Why TPG shares are down on strong full-year results

TPG Telecom Ltd (ASX: TPG) shares slipped 3% to $3.93 during lunch hour trade. This followed the company’s release of its FY25 results. The market reaction suggests investors were hoping for a little more from the telco’s turnaround story.

Over the past 12 months, TPG shares have declined 13%. They are trailing the S&P/ASX 200 Index (ASX: XJO), which has jumped 11% higher over the same period.

Return to profitability

TPG Telecom is one of Australia’s largest telecommunications providers. In recent years, the company has reshaped itself into a leaner, mobile-focused operator.

For FY25, TPG Telecom delivered a return to profitability. The telco posted a $52 million net profit after tax (NPAT), compared with a $140 million loss in FY24.

Service revenue edged 2.2% higher to approximately $4.18 billion. The growth was driven by a 4.2% lift in mobile service revenue as subscriber growth gathered pace. EBITDA rose strongly with 18.4% to $1,660 million; on guidance basis, up 2.0% to $1,637 million.

Higher revenue per user

TPG Telecom pointed to its regional mobile network expansion as a key driver of its 2025 results. It managed to add 228,000 new mobile subscribers over the year.

Growth skewed heavily toward its digital-first brands and enterprise, government and wholesale (EGW) division. The average revenue per user edged higher to $35.5. That’s a sign the telco isn’t just adding customers but extracting more value from them.

The balance sheet saw a significant reset over the year. TPG Telecom repaid billions in borrowings. It also returned substantial capital to shareholders through dividends, with total ordinary dividends of 18 cents per share declared for FY25.

Simplified business paying dividends

There are clear strengths in TPG Telecom’s story. Mobile momentum is building, cash flow has improved substantially, and the simplified business model appears to be gaining traction.

CEO and Managing Director Iñaki Berroeta said:

2025 was a transformational year for TPG Telecom. We delivered another year of mobile subscriber growth, cementing our position as Australia’s leading challenger telco… We are well-positioned to unlock further value for customers and shareholders. We are targeting continued growth in our share of Mobile Service Revenue, growing EBITDA margins as we keep costs strongly under control, and ongoing growth in free cash flow, earnings per share and return on capital.

However, risks remain. Competition across mobile and broadband markets is intense, and TPG Telecom must continue executing well to defend margins. Any missteps in its mobile-led strategy could quickly weigh on earnings and the price of TPG shares.

What next for TPG shares?

Looking ahead, TPG Telecom has provided guidance for FY26 EBITDA of $1,665 million to $1,735 million, with capital expenditure of around $750 million. The company expects continued mobile growth and tight cost control to support these targets.

Management is also targeting dividend growth for TPG shares backed by sustainable profits and cash flow. It will also push ahead with further efficiencies as it streamlines the business.

The post Why TPG shares are down on strong full-year results appeared first on The Motley Fool Australia.

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Motley Fool contributor Marc Van Dinther has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.