TPG Telecom (ASX:TPG) outlined what executives described as a “milestone year” in FY2025, pointing to network expansion, a simplified asset base following transactions with Vocus, and improving cash generation and balance sheet strength. Management also provided FY2026 guidance for continued EBITDA growth, driven by mobile service revenue growth and ongoing operating cost discipline.
Network expansion and customer metrics
CEO Iñaki Berroeta said FY2025 marked a year of “transformation, simplification,” and delivery of what he called the company’s “best-ever network for customers.” TPG launched its regional network sharing arrangement and said it was already seeing some of the outcomes it sought, including churn reduction across both consumer and business customers.
Berroeta said third-party research suggested there is “increasingly little difference between networks in Australia,” while adding that TPG delivers its network with a lower cost structure. He also highlighted improved network consideration among non-customers and lower churn as key indicators of progress.
Mobile growth led by digital-first brands
TPG reported what it characterized as market-leading performance in its core mobile business despite a slowdown in broader industry growth. Berroeta said the company’s subscriber growth accounted for the majority of industry net adds as it increased market share, led by digital-first subscription brands.
For FY2025, mobile service revenue rose 4.2% to AUD 2.423 billion, while gross margin increased 1.7% to AUD 2.002 billion. Management said that excluding the first-year cost of the regional sharing arrangement, gross margin would have increased 3.6%, and that growth accelerated in the second half following planned pricing refreshes and momentum in digital-first subscription brands.
The company reported total subscriber growth of 228,000 customers, or 4.1%, and said this was “higher than the other two MNOs combined.” Digital-first subscription brands contributed 113,000 net adds, while the traditional prepaid segment also showed “solid growth.” Berroeta also noted the company implemented a tranche of price increases on certain backbook plans in Vodafone postpaid, as well as TPG and felix mobile.
In Q&A, management said MVNO growth had no one-offs and was organic, attributing performance to improved distribution and increased online activity. Executives also said churn trends were improving across brands, including prepaid, helped by network performance and a shift toward digital channels, which they said typically produce lower churn than physical channels.
- Digital-first ARPU: Management said the largest ARPU growth was in digital-first subscription brands, up 10.7%, citing customer upgrades via app-based plan changes—particularly at felix.
- Postpaid mix effects: Executives said mix shift between business and consumer can dilute reported postpaid ARPU, implying consumer postpaid ARPU improved more than the blended average.
- MOCN economics: Management said the cost of the regional sharing arrangement was incurred ahead of revenue benefits, with second-half performance stronger than the first half.
Home broadband: mixed trends, fixed wireless focus
On home broadband, TPG said gross margin and ARPU increased in FY2025, supported by a mix shift to “on NetFix Wireless” and higher-tier NBN plans. However, the company reported NBN subscriber numbers were down year-over-year due to competition from non-telco players and aggressive, volume-driven resellers, though it said the decline was lower in the second half.
Berroeta said a 5G Standalone launch should expand the fixed wireless addressable market by at least 15%, which management expects will support base growth in FY2026. Executives said the company’s approach would be to remain disciplined with simple, value-led plans, focusing on the convergence value of NBN while continuing to grow fixed wireless.
In response to an analyst question, management said it had not seen a material impact from Telstra’s internet-only plans introduced in November, and described key competitive dynamics as coming from converged players (including energy and banking) and from growing retail broadband providers such as Superloop and Aussie Broadband.
Financial performance, capital management, and cost discipline
CFO John Davidson said FY2025 was a year of “structural change,” with a “simpler asset base,” stronger cash generation, and a strengthened balance sheet. Discussing continuing operations unless otherwise noted, Davidson reported service revenue rose 2.2% to AUD 4.179 billion, supported by mobile subscriber growth across consumer, business, and wholesale segments and by ARPU growth.
On the company’s guidance basis (pro forma and excluding material one-offs), EBITDA increased 2% to AUD 1.637 billion, above the midpoint of prior guidance. Davidson said that without regional expansion costs, EBITDA would have been up 5.7%, with stronger growth in the second half. Underlying NPATA and EPS (pro forma, excluding material one-offs and customer base amortization) were AUD 69 million and AUD 0.037, respectively.
TPG declared ordinary dividends of AUD 0.18 per share for the year, with the final dividend franked to 30%. The company also declared AUD 0.27 per share for the year including a special dividend. Management said dividends are targeted to grow in line with sustainable profit and cash flow growth and that it expects dividend franking to increase over time.
Davidson highlighted operating cost discipline, noting operating costs of AUD 1.031 billion were up 0.5% and below inflation, alongside progress toward a target of AUD 100 million in real cost savings over four years to FY2029. He said savings were supported by lower network maintenance and support costs, a lower FTE base from business simplification and IT modernization, and disciplined third-party spend, alongside a deliberate increase in marketing expense.
Cash flow, leverage reduction, and FY2026 guidance
The company said it returned more than AUD 3.3 billion to shareholders during the year and reduced future financial risk by paying down AUD 2.7 billion of debt. Davidson said bank borrowings fell from AUD 4.1 billion to AUD 1.361 billion.
Operating free cash flow nearly doubled to AUD 1.291 billion, which Davidson attributed to proceeds from the Vocus transaction, a handset receivables financing program, and lower CapEx, spectrum, and borrowing costs. Free cash flow to equity was reported at AUD 5.751 billion, which management said enabled debt repayment and capital returns. Davidson emphasized that some proceeds, including from the Vocus transaction and handset receivables financing (noting a net AUD 594 million impact from the program), were non-recurring, but said the underlying business was now generating materially higher recurring cash from a smaller asset base.
For FY2026, Berroeta provided formal guidance for EBITDA of AUD 1.665 billion to AUD 1.735 billion, implying just under 4% pro forma growth at the midpoint of AUD 1.7 billion. The company guided to CapEx on an additions basis of AUD 750 million and reiterated expectations for “significant” CapEx reductions from FY2027 onward.
On financing costs, Davidson said bank interest expense is expected to fall materially in FY2026 following debt repayment, and he indicated the company’s current expectation is that financing costs will be roughly AUD 100 million lower in FY2026 than the FY2025 pro forma total of AUD 426 million, subject to interest rate movements and other factors.
Executives also addressed spectrum policy, saying they supported settings that sustain network investment. Management said it did not support the ACMA’s latest proposals on spectrum license renewal payments, though Davidson added the company would not expect to fund renewals until later in FY2027 and characterized that as manageable. In Q&A, management said its spectrum payment expectations were “more than” an analyst’s AUD 1 billion to AUD 1.5 billion estimate, but “significantly lower” than what it has historically paid and spread over a longer period.
About TPG Telecom (ASX:TPG)
TPG Telecom Limited provides telecommunications services to consumer, business, enterprise, and government and wholesale customers in Australia. The company owns and operates fixed and mobile telecommunication services. It also offers mobile, voice, fibre internet, enterprise ethernet, SD-WAN, data, business answering, messaging, enterprise fixed wireless, IoT devices, cloud, mobile private network, business satellite, and call centre services. It provides its services under the Vodafone, TPG, iiNet, AAPT, Internode, Lebara, and felix brands.
