite some weakness in Postpaid services.
The company’s total mobile subscriber base expanded 1.8% to 5.51 million, boosted by a key contract with Lyca Mobile and demand for its digital Prepaid brands. However, aggressive handset discounting by competitors and the 3G network shutdown led to a drop in Postpaid subscribers.
Fixed Wireless Strength Offsets Decline in Fixed-line Customers
TPG maintained its position as Australia’s largest provider of Fixed Wireless services, which helped cushion the impact of a 2.4% decline in total fixed-line subscribers to 2.08 million. The company’s strategy of focusing on higher-margin Fixed Wireless services contributed to its 3.5% rise in gross profit to $3.2 billion.
Profitability and Cash Flow Gains
Despite revenue growth, TPG’s statutory EBITDA declined by 8.7% to $1.7 billion due to a $250 million non-cash impairment related to the decommissioning of mobile network sites as part of its regional sharing agreement with Optus. However, underlying EBITDA—which excludes one-off items—grew by 3.4% to $1.99 billion, aligning with market expectations.
Cost efficiencies also played a role in TPG’s solid performance, with operating expenses falling 3.6% to $1.2 billion. This led to a increase in operating free cash flow (OFCF) to $672 million, up $474 million from the previous year.
Dividends Hold Steady
For FY 2024, TPG maintained its total dividend at 18 cents per share, with a final unfranked dividend of 9 cents per share due to the company exhausting its franking credits.
Outlook for FY 2025
Looking ahead, TPG has provided a cautious yet optimistic forecast for FY 2025:
- EBITDA is projected between $1.95 billion and $2.025 billion, assuming stable market conditions.
- Capital expenditure (excluding spectrum payments) is expected to fall to $900 million, compared to $1.014 billion in FY 2024.
- Management anticipates continued service revenue growth, steady operating costs, andfree cash flow performance, driven by reduced capital investment and improved working capital.
