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Highlights:

  • TPG announces AUD 3 billion capital return to shareholders post Vocus deal
  • The company will reduce debt by up to AUD 2.4 billion, targeting improved financial position
  • TPG maintains 18c FY25 dividend and outlines reinvestment plan for minority holders

TPG Telecom Ltd (ASX:TPG) shares rose nearly 4% on Tuesday following the company’s announcement of a large-scale capital return to shareholders. The move comes after TPG completed the AUD 5.25 billion sale of its non-mobile fibre and enterprise network assets to Vocus Group, a deal first announced in 2023. TPG will return up to AUD 3 billion to shareholders via a pro rata capital reduction of up to AUD 1.61 per share, effectively operating as a special dividend. The return represents approximately 29.1% of the company's share price based on the previous close of AUD 5.52.

The capital return forms part of a broader capital management initiative that includes a AUD 688 million reinvestment plan. This scheme allows minority shareholders to reinvest some or all of their capital return into new TPG shares. Larger strategic shareholders have opted out of participating, which TPG says will improve the company’s ASX free-float and potentially enhance liquidity. Chairman Canning Fok commented that the board considers this capital return and reinvestment plan a value-accretive decision for shareholders, adding that it places TPG in a more sustainable long-term financial position. The move is designed to shift greater ownership to retail and minority shareholders while simplifying the company’s structure on the exchange.

The company stated that it will use the remaining sale proceeds to repay up to AUD 2.4 billion in bank debt. As of its latest financial update, TPG had been working to simplify its balance sheet and streamline operations following recent network consolidation and restructuring initiatives.

Chief Executive Officer Iñaki Berroeta noted that the past year has involved a significant shift in TPG's business profile. The Vocus transaction and expansion of the company’s mobile network footprint have contributed to what he described as a simplified and more capital-efficient operation. In addition to the capital return, TPG reaffirmed its commitment to a full-year dividend of 18 cents per share for FY25, in line with FY24 levels. The company also signalled an intention to grow dividends over time, subject to earnings and cash flow conditions.