TPG’s half year is out.

The market appears extremely disappointed, with actual EBITDA about 5% below consensus EBITDA, and no firm guidance given, other than “strong momentum into the 2H”.

We are quite a bit more relaxed about the result, which we think is certainly better than today’s price action (down 12%) would suggest.


After a long period of decline, subscribers in mobile are growing again.

Firstly, the merger with Vodafone two years ago triggered some churn, and secondly, the pandemic meant international visitors fell away, which disproportionately affects the Vodafone brand.

Those pressures seem to be abating, somewhat, as per the above graph.

Mobile ARPU increased fractionally, with management suggesting this will continue, which is good news, and AMPU’s across fixed continued to grind lower, which is not so good news, but understandable given the pricing structure of the NBN reseller model.

Recent announcements from NBN co regarding pricing seem to be a net positive for the industry, looking forwards.

We’ve seen competitors increase their ARPU’s, noting TLS (below) on prepaid and post-paid services, which is an industry tailwind.

Overall, TPG pointed to the sequential quarterly improvements in revenue, driven by the higher subscriber numbers, and fractionally higher pricing, which is highlighted below on the left hand side.

Good cost control meant a sequential improvement in underlying EBITDA, shown below, right hand side, the first such lift in a few years. We think the market might be misinterpreting the one-off nature of restructuring costs (the $35m).

Both TPG and TLS management seemed (to us!) reasonably bullish on the outlook, predicated on the above factors, but also industry competition returning to a more rational state, focused instead on getting a good return out of 5G capex, and the network more broadly.

Both companies were adamant that the period of uncertainty was now behind them, with the focus on profitable growth moving forward.

As for the degree of “growth moving forwards”, although the below earnings call transcript is fairly garbled, to our mind the key essence of “building momentum” comes through, suggesting confidence in a stronger 2H.

Overall, we are happy enough in our direct equity exposures, and see no thesis breach, despite the market reacting violently to today’s result.

We will just have to wait for better execution over this next half.

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