TPG Telecom Limited (TPG)
BUY

TPG - Stock Update

 9 May 2022
Sector: Communication Services

TPG announced in an ASX release this morning that it has entered into a binding agreement to sell 100% of its mobile tower and rooftop infrastructure asset to OMERS Infrastructure Management Inc.

  • Sale price is set at the enterprise value of the asset ($950 million) which is expected to translate to net cash proceeds of ~$890 million after transaction costs. The release stated that the price was the equivalent of ~32x EBITDA and represents ~A$850k per site.
  • TPG CEO Iñaki Berroeta mentioned within the ASX release that they plan to use the transaction to reduce financial leverage and deliver lower borrowing costs. Berroeta also mentioned TPG’s plans for a strategic partnership with OMERS through a 20-year lease back agreement with options for extension.

TPG has the benefit of being a defensive stock and has displayed that its operating fundamentals are improving. The sale of the mobile tower asset improves the net cash position. Overall, this supports our BUY rating.

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Company overview

TPG Telecom is one of Australia’s largest mobile network and fixed internet providers with core products being Home and Business NBN and Mobile SIM’s.

The sale of TPG’s mobile tower asset supports our BUY rating. The company seems to be in a better position in 2022 due to the network sharing deal with Telstra as well as the reduced amount of noise within the market to contend with.

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