Why we think TPG investors need to watch who takes a stake in Optus

研报英文原文证据摘录

Why we think TPG investors need to watch who takes a stake in Optus

IdeaM

Investment thesis – We remain Underweight TPG

Nothing at this stage to alter our earnings estimates, valuation or cautious investment

thesis, but as we explore in this report, we are closely monitoring for any potential

changes in the competitive environment.

TPG is a well-run telco. We assessed its full-year CY25 results + and first-time CY26

guidance, released earlier this year (February 27, 2026), as broadly in line with the

market's expectations. The company's recent investor day and additional disclosure

provided on medium-term operating + strategic objectives are constructive for medium-

term earnings and returns, in our view.

Three key points to our cautious thesis:

1. Has TPG's earnings risk profile increased (ex-fibre)? The near-term outlook for

mobile sub growth (due to MOCN) and pricing is positive, in our view; it should

underpin modest positive near-term mobile EBITDA growth. However, medium-

term hopes for growth could prove more challenging, in our view, with our

forecast three-year EBITDA CAGR of 2% below the company's expectations. We

see the new TPG (ex-fibre) as primarily a consumer mobile business, #3 in the

Australian market and a reseller of NBN consumer broadband. As such, we believe

TPG is vulnerable to any variation in the current favourable mobile landscape.

2. Capital allocation priorities? We have not agreed with every strategic decision in

the past, e.g. rather than sell its fibre network, we would have preferred TPG to

cut its dividend to zero to accelerate debt reduction – see report: Should TPG cut

its dividend to zero? (15 Nov 2023). But, to management's credit, they did execute

that asset sale well, and a significant portion of the capital raised was returned to