The ASX 200 index is back on form again on Tuesday and charging higher.
But one ASX 200 share is performing particularly positively today thanks to some big news.
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Which ASX 200 share?
TPG Telecom Ltd (ASX: TPG) shares are pushing 4% higher today after unveiling plans to return a massive amount of cash to shareholders. This follows the completion of its $5.25 billion sale of fibre and enterprise network assets to Vocus Group.
The ASX 200 share has announced that it will return up to $3 billion to shareholders through a pro rata capital reduction of up to $1.61 per share. While technically a capital reduction, the move effectively works like a special dividend for investors.
In addition, the company is offering minority shareholders the option to reinvest their proceeds into new TPG Telecom shares via a $688 million reinvestment plan. It notes that this will allow smaller investors to increase their ownership while boosting the free float of the company on the ASX.
Commenting on the plans, The ASX 200 share's chair, Canning Fok, said:
The Board is pleased to announce these plans, which we consider provide a compelling value proposition for all shareholders, while putting in place a sustainable long-term financial position for TPG to deliver stronger and more consistent returns.
Strategic Shareholders' willingness not to participate in the Reinvestment Plan recognises that increasing minority shareholders' ownership of TPG's shares will improve ASX free-float liquidity and has the potential to unlock value for all shareholders.
Management also plans to use the remaining proceeds to pay down up to $2.4 billion in bank debt, targeting a significantly stronger balance sheet and what it expects will be an investment-grade credit rating.
Dividends are staying
Alongside the capital return, the ASX 200 share reaffirmed that it intends to pay an FY 2025 dividend of 18 cents per share, matching what was paid in FY 2024. It has also committed to increasing dividends in the years ahead as profits and cash flow grow.
TPG Telecom's CEO, Iñaki Berroeta, said:
We have transformed our business over the past year through the execution of the Vocus Transaction and the doubling of our mobile network coverage, which have made us a simpler, more capital efficient business, while improving our commercial position.
Our capital management plans demonstrate the transformation of our financial position and the conviction we have in TPG's growth strategy and competitive position.
Based on yesterday's close price of $5.52, this $1.61 per share capital return equates to a whopping 29.1% dividend yield.
