TPG Telecom Limited (ASX: TPG)
TPG Telecom Limited released its full-year financial results for the period ending 28 February 2025, reporting total revenue of $5,520 million. However, the company faced a decline in profitability, with EBITDA falling by 9% year-over-year to $1,712 million and recording a net loss of $107 million, in contrast to a net profit of $49 million in the previous year. The loss was primarily attributed to a non-cash impairment charge related to network restructuring and higher financing costs. Despite the financial downturn, TPG declared a final dividend of 9.0 cents per share, which will be unfranked, with a record date set for 7 March 2025 and payment scheduled for 4 April 2025. The company highlighted that its operating free cash flow improved significantly to $672 million, mainly driven by lower capital expenditure and improved working capital management.
A major development for TPG during the financial year was the activation of its regional network-sharing agreement with Optus in January 2025. This agreement has significantly expanded the company’s mobile coverage, doubling it to over 1 million square kilometres, thereby enhancing service availability in rural and regional areas. The company reported a strong initial response from customers following the network expansion. Additionally, TPG continued its infrastructure modernization efforts, with 72% of its metropolitan mobile sites upgraded to 5G as of February 2025. The full 5G rollout is targeted for completion by 2027, with further investments planned to strengthen mobile service capabilities and improve connectivity.
TPG Telecom Limited, today on 20 March 2025, welcomed the announcement by the Australian Competition and Consumer Commission (ACCC) not to oppose its sale as announced on 14 October 2024, wherein, TPG Telecom Limited had entered into a binding Share Purchase Agreement (SPA) to sell its fibre network infrastructure assets and Enterprise, Government and Wholesale (EGW) fixed business, including Vision Network, to Vocus Group Limited (Vocus) for an enterprise value of $5,250 million (the Transaction) including a potential $250 million Contingent Value Payment.
The ACCC's investigation primarily assessed the level of competition between Vocus and TPG in the supply of data network and connectivity services, particularly fixed-line internet services for large enterprise and government customers. The commission found that Vocus mainly focuses on serving large enterprise and government clients, whereas TPG’s core market is small and medium-sized businesses. This distinction in market focus contributed to the ACCC’s decision not to oppose the acquisition, as the transaction is unlikely to substantially lessen competition.
The ACCC also considered the impact of the merger in other areas, including fixed-line voice services, NBN wholesale aggregation services, and data centre, cloud, and security services. Additionally, the introduction of NBN Co’s wholesale Enterprise Ethernet product in 2018 has lowered barriers to entry in the market, allowing new and smaller providers to compete effectively for larger customers. Given the presence of strong competitors such as Telstra, Optus, Aussie Broadband, and Superloop, the ACCC determined that the transaction would not significantly reduce market competition.
As part of the acquisition, Vocus will gain control over TPG’s fibre network, which includes metropolitan and inter-capital infrastructure, as well as international subsea cable systems and data centres that serve business, government, and wholesale clients. The deal also includes Vision Network, a fixed-line broadband network operating in key metropolitan areas across Australia. However, TPG’s mobile network, which operates under the Vodafone brand, is not part of the transaction, and TPG’s consumer mobile customers, along with its retail fixed-line customers, will remain with TPG.
The ACCC’s decision marks a key step in allowing the merger to proceed, ensuring that Vocus can expand its fibre network and strengthen its position in the enterprise and government telecommunications sectors without significantly diminishing competition in the broader market.
(Source: Company Reports)
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