TPG Telecom shares rise on new financing structure
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More news: Shares in TPG Telecom rallied after the telco launched a new handset receivables financing structure, targeting an additional $600 million in free cash flow for the financial year ending 31 December.
TPG shares were up 1.8% to $5.15 at 2:45pm AEST. The stock is up 14.7% in calendar 2025.
TPG Telecom unveils new financing structure to unlock $600m free cash flow
The news: TPG Telecom has launched a new handset receivables financing structure to support competitive mobile phone handset offers to customers, release additional cash flow and improve capital efficiency.
The context: A handset receivables funding structure is a type of asset-backed financing arrangement used by mobile network operators to fund the cost of mobile devices that are sold to customers, typically on instalment payment plans.
TPG's new structure will involve the company selling eligible handset receivables to an off-balance-sheet trust. This is expected to deliver TPG a net benefit in free cash flow of approximately $600 million in the financial year ending 31 December 2025.
TPG also expects the new structure to directly contribute an improvement in return on investment capital (ROIC) of around 40 basis points in FY25 and around 110 basis points in FY26. The ROIC benefits of the structure are then expected to increase from FY27.
Senior financing of around $700 million is being provided to the off-balance-sheet trust by a leading group of TPG's lenders, with financing structured by Macquarie Bank.
TPG expects a net negative impact to statutory net profit after tax in FY25 of around $50 million associated with the new structure.
What they said: "Our customers value being able to pay for handsets through monthly interest-free payment plans as it lets them stay connected with the latest technology and spreads the upfront cost of the device," said TPG's managing director and CEO Iñaki Berroeta.
"Establishing this innovative financing structure enables TPG to keep offering customers highly competitive deals on Apple iPhone, Samsung Galaxy and other handsets while deploying our shareholders' capital much more efficiently."
The source: ASX
