The Game Getting Tougher but TPG Telecom Keen to Play a Different Game

TPG Telecom's ninth consecutive year of record underlying EPS, one that grew 12% in fiscal 2017 to AUD 0.48 and beat our estimate by 8%, is just a mirage in the rear-view mirror. We expect the margin-crunching impact of the National Broadband Network, or NBN, and the competitive intensity it has fostered to manifest in the group's earnings from fiscal 2018. Indeed, the change in industry dynamics is such that TPG rounds out the last of the three major domestic telecoms to rebase its dividends--an especially prudent approach given management's aggressive mobile ambitions.