August 21, 2026

H1 2026 earnings call transcript

TPG TELECOM LIMITED · H1 2026

Disclaimer

TRANSCRIPT OF TPG TELECOM – HY26 RESULTS – 21.08.2026

Paul Hutton

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.

Iñaki Berroeta:

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 network is driving market share growth in mobile at a strong ARPUs with record levels of customer consideration and satisfaction. We are using data and AI-enabled insights to better understand network experience and customer needs, helping us prioritise the areas where improvements can have the greatest impact for our customers.

Our strong growth in wholesale MVNO is proof that the market is recognising the strength of our network offering.

We delivered a strong Mobile trading performance, again outperforming the market in total mobile subscriber growth.

This was driven mostly by momentum in our Digital First and MVNO brands, while also achieving the strongest

Postpaid subscriber performance in the market.

Combined with solid ARPU growth, this drove a 4.2 per cent increase in Mobile Gross Margin in the half.

We expect ARPU growth to accelerate in the second half following recent plan refreshes.

Cash flow continues to improve due to higher earnings; lower capex and the changes we made last year to reduce borrowings.

This benefits both ROIC and dividends.

We have increased our interim dividend by 1 cent per share to 10 cents per share.

The first half positions TPG to deliver further shareholder value through the remainder of 2026 and the years ahead.

Consistent operational and commercial execution is leading to the consistent delivery of financial results.

Our strong performance in the first half was again led by our Mobile business and disciplined cost management.

Mobile Service Revenue increased 3.1 per cent in the half.

We expect stronger ARPU performance to support further growth in the second half following recent plan refreshes.

EBITDA rose 4.5 per cent on the first-half 2025 Pro Forma result.

We expect second-half EBITDA to be higher than the first half in absolute terms, consistent with our normal business seasonality.

ROIC and Underlying EPS both increased materially, reflecting our operating performance and improved capital structure.

Mobile delivered a strong result as we continue to provide products that customers want across a differentiated multi- brand portfolio.

Total subscriber growth was 64 thousand in the half, with Postpaid and total subscriber growth outperforming our competitors.

With more new subscriber additions than the other MNOs together, proof that our Digital First subscription brands are positioned where customer demand is growing, and that our MVNO strategy is delivering real, tangible results.

This momentum is contributing further market share growth, building on an increase of close to 1 per cent since the start of the MOCN implementation.

During the half, we entered partnerships with three new MVNOs.

Disclaimer

Z Mobile is now fully operational, while the migrations of Spacetalk and Swoop - operator of the Moose Mobile brand

- are taking place in the second half.

ARPU is growing across all products and is expected to accelerate through the second half following our recent plan refreshes, which included both front-book and back-book plans.

Now turning to Home Broadband.

The NBN market remains challenging, but the targeted initiatives we have made in recent months to address churn are beginning to pay off.

We are seeing evidence of stronger retention and improved customer experience.

Subscriber numbers in NBN were down in the half – but the rate of decline slowed compared with both halves in

2025.

We expect a further improvement in the trend in the second half, having recorded stronger performance in July and beginning of August.

AI and advanced analytics are part of the solution, helping us identify customers at risk of churn earlier, personalise retention offers and improve service outcomes before issues escalate.

In Fixed Wireless, we have seen a return to subscriber growth in the second quarter since the launch of 5G standalone services, which has increased our addressable market by 15 per cent.

We are also seeing an increase of the portion of the NBN base on the lower churn, higher-speed tiers.

Since December 2025, we have seen an increase of 24 percentage points in NBN customers on NBN100, or faster plans, growing to 56 per cent. We have also seen a shift of Fixed Wireless customers from 4G to 5G.

We expect these trends and growing Fixed Wireless subscriber numbers in the second half, to drive stronger AMPU over time.

The next slide shows Service Revenue and Gross Margin for both Mobile and Home Broadband.

The trend in Mobile remains strong, with growth more than offsetting higher regional sharing costs from a full six months of operation and rollout of more 5G sites.

Home Broadband continues to reflect more challenging conditions amid a declining total NBN market.

Gross Margin growth was greater than Service Revenue growth in aggregate, and we expect that to remain the case over time.

To reiterate

• We expect continued subscriber growth and accelerating second-half ARPU growth to drive Mobile Gross

Margin.

• We expect subscriber numbers in NBN and a return to growth in the higher-margin Fixed Wireless business to drive Home Broadband.

As we noted at the investor day our strategy framework now has five pillars with the addition of ‘Embody customer first, people always’.

We continue to deliver against all five pillars of the strategy and we are optimistic about the coming months and years.

Network sharing is delivering better experience for our customers and efficiency for shareholders.

The Mobile market will benefit from further network sharing – especially as we look ahead to the 6G rollout.

Recent outages highlight the essential nature of the services telcos provide, and the importance of a framework that enables resilience and redundancy.

Greater network sharing could be part of the solution while also delivering lower industry costs and increased network performance that would benefit customers.

Another opportunity is the emergence of LEOSat.

Disclaimer

This is a complementary technology to terrestrial networks that can support existing mobile coverage in remote areas and further reduce coverage gaps.

The recent ACCC announcement of an inquiry into mobile services, and issues such as domestic roaming and network access, is an opportunity for improved industry settings.

We will bring our challenger spirit and customer-first culture to this process.

I'll now hand over to John, to take you through the financials in detail.

John Boniciolli

Thank you, Iñaki, and good morning everyone.

It was a strong first-half performance.

I was particularly pleased with EBITDA growth, supported by strong Mobile performance and effective cost control, and our stronger cash generation.

My first slide shows the positive trends across our key financial metrics.

For 2026, we compare our result with the 2025 Pro Forma result from the prior corresponding period.

This shows 2025 as if the new commercial agreements with Vocus had been in place for the full period, providing the most relevant baseline for comparison with 2026.

This highlights the benefits coming through from the structural changes we have made, resulting in improving earnings quality, stronger margins and better cash conversion.

Service Revenue increased 0.5 per cent in the half, led by Mobile, which increased 3.1 per cent and has been sustainably strong for several years now.

As I said at the Investor Day, we expect Gross Margin growth to continue to exceed Service Revenue growth.

We delivered Gross Margin growth of 2.9 per cent in the first half, resulting from continued strong Mobile performance and the non-volumetric nature of our infrastructure sharing arrangements with both Optus and Vocus, within direct costs.

This is despite an extra month of the regional MOCN with Optus in the Period compared with the first half of 2025, and the growth, as expected, in those costs due to the 5G rollout.

Also as flagged at the Investor Day, EBITDA growth was greater than Gross Margin growth due to disciplined operating cost control.

As we look across other operating metrics, the trend in Underlying NPATA, EPS, dividends and ROIC were all positive.

This reflects work we have undertaken specifically through a combination of:

• Running our networks smarter including through infrastructure sharing

• Growing Mobile Service Revenue through distinctive brands

• Operating cost efficiency from business simplification, and

• Significantly improving our balance sheet settings.

Finally, cash flow outcomes in the year were again strong.

I’ll touch more on these shortly.

My next slide is a profit summary.

There are a few points to highlight that I didn’t cover in the previous slide.

Hardware margin improved as we delivered operational efficiency despite lower industry volumes.

Operating costs, around halfway down the table, were basically flat at 508 million dollars.

This is a very strong outcome against inflation of 3.6 per cent.

Disclaimer

Turning to depreciation and amortisation, the modest benefit against the prior year Pro Forma results largely reflects a one-time non-cash adjustment to amortisation of intangibles.

We now expect FY26 total depreciation and amortisation to be relatively flat to FY25 on a Pro Forma basis.

Net financing costs have reduced substantially from FY25 because bank borrowings are now materially lower.

For the full year, we anticipate total net financing costs, Pro Forma for the new leases for fibre access, to be more than 100 million dollars lower than FY25.

We are now a net tax payer, having utilised historic revenue losses against the gain on last year’s Vocus transaction.

I expect a go-forward tax rate of approximately 30 per cent.

Now turning to cash flow, where momentum is very positive.

Cash flow from operating activities was broadly neutral, as the initiation of tax payments offset the increase in

EBITDA, and our positive working capital movement was a touch lower.

Operating Free Cash Flow was up more than 16 per cent, reflecting the benefit of lower capex as our investment cycle moderates, offset marginally by minor increases in lease costs.

Free Cash Flow to Equity was 93 million dollars, an increase of 108 million dollars, reflecting the substantial repayment of bank borrowings last year.

At the FY25 result, I said we expected that, on a reported basis in FY26, EBITDA growth and lower bank borrowing costs would offset the absence of seven months of cash flow from Discontinued Operations and the impact of a full year of the new Vocus arrangements.

This was, of course, excluding the material non-recurring cash benefits in FY25 of the Vocus sale proceeds and initiation of the handset receivables financing programme, and excluding separation costs.

We are very confident of achieving this outcome for the full year.

The business is now generating materially higher recurring cash flow, and we expect this trajectory to continue due to growth in Mobile Service Revenue, cost control, lower capex and much lower borrowing costs.

I will now cover operating costs.

Delivering a real reduction in costs is not easy in a high inflation environment – but the simplification of our business is creating sustainable efficiencies.

Looking at where the savings were created in the first half:

• Technology costs increased by around 11 million dollars, mainly due to higher costs for software licences, electricity and network rental.

• Employee Costs increased around 1 million dollars, as business simplification benefits largely offset wage increases.

• Other costs reduced 8 million dollars.

This is another strong performance against our objective to deliver 100 million dollars of operating cost efficiencies, before inflation, by FY29.

At 46 million dollars achieved to date since the start of FY25, we have already delivered almost half the target.

We expect FY26 to be broadly flat on FY25 in nominal terms.

I am very pleased with our track record on operating costs.

We are targeting and delivering structural cost reductions, not just short-term restraint, and supporting operating leverage as the business grows.

AI is a practical enabler of further productivity in areas such as customer care, network operations, software development and internal process automation.

Our focus is on using AI responsibly to improve speed, quality, capacity and efficiency, while maintaining strong governance and human oversight.

Now turning to capex and depreciation and amortisation.

We issued capex guidance on an additions basis.

Disclaimer

The top chart on this page shows the difference between this and cash capex, with 2025 figures on the comparable

Pro Forma basis.

Half-year additions was 277 million dollars, which we expect to increase to about 750 million dollars for the full year.

From FY27 onwards our targeted capex range remains 550 to 650 million dollars.

As we have previously mentioned, we expect to be at the upper end of that range in FY27 itself.

This reduction reflects the lowering capital intensity of the business now we are passed the peak of the 5G upgrade and IT modernisation.

First-half D and A charges were all broadly as expected, except for the one-time benefit in intangibles of 10 million dollars.

FY26 D and A is now expected to be in line with FY25 Pro Forma of

1.28 billion dollars. Slightly lower than I said at the FY25 result.

My final slide covers dividends and borrowings.

The declaration of an increase in the interim dividend to 10 cents per share reflects the strengthening of our financial position.

Debt servicing costs are lower, so there is more cash available to shareholders.

We have pulled franking back slightly to 25 per cent to ensure we have a sustainable level of franking on this increased dividend.

In the first half of 2026, we also made progress in deleveraging, reducing Debt to EBITDA to about 2.9 times on the basis that S&P measures, down from about 3.0 times at the end of 2025.

We expect to make further improvements to this ratio, reducing it much closer to our target of below 2.75 times by the end of the Year.

Last month, we kicked off the refinancing process for our bank debt maturing in July 2028.

Through this refinancing we intend to de-risk our position further, extending the duration of our debt and reduce the concentration of maturities.

We continue to expect to reduce leverage further in coming years and to pay higher dividends as profit and cash flow grow.

Thank you.

I will now hand back to Iñaki.

Iñaki Berroeta:

Thanks John.

This slide sets out our drivers of shareholder value and shows how we are tracking against our key commitments.

Progress was strong in the first half of 2026, and we are confident of delivering further progress both for the remainder of this year and beyond.

Our enhanced customer propositions are driving continued Mobile Service Revenue growth.

And we are getting continued operating leverage with higher margins and return on capital as we deliver cost discipline and capital efficiency.

This makes the outlook for cash flow and dividends very positive.

Our formal guidance for the Year is unchanged.

Disclaimer

We continue to expect EBITDA to be between 1.665 and 1.735 billion dollars, representing growth of just under 4 per cent on a Pro Forma basis at the midpoint of 1.7 billion dollars.

This implies an improved second half, which I am confident we can deliver.

We continue to guide for capex, on an additions basis, of 750 million dollars.

Thank you.

We will now take questions.

Paul Hutton

Thanks, Iñaki. As a reminder, to ask a question, please press “star 1” to join the queue or “star 2” to exit the queue.

Along with Iñaki and John, we also have members of the TPG leadership team available to assist with questions today. Our first question comes from Eric Choi. Barrenjoey. Eric.

Eric Choi

Thanks, Paul. Hey guys, good result as well. Do you mind if I ask a few, maybe guidance, one on dividends and one on long-term satellite, if that's okay?

Paul Hutton

Yeah.

Eric Choi

Awesome. Just maybe on guidance. If I look at what you're guiding to for EBITDA, that only requires a $60 million improvement, second half versus first half. And we can kind of work out Opex and fixed gross margins will be broadly flat, half on half, which means mobile's really going to be the delta. But if I look at your postpaid price increases, that already gets you $30 million. And even if I just assume 1 or 2% of sub growth half on half, that gets me north of that

60 already. So that's just the first question. It kind of looks like midpoint of guidance looks very achievable and under some subscriber scenarios, you're probably in the top half.

John Boniciolli

Why don't I take that, Eric? Yeah, so what you've outlined is absolutely correct. The Opex outlook is flat. We've already noted the improvement expected in half two on ARPU. Given that everything else being equal, you'd expect mobile margin to improve in the second half. You've also noted the improving trend on fix, and you've made an assumption there on a flatty sort of outlook for fixed gross margin, which is not unreasonable. I won't make a comment on subscriber growth for the second half, which I think you've also referenced. So yeah, we are confident of that guidance outlook, and it's exactly why we've reiterated guidance.

Eric Choi

Excellent. Thanks for being helpful on that, by the way, JB. Second one, maybe for you as well, JB. Just on dividends, I think you can infer it's going to lift by at least two cents a year because it has to be at least 10 second half. So you get 20 cents this year, 18 cents last year. My question's more about FY27. So, is it possible that dividend could lift two cents again? Because on previous calls, we've talked about FY27 free cashflow being potentially $400 to $500 million, which would be 22 cents of free cashflow per share. So if you've got the free cashflow there and you've already grown dividends by two cents a year, could you get a similar outcome in FY27?

John Boniciolli

Yeah, look, I'm not going to give an outlook for the exact amount of dividends, but what I will say is this. One, we updated our dividend policy in August of last year, and that was to a progressive dividend. And to be really clear on that is to grow our dividends over time in line with earnings and cashflow growth. That earnings and cashflow growth is absolutely coming through, and I think that's very apparent in our results, hence the confidence and the outlook for an interim dividend of 10 cents per share.

The second point I would make is given with your point on table just on FY26 firstly cash. If you take the midpoint of guidance and you note that we've said cash Capex is going to be broadly in line in 26 versus 25, then we're already at $400 to $500 million of free cash flow in FY26.

You add to that, I'm going to talk on a capex additions basis, capex drops from on an additions basis to $550 to $650 million, and that will have a cash capex benefit combined with whatever you are assuming in earnings growth in '27, then the cash outlooks look quite strong. And hence our confidence in that progressive dividend policy, and hence our confidence on our intention to grow dividends over time in line with earnings and cash growth.

Eric Choi

Disclaimer

Awesome. And can I do one final one maybe for Iñaki, more longer term. So Iñaki, if I make an observation, you've been doing this a long time even before TPG and back in the Vodafone days. When there were mobile pricing wars going on, I'd make the observation you stayed very rational and sensible with pricing. The reason why I bring that up is people are now questioning in the longer term if satellite players come in, does that bring irrationality into the mobile market? So, I'm just wondering, Iñaki, can you just talk to a scenario if Vodafone were to partner with or

MVNO with a satellite player, do you think this is a positive or negative outcome for Vodafone ARPUs? Or do you think about it more in terms of delta to your mobile service revenues?

Iñaki Berroeta:

Thanks, Eric. Look, I mean in principle, we are positive about this technology. The way we see the technology is pretty simple. So, this is the potential to cover geographical areas that in the past were not able to be covered with a terrestrial network. And we think that this is a change in terms of that coverage as a differentiator and also within that this is a change that is for the good for us. In terms of the rational, I mean we are rational regardless of the technology. So this has nothing to do with whether there are shifts in the technology available to us. And we do think that this is a critical service, is a very valuable service. It’s also very affordable, but also we need to make sure that we're able to maintain the sustainability of TPG and the service that we provide to our customers. So regardless of the arrangements that we will look for with the different options that we will have in the future around this, I think that at the core, we remain, like you said, a rational company.

Eric Choi

Excellent. Thanks, Iñaki.

Paul Hutton

Thanks, Eric. Our next question comes from Entcho Raykovski from Evans & Partners.

Entcho Raykovski

Thanks, Paul. Morning everyone. So, my first question is mobile related. And I mean, you've clearly outperformed the market from a subscriber perspective in the first half, so very good performance. But I'm just conscious that mobile service revenue growth of 3.1% tracks slightly below Telstra. I mean, I had them at 4.1% and then Optus was sort of in the mid-threes. So, any concern that your mobile service revenue growth is lagging slightly? Or is there perhaps a further pricing opportunity? And how do you think about balancing ARPU versus subs growth? And I mean, that probably goes towards some of your comments around ARPU growth accelerating into the second half, but maybe as part of that answer, if you can talk through how you see the subscriber trajectory flowing through into the December half.

Iñaki Berroeta:

Yeah, thanks Entcho. Look, I think that before I give James Gully to talk a little bit about what we have done in the plan refreshes, I think that the first thing to consider is we've been consistently for many, many reports, been increasing our ARPUs and our customer numbers. And I think that I always say that the balance of those two are not always the same, but also there are cycles around the timing of those plan refreshes. And I think that this is something that needs to be taken into consideration, and it's not the same for everyone in the same way that it's not the same, the mixes of customers. I think that you need to look at this more in a longer timeframe and look a bit at the trajectory. And definitely, what we mentioned around the timing of our plan refreshes has quite a lot to do with that comparative of the last six months. James, you want to add something about what we have done?

James Gully

Yeah., just to build on what Iñaki said, the timing of our plan refresh activity probably influenced some of those numbers. And in the second half, we are seeing forecasting anyway, an acceleration of our ARPU growth and service revenue growth on the back of that. If you look at the timing of the plan refreshes that we have undertaken, our postpaid front book and a significant portion of our back book changed in July and into August of this year, so that benefit will flow through in the second half. We did have Vodafone prepaid plan refresh of $5 in the middle of the half in the first half. We'll have the full half benefit of that in the second half.

We've also recently, as of Wednesday, updated our front book and back book for Felix. So, the low and medium plans are moving up by $5. And then on top of that, we've started communicating to our TPG mobile customers about some price changes on the low-end plans on TPG as well. So, the combination of all of those, we would see a acceleration of ARPU in the second half, still maintaining some momentum in net adds, but certainly, the balance may swing a little bit more to ARPU. As Iñaki said, it kind of moves a little bit between those two, but that's the way we see the outlook for the second half Entcho.

Entcho Raykovski

Disclaimer

That's good colour. Thank you. And then my second question is around home broadband. Can you talk a little bit more about the dynamic which is driving the better July, August performance? I guess apart from fixed wireless, you've been pretty clear on what you're doing there. And is it partly because you've kept pricing flat on some of the

NBN products, the 100 and 500 products? And how does that impact margin? Having said that, you've obviously guided AMPU improvement in 2H.

Iñaki Berroeta:

Thank you. I think that I'm going to let James talk a little bit about that and everything that we've been doing around churn management through AI and other things that we've been doing around all our broadband proposition. James?

James Gully

Yeah, sure. We have been working very hard on our churn across our NBN customer base as the number two provider in the country. Managing that in a pretty competitive market is our top priority, and we feel like we've made some very big inroads in that space. So, while the market dynamic in July, you get a lot of NBN price rises being passed through, that stimulates a lot of churn in the market, but we certainly navigated this year with a far better outcome than we have in other years. You are correct that we didn't increase the prices of some of our propositions such as NBN 500, but actually that was pretty common across the market.

So, we weren't alone on that and just the nature of the NBN price increase has really allowed some of us to absorb that. So, the underlying benefit is coming from churn, which as Iñaki mentioned earlier on, is really by identifying proactively customers and their experience on our network and being able to manage that customer proactively instead of reactively and lowering our churn volume. So, we're really happy with the progress that we're making there; and expect it to continue having navigated what is a tricky period as those price changes go through the customer base.

Entcho Raykovski

Okay, great. So, my last one, you touched on this in the presentation, but I don't know if you're able to provide a broader view on ACCC’s mobile service inquiry. Specifically, do you see regional roaming as essential, particularly in the context of the MOCN deal you have in place with Optus?

Iñaki Berroeta:

Thanks, Entcho. Look, I think that the first thing is that we have welcomed this inquiry and we've been public on that.

We do think there is an opportunity to look at how the sector can deliver more coverage, stronger competition, and also resilience. So, I think that from that perspective, we think is the right thing to do. Probably the key policy question is how the current market settings are going to continue to deliver the best in all these areas to consumers, especially in those areas where infrastructure competition might be limited or a monopoly. And I think that this is really the context of where we see the inquiry.

So, whether it adds or not, we are in a very different market from the first inquiry, which was done back in 2016, I believe, or 2017. Things are changing, LEOSat are coming, but that's why we do think that it's the right time to look at it. And probably this inquiry, not only looking at the domestic roaming implementation itself, but looking at the whole telco market and the current policy, and also the way that the policy that is being set around satellites, what's the impact that that's going to have, I think is positive.

Entcho Raykovski

Okay, great. Thanks, Iñaki.

Paul Hutton

Thanks, Entcho. The next question is from Liam Robertson at Jarden.

Liam Robertson

Thanks, Paul. Morning guys. My first question's just on Opex, obviously a really good outcome in the half. I think you've now delivered almost half of the hundred mil operating cost efficiencies that you're expecting to deliver by

FY29. So, I guess my question is, are you ahead of your own expectations on the FY29 timeline? Could we potentially see some upside risk to that?

John Boniciolli

Yeah. Look, I think it's fair to say we are ahead as we look back on the last 18 months. However, in many respects, it is part of the DNA of this organisation in terms of doing more with less, which really is part of the DNA, how we look at our cost outlook, how we always are looking at further productivity. We are now a dramatically simpler business.

So, whilst I say we are ahead maybe of where we thought we'd be 18 months ago on our cost. We are pleased with it, and we'll continue to do the heavy lifting on that and we'll continue to manage our costs very, very tightly. So, I

Disclaimer

We're pleased with that and we'll continue to manage our costs very, very tightly.

Liam Robertson

Perfect. Thanks, John. And then just secondly on capex, I'm conscious of comments around $100 mil step down into

FY27. I know you're suggesting the 5G upgrade is complete, but if I compare that commentary to some of your competitors, I guess they're talking about incremental investment over the next 12 months around 5G standalone. So, can you just help us contextualise those comments please?

Iñaki Berroeta:

Yes. Look, Liam, I think the best for that is, the different players in the markets are on different cycle. And I think I'm going to ask Giovanni to give you a view of where we are on our core network, but also on the RAN network investment for capex. Giovanni.

Giovanni Chiarelli

Thank you, Iñaki. So, in terms of our cycle, we were early investors on the 5G standalone. We have been the first network in country and one of the first in the world to have 5G standalone deployed. So, it was in 2021. So, that was much earlier than competitors here in the market. So, we have already passed that mark. Our 5G modernisation is concluding in the next two years in terms of radio and transmission, which is the Huawei swap out in favour of Nokia technology. So, this is the remaining part. So, in essence, we are already beyond the peak of the investments in 5G, and that's the main reason why we see the step-down in the next year capex, together with the fact that most of the investments in the IT and digital transformations are also behind us by now.

Liam Robertson

Perfect. Thanks guys. Appreciate it.

Paul Hutton

Thanks, Liam. Our next question comes from Lucy Huang at UBS.

Lucy Huang

Thanks, Paul. And thanks team. I've got three questions as well. Just firstly, if I can unpick some trends in enterprise mobile, given that's an area of strategic focused at the investor day. And how much growth did we see in the first half from enterprise contributing to the first page number? And in the context of the back-book mobile pricing refresh, are we seeing price rises as well in enterprise, or what proportion will be exempt from the price increase?

Iñaki Berroeta:

Thanks, Lucy. I think that Jonathan will be able to answer that one better.

Jonathan Rutherford

Yeah, Thanks, Lucy. Let me start with your second question first because it'll help give context to your overall question, which is do enterprise customers get back book price rises? Look, there's different segments in enterprise.

Some customers are contracted, some sit on month-to-month, some sit on long-term contracts. Clearly, we have a rational approach to pricing in enterprise, very similar to consumer. So, some of the base will be receiving price rises, and others will go through a natural contract refresh.

In terms of growth in H1, I think we had a good H1. We're very pleased. You'll remember at the investor day we talked about growing in government and growing in enterprise segments. We've done what we said we'd do, and I think we're very pleased with the overall growth trajectory. We don't split the numbers out into enterprise consumer postpaid, but we're on plan, and we're very happy.

Lucy Huang

Wonderful. And then just on the MVNO side, I guess we came in a little bit softer relative to your guidance on net adds in June. Just wondering if it's a timing issue. And with the three partners announced, should we expect them to all come through into the second half?

Jonathan

Yeah, great question, Lucy. Yes, it's timing and yes, we'll expect the partners to be on in the second half. And I think strong progress so far post-July.

Lucy Huang

Disclaimer

Wonderful. And then just my last one, which is on the debt profile in the business. I think, John, you mentioned you're starting off the refinancing activity for FY28 maturities. Just wondering, should we be thinking about the potential interest expense benefit? Are you expecting spreads to decrease off the back of the refinance?

John Boniciolli

Yeah. Look, we're expecting a lower margin through that given our current balance sheet settings and just the credit markets overall. What I'll also note just on that, just we do have a very mature and disciplined interest rate hedging programme as well. So, for this year, for instance, we're 62% hedged. So, that's probably another pertinent point to raise as well.

Lucy Huang

Great. Thank you.

Paul Hutton

Thanks, Lucy. Our next question comes from Andrew Gillies at Macquarie.

Andrew Gillies

Morning all. Just my first one is on hardware. Obviously, we've seen a fair bit of hardware softness in the market and in the results as well. Can you maybe talk to your plans for hardware if it's just a market issue, what you might be doing, and if in particular the handset receivables financing deal provides scope to go slightly harder on handsets?

Thanks.

Iñaki Berroeta:

Thank you, Andrew. I think that this is a combination of James, and also I'm going to ask John to talk a little bit about handset receivable. But you see that there have been some supply chain issues in the market overall, I think that the handset market is not like it used to be in that sense, but we are doing things around that. And I think that maybe

James, you can start with a bit where we are with handsets.

James Gully

Sure. Andrew, half one was certainly supply constrained, particularly in Apple, but also in some of the low-end devices. And so what that drove was an environment where suppliers and ourselves really were not investing to stimulate demand because we had limited supply, so we really went to manage our margins in the first half, was our goal on devices.

As we move into half two, we have seen an improving position on device supply, certainly from Apple and some support for activity, which is now in market, and obviously we head into the Apple launch in this half as well. So, we see a slightly improving position from half one, and we're also launching next week an Upgrade and Protect product that really gives customers options to upgrade devices pretty much at any point through their contract, but also support them in a world where they might lose or damage their device as well. So, we're looking at a number of ways that we can support customers as we move to a world where there's some supply constraints, but also higher prices on devices moving forward. I might flick to you, JB.

John Boniciolli

And just on handset receivable financing, as we announced when the programme was launched last year, it's all about managing our balance sheet and it does avoid the working capital volatility. Noted that the cost of that programme, including the bad debts risk that's avoided is very strong and hence why we did that deal. What I'd also say is, it's not a substitute for commercial discipline, and a great example of that would be, despite our hardware revenue dropping, our hardware margin improved because of the great work across the business on managing our logistics, stock obsolescence and stock write-offs, just one example of the commercial discipline.

Andrew Gillies

Perfect. And then just my second one on MVNOs, obviously we've seen some new deal wins there, there've been a few questions asked on enterprise as a strategic opportunity. Can you maybe talk to the pipeline for MVNOs and how we should be thinking about that opportunity over the next 12 to 24 months?

Iñaki Berroeta:

Jonathan.

Jonathan Rutherford

Thanks, Andrew. If you remember at the Investor Day, we talked about different kinds of partners, all of which sit in the wholesale segment, things like connected cars, wearables, and then the more traditional MVNOs. We'll look to

Disclaimer

TPG Telecom – HY26 results third-party transcript - this transcript is prepared by a third party and is provided for information only. Anyone accessing the transcript should undertake with responsibility for assessing the relevancy and accuracy of the content. develop in all three of those areas, and we've got a good pipeline across three areas. It may be more skewed to other kinds of partners rather than traditional MVNOs in the next 12 months, but a good pipeline, really committed to rolling out the ones that we've got and getting them on board in H2 and open for business.

Andrew Gillies

Perfect. Thanks very much guys.

Paul Hutton

Thanks, Andrew. Our final question at this stage is from Fraser McLeish at MST. Just a reminder, if you have any final questions, please press “star 1” to join the queue. Go ahead, Fraser.

Fraser McLeish

Great, thanks. I just wanted to focus back a little on the postpaid ARPU, just because it is probably still your single biggest revenue driver. And just understanding maybe some of the puts and takes, obviously you put your price rise of $4 through in the middle of last year that pretty much impacted the majority of the base, because that's $3.60 after

GST, but we've only seen 25 cents of that come through to ARPU. So just what are the things that diluted that? And when we look forward, what are the things that could dilute your price increase you've just put through? Thanks.

Iñaki Berroeta:

Thank you, Fraser. James, you want to take that one?

James Gully

Yeah, happy to. Thanks, Fraser. The drivers of some of that dilution, if you like, of the $4 front book being diluted, there's a number of factors there. One is, we have seen a slowdown in roaming in the half based on the Middle East conflict, so that has certainly had a dampening effect on ARPU versus the same period prior. As we have talked about, we do have a mix of enterprise customers and good growth in that section as well that comes through at a slightly lower ARPU than the base, so that to some extent has somewhat of a dampening effect on the overall blended ARPU and probably distorts what we can navigate in the consumer space in terms of passing through the price rise.

Then there's obviously the BAU either save activity or promotional activity that goes along with it, so last year was a

$4 increase, this year we put through a $5 plan refresh that we expect to give us the benefits in the second half, but also into next year. And we remain optimistic on a few fronts, some of the items we've talked about like upgrade and protect, we see as providing some ARPU upside also along the lines of other value-added services such as wearables and things like that to add value into the postpaid product and continue to drive ARPU. That's the summary there.

Fraser McLeish

Thanks. I'm guessing that the promotional activity is probably one of the bigger impacts on diluting that ARPU. Is it fair to say that if you're expecting ARPU to grow better, we'll maybe see that, I know you don't want to guide on your promotional activity, but it sounds like that might be a bit lower going forward given you're through the big promotion for the MOCN network and we should see more of the price dropping through to ARPU than we saw certainly in this half. Thanks.

James Gully

Look, really it's a matter of just balancing that subscriber growth and ARPU moving forward, and that's what we'll continue to do. And part of it will depend on how we see the market and where the opportunities are as well, Fraser.

So I won't really provide any guidance on that, but we'll continue to just balance those two into the second half.

John Boniciolli

Fraser, our focus is on mobile service revenue and mobile margin growth. And at any point in time, that balance on subscriber and ARPUs could be slightly different in quarter across bands or even across the product set. But what I would say is that margin growth is the most important thing we look at, it was 4.2% in the half, and given what we've said about ARPU, we expect an improved performance in half two relative to half one on margin growth. And I think that's probably the really important point to take from the numbers in our outlook.

Fraser McLeish

Great, thank you.

Paul Hutton

Thanks, Fraser. Our next question is from Ware Kuo at Bank of America.

Disclaimer

Ware Kuo

Morning, thanks team. Just one question from me, just on the fixed wireless business, you guys have talked to improving momentum expected in the second half. Could you just talk to maybe some of the capacity service quality differences versus NBN fixed product? How does that change with standalone 5G? And maybe just elaborate on some of the new customer addressable market that may have been previously difficult to serve for fixed wireless.

Thanks.

Iñaki Berroeta:

Thanks. Look, on the fixed wireless, I think that the important thing is that a lot of the work that the team has been doing around sharing management for fixed problem products has been also applied on fixed wireless. On top of that, we have the initiative on using the standalone 5G core. We have now, I believe 70% of the base on fixed wireless is already on 5G, so that's also something that is helping us.

And looking at the performance that we had in the last month and at the beginning of August, we see that [inaudible] so that's why we are optimistic about the product. The product still represents an affordable option for many, many customers, which are in the geographical area where we commercialise that product, and it continues to be the most margin accretive product that we have on fixed, so for that reason, it's a product that we continue to be on.

Ware Kuo

Great, thank you.

Paul Hutton

Thanks, Ware. Our final question is from Ben Jones at J.P. Morgan.

Ben Jones

Morning guys, thanks for taking that question. Just the first one on the digital first brands, obviously net ads came in better late in the half versus the comments you initially gave at the Investor Day. Can you just comment on what changed in June post the Investor Day and how that's tracking, particularly in that digital first portfolio into 2H?

James Gully

I wouldn't say anything changed too dramatically, it's just continued momentum in those brands. Customers are really wanting that digital first product with a really simple, transparent product, really well priced and providing great value.

So we just see really continued momentum in that space rather than something materially shifting.

John Boniciolli

I think Investor Day was early May [correction early June 2026], and you provide an outlook for two months. I think that's what the momentum continued and we're very pleased how customers have responded.

Ben Jones

Got it, thanks for that. And just more medium term, especially if you're thinking about how you're outperforming the market on the postpaid side and appreciate your ARPUs products locked in for this year. Going forward, if you've got the better churn characteristics and you're closing the coverage gap, does that give you more scope to accelerate that pricing ARPU going forward?

Iñaki Berroeta:

I think that that gives us a scope for many things. We never talk about what we're going to do in pricing in the future obviously, but I think that what is clear is that whether it's on Postpaid or whether it's on digital first brands, since the introduction of the MOCN, the traction that we're getting in the market is strong and we will continue to leverage on that and the benefits of our network.

Ben Jones

Great, thanks very much for the call guys.

Paul Hutton

Thanks, Ben. We have no further questions at the moment, so we'll conclude the call for today.

Thank you very much for joining, speak to you soon.

End of transcript