TPG Telecom Limited (YST1.F) Earnings Call Transcript & Summary

Good morning, everyone. My name is Trent Czinner, and I am the Group Executive, Legal and External Affairs and Company Secretary. I will be assisting with the procedural matters for today's meeting. I would like to begin by acknowledging that today is Remembrance Day. We honor the courage and sacrifice of all Australian service personnel, who have served or continue to serve our country. I also acknowledge the Gadigal people of the Eora Nation, the traditional custodians of this land I'm on today. I pay my respects to their elders past and present and extend that respect to all Aboriginal and Torres Strait Islander peoples joining us today. We acknowledge the contributions of indigenous Australians and the rich history and diversity of this land. I will provide shareholders with information about how to vote and how to ask questions prior to the resolution being presented to the meeting. I would now like to ask TPG Telecom's Chairman, Mr. Kin Ning Fok, to formally open the meeting.

Good afternoon, ladies and gentlemen. I am Kin Ning Fok, the Chairman of TPG Telecom. It is my pleasure to welcome you to this virtual Extraordinary General Meeting today. I have confirmation that a quorum is present, so I therefore declare the meeting open. I am joined today by my fellow Board members, Inaki Berroeta, our CEO and Managing Director; Helen Nugent AC; and Robert Millner AO, who are in the Sydney boardroom; and Paula Dwyer, Pierre Klotz, Tony Moffatt, John Otty, Frank Sixt, and Jack Teoh, who join me on screen. I am -- I also welcome other members of the TPG executive team in our Sydney office, including John Boniciolli, Chief Financial Officer, who is sitting with Inaki and Trent. The agenda for today's meeting is as follows: First, I will ask Trent to explain the meeting procedures. I will then present my address. I will then invite Inaki to present his address. We will then proceed with the formal business and the resolution to be put to the meeting while answering questions from shareholders. Trent, please go ahead.

Thank you, Chairman. Ladies and gentlemen, the Notice of Meeting and notice and access letter was lodged on the ASX and distributed to shareholders, and I will take them as read. I would like to advise shareholders of a nonmaterial error in the Notice of Meeting. In Annexure A on Page 24, in the borrowings line under the pro forma June 2025 column, the number, negative 1,853 million should read negative 1,799 million. The error does not flow through to the total noncurrent liability or total liabilities lines below it, which are correct. Voting today will be conducted by an online poll, and results will be released to the ASX and available on the company's website as soon as possible after the meeting. When the Chairman declares the poll open, select the Vote icon and voting options will appear on your screen. To vote, select your voting direction. A tick will appear to confirm receipt of your vote. To change your vote, select click here to change your vote and press a different option to override. Proxies for the resolution will be displayed on the screen and were disclosed in our ASX release this morning. The figures are at the closing time of receipt of proxies, which was 4:00 p.m. Sydney time on Sunday, 9 November 2025. As set out in the Notice of Meeting, the Chairman will vote all directed proxies in accordance with the directions provided by shareholders and will vote all open proxies in favor of the resolution. We welcome your questions in relation to the item of business today being the proposed capital reduction. To ask a question, select the Q&A icon and select the shareholder capital return topic. Type your question into the chat box at the bottom of the screen and press send. To ask a verbal question, follow the instructions in the virtual meeting platform. We ask that you keep your questions to 2 or 3 and direct them to the Chairman. Questions not related to the item of business at the EGM or those that are out of order will not be submitted or answered. We will endeavor to answer all relevant questions. I will now hand back to the Chairman.

Thank you, Trent. I now declare the poll open, and the shareholders are now welcome to submit their votes and their questions online. As Trent noted, I welcome shareholder questions in relation to the item of business today. Questions are not related to the item of business of the EGM or that are out of order will be ruled out. My address and Inaki address has been lodged with the ASX prior to the EGM commencing. Thank you to all our shareholders for joining us online today. We are here to consider an important proposal. The return of approximately $3 billion to shareholders by a pro rata cash distribution of $1.61 per share, comprising a $1.52 capital reduction and a $0.09 per share unfranked special dividend. We will also explain our proposed reinvestment plan, which is another important component of the capital management plan we announced in August. These proposals are important step for TPG Telecom. They are possible because of the strength of our financial position and the clear direction we are taking to shape the business into a simpler mobile-led company. The Board considers a capital return is the best interest of all shareholders and is pleased to recommend to shareholders to vote in favor of this resolution today. The proposed reinvestment plan give minority shareholders who are on TPG's register on the record date of 17th November 2025, the chance of reinvest their capital return proceeds into new TPG Telecom shares. This will help increase minority ownership and is intended to improve share trading liquidity. Our strategic shareholders support this plan. Today, the meeting come at a time when TPG is performing well. Our mobile business is growing, supported by strong offers and our regional network sharing agreement with positive momentum in mobile service numbers and revenue in the first half. I will shortly hand over to our CEO and Managing Director, Inaki Berroeta, who will explain the capital return and reinvestment plan in more detail. After that, we move to the formal resolution. The Board is confident in the leadership team's ability to continue to deliver strong results. On behalf of the Board, I want to thank our people, our customers and our shareholders for your continued support of TPG Telecom.

Thank you, Chairman. I also thank shareholders for joining us today to consider this important proposal. Your continued support is appreciated. The proposed capital return marks a significant milestone in TPG Telecom's transformation into a simpler, mobile-led business, one that delivers a more efficient cost structure and a solid foundation for growth, both now and into the future. Following our regional network expansion, we continue to see good momentum in mobile subscriber growth, supported by our network sharing arrangement and compelling customer propositions. We've reshaped our business to be a leaner, more focused and better positioned to compete. With a streamlined structure and an investment-grade balance sheet, we're in a position to continue growing our business and to return significant value to shareholders. Let me start with how we got here. On 31st July this year, we completed the sale of our fiber network infrastructure assets and enterprise government and wholesale fixed business to Vocus Group. This transaction delivered net cash proceeds of approximately $4.7 billion and has allowed us to simplify our operations and strategy and unlock significant substantial value for shareholders. In addition to strengthening our balance sheet following this transaction, we recently announced a new handset receivable financing structure, which has unlocked a further approximately $600 million in free cash flow in fiscal year '25. Together, these initiatives will reduce our bank borrowings by approximately $3 billion to approximately $1.1 billion by 31st December 2025. This includes the repayment and cancellation of $1.7 billion of bank borrowings using proceeds from the Vocus transaction in August and the benefits of our new handset receivables financing program introduced in mid-October and assumes full uptake of the reinvestment plan. As announced on 5th August 2025, today, we are seeking shareholder approval for the pro rata cash distribution of approximately $3 billion or $1.61 per ordinary share comprising a $1.52 capital reduction and a $0.09 per share unfranked special dividend. This return of cash rewards all shareholders equitably. As well as this, we will also be offering minority shareholders the opportunity to reinvest their proceeds into new TPG Telecom shares through a reinvestment plan. Importantly, this will help increase minority ownership, improve trading liquidity and increase our free float market capitalization. Subject to approval of the new capital return today, the reinvestment plan will be conducted in the coming weeks. The pricing term of the reinvestment plan will be announced when the offer launches. In order to participate in the investment plan, you must be a TPG Telecom shareholder on the record date of next Monday, 17th of November 2025. We are excited about the road ahead and confident that TPG Telecom is well positioned for the future with a simplified structure, a stronger balance sheet and a clear focus on delivering value to our customers and shareholders. Thank you again for your continued support. I will now hand back to the Chairman.