Fund Manager Summary
The fund managers believe that the outlook for TPG Telecom Ltd is promising, particularly as it positions itself as a more focused mobile operator, presenting attractive upside potential. In their opinion, the ongoing price increases among major competitors indicate a clear growth trajectory in the telecommunications sector. The recent divestment of the Vocus fibre network, yielding $4.7 billion in net proceeds, is expected to strengthen TPG's balance sheet and enhance its ability to return capital to shareholders. Furthermore, TPG's transition to a simplified business model with sustainable leverage is likely to attract a broader range of investors, paving the way for improved analyst ratings, despite the current prevalence of "sell" recommendations due to legacy issues.
Source: Trading View
Commentary From The Managers
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Yarra Capital Management
31 Oct 2025
$5.53
Summary
- TPG Telecom has shown strong performance following a significant announcement.
- Yarra Capital Management continues to hold an overweight position in TPG.
- The company revealed a new $600 million handset receivables financing structure.
- TPG is set to execute a $2.4 billion capital return after divesting its Enterprise, Government, and Wholesale segments to Vocus.
- Initially, the divestment created a short-term overhang on the stock.
- The discounted reinvestment plan disincentivized minority shareholders from taking positions before the capital return event.
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Please note: The completeness, accuracy or current status of the investments referenced are not guaranteed.
Commentary From The Managers
Yarra Capital Management
31 Oct 2025
$5.53
- TPG Telecom has shown strong performance following a significant announcement.
- Yarra Capital Management continues to hold an overweight position in TPG.
- The company revealed a new $600 million handset receivables financing structure.
- TPG is set to execute a $2.4 billion capital return after divesting its Enterprise, Government, and Wholesale segments to Vocus.
- Initially, the divestment created a short-term overhang on the stock.
- The discounted reinvestment plan disincentivized minority shareholders from taking positions before the capital return event.
Summary
Ten Cap
30 Sept 2025
$5.02
- Ten Cap initiated a position in TPG Telecom (TPG) following a nearly 10% drop in share price.
- The decline was attributed to market confusion surrounding TPG's dividend reinvestment plan.
- At a valuation of 18x earnings (excluding capital return), TPG is viewed as compellingly priced.
- TPG is expected to achieve double-digit growth potential, enhancing its attractiveness.
- This value proposition is particularly notable when compared to higher-priced defensives like Telstra (TLS), which trades at 25x for lower growth.
Summary
Yarra Capital Management
31 July 2025
$5.54
- TPG Telecom (TPG) is currently rated as overweight by Yarra Capital Management.
- The company underperformed following its capital return strategy announcement.
- TPG’s strategy involves $4.7bn proceeds from the divestment to Vocus.
- The $2.4bn capital return aligns with market expectations.
- The structure of the capital return did not sufficiently clear shareholder overhang.
- Approximately 77% of the float is held by four strategic shareholders.
- Minority shareholders have an option to reinvest in October 2025 at a discount.
- This reinvestment plan may discourage minority shareholders from investing now.
- Yarra Capital Management continues to hold its position due to these dynamics.
Summary
Yarra Capital Management
3 July 2025
$5.36
- Yarra Capital Management is optimistic about TPG Telecom, Australia’s third-largest telecommunications company.
- TPG is currently trading around $5.40, with potential for significant upside as it shifts towards being a pure play mobile operator.
- The mobile segment represents the most robust growth area in the telecommunications industry, with prices increasing as competitors aim to enhance earnings.
- TPG’s recent sale of the Vocus fibre network assets will provide approximately $4.7 billion in net proceeds, bolstering its balance sheet.
- This financial strength positions TPG to return capital to shareholders while facilitating strategic growth.
- With a simplified business model, TPG is showcasing sustainable leverage and a stronger growth trajectory.
- These factors enhance TPG's attractiveness to a broader range of investors, potentially leading to improved analyst ratings.
- Currently, the majority of analyst recommendations are "sell," primarily due to historical issues.
Summary
BKI Investment Company
31 Mar 2025
$4.80
- BKI Investment Company continues to hold its position in TPG Telecom Ltd.
- Substantial capital investments have been made by TPG over the past five years, focusing on infrastructure and spectrum.
- Cash capital expenditure reached $2.2 billion over the last two years, excluding spectrum costs.
- Projected annual expenditures for TPG are expected to decrease significantly, with $900 million anticipated in 2025 and $500-650 million from 2027 onwards.
- TPG expects a $100 million reduction in operating costs following the sale of their fibre and EGW fixed assets.
- Since 2019, TPG has invested $586 million in spectrum.
- In January 2025, TPG will activate a major regional network sharing agreement with Optus, enhancing mobile network coverage.
- This agreement will expand TPG's coverage to over 1 million sq/km, reaching 98.4% of the Australian population.
- TPG's extensive mobile network of over 5,700 sites solidifies its position as Australia’s second-largest fixed voice and data network.
Summary
Please note: The completeness, accuracy or current status of the investments referenced are not guaranteed.
ANALYST INSIGHT
Equity Research Analyst
"With TPG Telecom seemingly poised to transform into a streamlined mobile powerhouse, the potential for upside appears enticing. As the telco landscape shifts, this could be the moment for investors to reconsider what once seemed a 'sell' opportunity."
Last Updated: 31 Oct 2025
Query The Data
Frequently Asked Questions
Who is investing in TPG Telecom Ltd (ASX:TPG)?
Fund managers including Yarra Capital Management, BKI Investment Company and Ten Cap have invested in TPG Telecom Ltd (ASX:TPG).
Why do fund managers invest in TPG Telecom Ltd?
Fund managers are investing in TPG Telecom Ltd due to its status as Australia's third-largest telecommunications company, which is transitioning to a focused mobile operator. With rising prices and an improving earnings outlook in the sector, TPG's recent divestment of the Vocus fibre network will enhance its balance sheet, providing significant capital for shareholder returns. This strategic simplification of its business model is expected to attract a wider range of investors and improve analyst ratings.
What happened to TPG Telecom Ltd (ASX:TPG)?
Fund managers are investing in TPG Telecom Ltd due to its compelling valuation and growth potential. Despite recent underperformance linked to its capital return strategy, TPG's share price decline has created an attractive entry point. With a price-to-earnings ratio of 18x and prospects for double-digit growth, TPG is seen as a more favorable investment compared to higher-priced competitors like Telstra, which trades at 25x with lower growth. This combination of value and growth potential positions TPG as an appealing option for fund managers.