Half Year 2026 TPG Telecom Ltd Earnings Call Transcript
Key Points
- TPG Telecom Ltd (TPGTF) delivered strong mobile trading performance, outperforming the market in total mobile subscriber growth with 64,000 net additions in the half.
- Mobile service revenue increased 3.1%, with gross margin up 4.2%, driven by solid ARPU growth and a differentiated multi-brand portfolio.
- EBITDA rose 4.5% on a pro forma basis, supported by disciplined cost management and operational efficiencies, with $46 million of the $100 million cost savings target already achieved.
- Cash flow improved significantly, with free cash flow to equity up $108 million to $93 million, and the company reduced debt to EBITDA to about 2.9 times, on track to reach below 2.75 times by year-end.
- The company increased its interim dividend to $0.10 per share, reflecting stronger earnings and cash generation, and expects further dividend growth in line with its progressive dividend policy.
- Network sharing and the MOCN with Optus are driving market share gains, with record customer consideration and satisfaction, and the company is expanding its MVNO partnerships with three new deals.
- Fixed Wireless returned to subscriber growth in Q2 following the launch of 5G standalone services, expanding the addressable market by 15% and improving ARPU potential.
- Home broadband (NBN) subscriber numbers declined in the half, though the rate of decline slowed; the market remains challenging with competitive pressures.
- Mobile service revenue growth of 3.1% lagged behind Telstra (4.1%) and Optus (mid-3s), partly due to timing of plan refreshes and roaming slowdown from the Middle East conflict.
- Hardware revenue was soft due to supply chain constraints, particularly for Apple devices, though margins improved through operational efficiency.
- The company faces higher regional sharing costs from the full six months of MOCN operation and continued 5G rollout, which partially offset revenue growth.
- Operating costs increased in technology areas (software licenses, electricity, network rental) by $11 million, and employee costs rose slightly, despite overall cost control.
- The company is now a net taxpayer with a go-forward tax rate of approximately 30%, which will impact future cash flows.
- CapEx remains elevated at $750 million for FY26, with a step-down to $550-650 million only expected from FY27, limiting near-term free cash flow growth.
Good morning, everyone. This is Paul Hutton from the TPG Telecom Investor Relations team. Thank you for joining us for the presentation of our 2026 half year results. We acknowledge the traditional custodians of country throughout Australia, and the lands on which we and our communities live, work, and connect. We pay our respects to their elders, past and present.
This morning, Iñaki will present our results, highlights, and business update. John will then present a detailed review of our financial performance. Iñaki will then discuss our outlook before we open for Q&A.
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Thanks, Paul, and good morning, everyone. We have made a good start to 2026 and expect to build on this foundation. This reflects the work we have done to sharpen our customer's proposition, expand our network reach, and simplify the business, giving us confidence in both near-term momentum and longer term value creation. Our enhanced
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