Communications Day – story of the week

The story of the week is in two articles from CommsDay (18 November 2025).  TelSoc has chosen to reprint the articles because of the various speculation that has arisen in recent time about the fate of mobile network operators and their profitability trends.  Members will recall that we had a webinar earlier in the year with Professor William Webb from the UK, who raised the question about whether MNOs were becoming utilities and how they might modify their business plans to adapt to being effectively the providers of connectivity.  TPG’s latest move might be considered in that context.

TPG flags tight cost discipline as it banks gains from Optus MOCN expansion

TPG Telecom CEO Inaki Berroeta said the telco was entering a period of “relatively flat operating cost in nominal terms” and materially lower borrowing expenses, giving it far greater certainty over medium-term cash flows as it executes its post- divestment strategy.

Speaking at a briefing on TPG’s reinvestment plan, Berroeta said the company’s cost profile had now stabilised, with spectrum outlays paused until 2028 and capital expenditure set to fall sharply after two years of heavy investment. “We expect capex to fall from the peak above $1 billion in 2023 and 2024 to between $550 and $650 million from 2027,” he said.

These settings accompany continued mobile service revenue growth, supported by the doubling of TPG’s regional mobile coverage this year through its MOCN arrangement with Optus.

The briefing followed TPG’s announcement of a capital return funded by the $4.7 billion received from the sale of its fibre assets and its enterprise, government and wholesale fixed business to Vocus. Of that, $3 billion will be returned to shareholders.

Berroeta said the combination of lower opex, falling capex and no near-term spectrum liabilities pointed to “increased market share in mobile, higher EBITDA margins, lower opex and capex as a proportion of revenue, and higher ROIC”. He added that these factors provided “great visibility of medium-term cash flows and a strong out- look for TPG Telecom and its shareholders.”

The reinvestment plan aims to allow minority shareholders to reinvest part or all of their $1.61 per share cash distribution into new TPG shares. The institutional com- ponent, which opened yesterday, will raise up to $550 million, with new shares priced at $3.61 – a 5% discount to Friday’s close – and with the CEO noting that share- holders could oversubscribe.

TPG said Barrenjoey Markets, BofA Securities, Morgans Corporate and UBS Securities Australia are acting as joint lead managers.

The retail reinvestment plan, targeting a further $138 million, will open on 20 November. Its shares will be priced at the lower of $3.61 or a 5% discount to the arithmetic average of the daily VWAP during the give trading days up to and including the 5 December close.

“This raising is about offsetting the impact on our free float market capitalisation of the capital return and increasing the proportion of our free float,” Berroeta said. “All proceeds raised count toward our index weighting and will contribute to the overall trading liquidity of our shares.”

He added that proceeds will be used to pay down bank borrowings, in addition to the $2.3 billion already repaid since August. “Today’s offering is primarily about facilitating reinvestment for our shareholders, not funding the business,” he said, adding that the offer is not underwritten and may raise less than the maximum amount.

Rohan Pearce

TPG Telecom‘s move to asset-light model seen as pivotal industry moment

TPG Telecom’s move towards an asset-light business model represents a “pivotal moment” for the company and reflects broader pressures across the Australian and New Zealand telecommunications sectors, according to new analysis from Venture Insights.

The research firm said TPG’s $3 billion capital return demonstrates management’s confidence following the divestiture of its fixed network assets and its network- sharing arrangement with Optus.

Venture Insights noted that by selling infrastructure and reducing mobile capex, TPG has strengthened its balance sheet while “navigating towards a more asset-light model that allows for increased operational flexibility”.

The report said TPG’s new Reinvestment Plan, allowing minority shareholders to recycle capital into fresh equity, represents a forward-looking approach to investor engagement. It described the strategy as “a progressive approach to maintaining robust investor relations”.

But the broader context remains difficult. Venture Insights’ David Kennedy told the recent CommsDay Wholesale Congress that the Australian market is characterised by “the paradox of rising data consumption juxtaposed with stagnant revenues”, a trend that continues to challenge profitability for all major operators except Telstra. The report said rising operational costs are being driven in part by technology platforms that “reap the benefits of increased data usage without a fair compensation model for traditional network providers”.

Regulation is adding further pressure. The report said scrutiny from the Australian Competition and Consumer Commission and the Australian Communications and Media Authority is “mandating fair practices that can protect consumer interests while adding to industry costs”, contributing to what it described as a “paradigm shift to- wards utility-like business models”.

Venture Insights said comparable pressures are evident in New Zealand, where Spark NZ, One NZ and 2degrees face the same revenue stagnation despite accelerating data use. It said the market’s competitive intensity and oversight from the Commerce Commission are pushing operators toward deeper partnerships, investment in next-generation networks and more efficient service models.

The report warned that the transition to asset-light operations will raise new challenges when infrastructure contracts mature. It said divestment may provide immediate balance-sheet benefits but “poses questions regarding potential pricing reviews and contractual negotiations at the end of their terms”. Operators shifting to leased or service-based access will need to anticipate the risks of future price resets and factor them into long-term planning.

Venture Insights argued that operators will only improve return on investment by adopting more innovative service strategies. It said telcos should look beyond cost- cutting and emphasise value-added offerings, noting that “the focus should not solely be on cost-cutting but rather on fostering a culture of innovation.” It cited TPG’s net- work-sharing arrangement with Optus as one example of collaboration that can un- lock efficiencies and create new options for network design.

For operators, the report said the implications are clear: asset-light models “may serve as a blueprint” for telcos seeking to optimise their asset bases. For investors, Venture Insights said TPG’s shift demonstrates how divestitures and reinvestment structures can influence long-term returns, particularly in an environment where revenue growth remains flat and capital allocation becomes a key source of value.

Grahame Lynch

 

IN TODAY'S ISSUE (21 November 2025)

IN TODAY'S ISSUE

Communications minister Anika Wells has taken off the table a potential new requirement for a centralised network outage register just one day after the Department of Communications flagged the concept in a draft consultation document. However, plans remain afoot to expand the outage register requirements from mobile operators to cover all carriers and carriage service providers across fixed, mobile and satellite services.

TPG Telecom told shareholders it expected to be in a position to meet the federal government's proposed Universal Outdoor Mobile Service Obligation but said it was still "currently engaged in discussions with potential partners and providers of LEOSat services" that would underpin delivery of the UOMO. It said it was "seeking to finalise arrangements for the use of those services."

Network link diversity rules could become a feature of a key regulatory regime governing NBN-like broadband networks, the competition regulator has said.

The Australian Cyber Security Centre and international partners have released guidance on mitigating risks from rogue internet infrastructure providers.

OTT messaging service Telegram has dropped a Federal Court challenge to the validity of an almost $1 million fine imposed by the eSafety Commissioner.

NZ's Radio Spectrum Management is consulting on future management rights for the 2300MHz and 2600MHz bands once the existing rights expire in 2030 and 2028 respectively.

 

The NZ Telecommunications Forum has expressed concern that proposed legislation to amend the fast-track approvals process for infrastructure projects could inhibit the ability of the telecom sector to provide supporting infrastructure to new builds.

Nokia used its Capital Markets Day 2025 to outline a major reset of its business for the AI era, announcing a simplified operating model, new long-term financial targets and a set of strategic KPIs intended to reposition the company around what it described as the AI supercycle.

Plus more

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