This article first appeared on GuruFocus .
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Service Revenue:Increased 0.5% in the half, led by mobile, which rose 3.1%.
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Gross Margin:Grew 2.9% in the first half, driven by strong mobile performance and non-volumetric infrastructure sharing arrangements.
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EBITDA:Rose 4.5% on the first half 2025 pro forma results; FY26 guidance remains between $1.665 billion and $1.735 billion.
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Mobile Subscriber Growth:Total subscriber growth of 64,000 in the half, with postpaid and total subscriber growth outperforming competitors.
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Mobile ARPU:Growing across all products, expected to accelerate in the second half following recent plan refreshes.
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Operating Costs:Flat at $508 million, a strong outcome against inflation of 3.6%; $46 million of cost efficiencies achieved to date since start of FY25.
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Hardware Margin:Improved due to operational efficiency despite lower industry volumes.
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Net Financing Costs:Reduced substantially from FY25 due to materially lower bank borrowings; full-year costs expected to be more than $100 million lower than FY25.
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Operating Free Cash Flow:Up more than 16%, reflecting lower CapEx.
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Free Cash Flow to Equity:$93 million, an increase of $108 million.
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CapEx:Half-year additions of $277 million, expected to increase to about $750 million for the full year.
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Depreciation & Amortization:FY26 expected to be in line with FY25 pro forma of $1.28 billion.
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Interim Dividend:Increased by $0.01 per share to $0.10 per share, with franking pulled back slightly to 25%.
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Leverage:Debt to EBITDA reduced to about 2.9 times, down from about 3.0 times at end of 2025; targeting below 2.75 times by year-end.
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NBN Subscribers:Numbers down in the half, but rate of decline slowed compared with both halves in 2025.
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Fixed Wireless:Return to subscriber growth in the second quarter since launch of 5G standalone services.
Release Date: August 21, 2026
For the complete transcript of the earnings call, please refer to the full earnings call transcript .
Positive Points
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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.
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Mobile service revenue increased 3.1%, with gross margin up 4.2%, driven by solid ARPU growth and a differentiated multi-brand portfolio.
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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.
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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.
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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.
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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.
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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.
Negative Points
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Home broadband (NBN) subscriber numbers declined in the half, though the rate of decline slowed; the market remains challenging with competitive pressures.
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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.
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Hardware revenue was soft due to supply chain constraints, particularly for Apple devices, though margins improved through operational efficiency.
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The company faces higher regional sharing costs from the full six months of MOCN operation and continued 5G rollout, which partially offset revenue growth.
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Operating costs increased in technology areas (software licenses, electricity, network rental) by $11 million, and employee costs rose slightly, despite overall cost control.
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The company is now a net taxpayer with a go-forward tax rate of approximately 30%, which will impact future cash flows.
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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.
Q & A Highlights
Q: Can you elaborate on the drivers of mobile service revenue growth, which at 3.1% slightly trails competitors, and how you plan to balance ARPU growth versus subscriber growth going forward? A: Inaki Berroeta (CEO) and James Gully (Acting Group Executive Consumer Product, Marketing and Digital) explained that the timing of plan refreshes influenced the comparative numbers. They expect ARPU growth to accelerate in the second half following recent plan refreshes, including postpaid front book and back book changes in July/August, a Vodafone prepaid refresh, and price increases on Felix and TPG Mobile low-end plans. The company's focus remains on mobile service revenue and margin growth, which was 4.2% in the half, with an expected improved performance in the second half.
Q: What is driving the better July-August performance in home broadband, and how does this impact margins? A: James Gully (Acting Group Executive Consumer Product, Marketing and Digital) stated that the improvement is driven by proactive churn management using AI and advanced analytics to identify at-risk customers and manage their experience. While NBN price rises in July typically stimulate churn, the company navigated this period better than in previous years. The underlying benefit is coming from lower churn volumes, and the company expects this trend to continue.
Q: Are you ahead of your own expectations on the $100 million operating cost efficiency target by FY29, and could there be upside? A: John Boniciolli (CFO) confirmed the company is ahead of where it thought it would be 18 months ago, having delivered $46 million to date. He noted that cost discipline is part of the organization's DNA and that the company will continue to manage costs tightly, but he did not explicitly guide to an increased target.
Q: Can you contextualize the CapEx step-down into FY27, given competitors are talking about incremental investment in 5G standalone? A: Giovanni Chiarelli (CTO) explained that TPG was an early investor in 5G standalone, deploying it in 2021, ahead of competitors. The company has already passed the peak of 5G investment, with the remaining work being the Huawei-to-Nokia swap out over the next three years. Most IT and digital transformation investments are also behind them, justifying the lower CapEx guidance.
Q: How should we think about the potential interest expense benefit from the refinancing of FY28 debt maturities? A: John Boniciolli (CFO) stated that the company expects a lower margin through the refinancing given its current balance sheet settings and market conditions. He also highlighted a mature and disciplined interest rate hedging program, with the company 62% hedged for the current year.
Q: Can you talk to the plans for hardware, given market softness, and whether the handset receivables financing deal provides scope to go harder on handsets? A: James Gully (Acting Group Executive Consumer Product, Marketing and Digital) noted that H1 was supply-constrained, particularly for Apple devices, leading to a focus on margin management. The supply position is improving in H2, and the company is launching an "upgrade and protect" product. John Boniciolli (CFO) added that the receivables financing program is about managing balance sheet volatility and is not a substitute for commercial discipline, citing improved hardware margins despite lower revenue.
Q: What is the pipeline for MVNOs and how should we think about that opportunity over the next 12-24 months? A: Jonathan Rutherford (Group Executive Enterprise, Government & Wholesale) stated that the pipeline is good across three areas: connected cars, wearables, and traditional MVNOs. The pipeline may be more skewed to non-traditional MVNO partners in the next 12 months, but the company is committed to onboarding the three announced partners in H2.
Q: What are the puts and takes on postpaid ARPU, and what factors diluted the impact of the $4 price rise? A: James Gully (Acting Group Executive Consumer Product, Marketing and Digital) cited a slowdown in roaming due to the Middle East conflict, a mix of enterprise customers at lower ARPU, and BAU save/promotional activity as dilutive factors. He remains optimistic about ARPU upside from new products like "upgrade and protect" and value-added services like wearables.
Q: Can you elaborate on the fixed wireless business, its capacity and service quality differences versus NBN, and the impact of 5G standalone? A: Inaki Berroeta (CEO) highlighted that churn management initiatives have been applied to fixed wireless, and 70% of the base is now on 5G. The product remains the most margin-accretive fixed product and offers an affordable option for customers in its coverage areas. The company is optimistic about its momentum.
Q: What changed in June to drive better net adds in the digital-first brands, and how is that tracking into 2H? A: James Gully (Acting Group Executive Consumer Product, Marketing and Digital) said nothing changed dramatically; it was continued momentum driven by customer demand for simple, transparent, well-priced digital-first products. The company is pleased with the customer response and expects the trend to continue.
For the complete transcript of the earnings call, please refer to the full earnings call transcript .
