Since the release of the full-year results on Feb. 27, 2026, TPG Telecom shares have risen 8%, dividend-adjusted, compared with the 2% decline in the S&P/ASX 200. We delve into why and whether there is still value at current prices.

Why it matters: TPG is on a simplification journey to become a connectivity-focused mobile and broadband provider, unencumbered by legacy corporate maneuvers and balance-sheet constraints. The journey coincides with a more risk-averse market seeking a defensive haven.

  • As investors grapple with rising inflation, cost of living, and geopolitical tension, few businesses offer as much earnings resilience as telecom providers, especially those focused mainly on connectivity. Interest in TPG is further aided by the improving free float and liquidity of its shares.
  • After the reinvestment plan in November 2025, TPG’s free float (shares owned by minority shareholders) lifted to 27%, from 23%. Since then, long-time corporate shareholder Soul Patts has sold down its interest to below 5%, from 12%, thereby further increasing free float to 34%.

The bottom line: We retain our AUD 4.70 fair value estimate for no-moat TPG, with shares just 9% below our assessment. Closing the remaining discount hinges on keeping the AUD 1.0 billion operating expense base largely flat from efficiency gains, while capital expenses ease due to recent 5G-related investments.

  • Employee benefits account for around 35% of TPG’s operating expenses. As artificial intelligence advances, technology will play an increasing role in customer service and network maintenance, providing avenues for headcount reductions.
  • Despite the recent rally, TPG’s valuation remains reasonable, trading at 7.0 times our 2027 EBITDA forecast. This is below the 7.6 average for our mature telecom coverage and 8.5 for Telstra. Such a discount no doubt played a role in institutional investors soaking up Soul Patts’ shares.

Defensive Telcos Back in Vogue

The 2020 merger with Vodafone Australia (the third-ranked mobile player in the country) is one way TPG Telecom is trying to limit the impact of the NBN on its fixed-line broadband business. Mobile offers a critical strategic path to future-proof the group in the face of an onslaught from the NBN.

In July 2025, TPG sold its fiber assets for AUD 5.3 billion to Vocus. The transaction followed the resurrected mobile network-sharing deal with Optus, approved by regulators on Sept. 5. On consummation of both, TPG is now a mobile-focused entity, operating in a three-player wireless industry that is becoming more rational, with no more lingering balance sheet concerns. It has also retained the capacity to offer fixed-line broadband to retail and small businesses, while continuing to find ways to bypass the National Broadband Network via fixed wireless and 5G.

Part of the AUD 4.7 billion net proceeds from the fiber asset sale was used to pay down debt, but AUD 3 billion was distributed to shareholders in the form of an AUD 1.61 per share capital return. We see this as a sensible capital management move, as TPG does not need the money. It has cut debt by AUD 1.7 billion from the sales proceeds, and the new handset receivables financing structure will further reduce leverage. We forecast pro forma net debt/EBITDA to be 1.4, and 1.1 post the AUD 438 million Reinvestment Plan conducted in November 2025, designed to increase free float in TPG shares.

In April 2024, TPG announced a regional mobile infrastructure-sharing deal with Optus, to replace the Telstra alliance which was rejected by the competition regulator. The logic of the partnership remains the same: to allow Optus to utilise TPG’s excess mobile spectrum to improve capacity, in return for granting TPG access to Optus’ mobile network assets to improve TPG’s regional presence and expand addressable market. TPG hopes to become a serious third player in regional markets where its mobile revenue share is less than 10%.

Bulls Say

  • Cross-selling opportunities remain for both consumer and corporate markets.
  • The regional mobile network-sharing deal with Optus increases the scale of TPG and allow it to better compete against Telstra and Optus in the overall Australian market.

Bears Say

  • TPG Telecom’s service levels are seen as less attractive than some peers. Market share gains have been driven by pricing.
  • Development of the national broadband network could lower barriers to entry, providing open access for new players to enter the market and deliver fiber broadband services. This scenario is increasing competition.

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Terms used in this article

Fair Value: Morningstar’s Fair Value estimate results from a detailed projection of a company’s future cash flows, resulting from our analysts’ independent primary research. Price To Fair Value measures the current market price against estimated Fair Value. If a company’s stock trades at $100 and our analysts believe it is worth $200, the price to fair value ratio would be 0.5. A Price to Fair Value over 1 suggests the share is overvalued.

Moat Rating: An economic moat is a structural feature that allows a firm to sustain excess profits over a long period. Companies with a narrow moat are those we believe are more likely than not to sustain excess returns for at least a decade. For wide-moat companies, we have high confidence that excess returns will persist for 10 years and are likely to persist at least 20 years. To learn about finding different sources of moat, read this article by Mark LaMonica.