Strong Guidance for Narrow-Moat TPG Telecom Post an In-Line Fiscal 2014 Result

We have lifted our fair value estimate for narrow moat-rated TPG Telecom by AUD 0.50 per share to AUD 6.50 following an in-line fiscal 2014 result and stronger-than-expected guidance for 2015. TPG Telecom's fiscal 2014 revenue of AUD 971 million was 4.5% ahead of our estimate and earnings before interest, tax, depreciation and amortisation, or EBITDA, of AUD 362 million was 4.2% ahead. Net profit after tax of AUD 171.7 million was 2.9% below our estimate, reflecting higher-than-expected amortisation of the recently acquired AAPT customer base. The company guided to fiscal 2015 EBITDA of AUD 455 to AUD 460 million, which is 6% to 7% above our previous estimate of AUD 428.5 million.