TPG Telecom Ltd (ASX: TPG) shares have enjoyed a strong year to date.
The telecommunications company has risen more than 15% since the start of 2025.
Image source: Getty Images
What's behind the strong rise?
The telecommunications company reported it added 100,000 mobile subscribers in the first half of the year.
Furthermore, revenue and revenue per user have also increased, which may have contributed to investors buying shares in this communications services company.
It released its results for the half year ended 30 June 2025 last week, which included:
- Service Revenue up 2.2% to $2,060 million, driven by growth of 100,000 mobile subscribers following regional network expansion
- EBITDA up 1.0 % to $813 million
- Statutory NPAT up $32 million on higher EBITDA
- Interim dividend of 9.0 cents per share declared with a new policy to increase over time, subject to sustainable growth in profit and cash flow
Iñaki Berroeta, Chief Executive Officer and Managing Director, said:
This was a transformational half year for TPG Telecom. We are now mobile-led and simpler to run following the sale of our fibre infrastructure and Enterprise, Government and Wholesale (EGW) Fixed assets to Vocus.
The company also highlighted the success of the establishment of its regional network infrastructure sharing agreement. This provides greater mobile coverage across Australia.
What did Macquarie have to say?
Broker Macquarie provided upgraded guidance on TPH Telecom shares last week following earnings results.
Macquarie highlighted TPG's improving cash flow and balance sheet, noting the company repaid A$1.7 billion in debt during 1H25, reducing its net debt/EBITDA ratio to 2.7x from 3.7x.
It believes this deleveraging, combined with a better bank interest margin and exposure to falling interest rates, strengthens its financial position.
Operationally, the digital-first strategy is proving effective, supporting a firm A$100 million cost-out program.
The Felix and TPG brands contributed over 50% of 1H25 mobile subscriber net additions. While average revenue per user (ARPU) is lower, the additions are margin-accretive.
Looking ahead, TPG's deleveraging and improving interest cost profile are expected to continue, with potential for further debt reduction if capital return reinvestments are executed.
Updated price target for TPG
The broker said it has revised FY25, FY26, FY27, and FY28 EPS by -3%, -2%, 0%, and +2%, respectively.
One catalyst for this was the NBN industry-wide challenges, which are set to continue.
Despite this, Macquarie retained its outperform rating and updated its 12-month price target for TPG Telecom shares to $5.60.
From TPG Telecom's close yesterday at $5.23, this indicates an upside of just over 7%.
