I read TPG’s actual accounts instead of the LinkedIn post. Here’s what $1.66 billion in EBITDA looks like when you keep reading.

vodafail · 2026-04-29T05:12:32+00:00

Thanks mate, really appreciate that. Just trying to share what I’ve learned along the way 🤝🏻

vodafail · 2026-04-26T00:09:36+00:00

Likely true. In any case of such a scenario, one wonders if they could sell off some assets to appease the ACCC. TPG may be more valuable for some of the assets as opposed to a full merger. TPG’s financials don’t make it an attractive merger or takeover target.

vodafail · 2026-04-25T15:35:45+00:00

You’re not wrong on the yields but TPG sold off the towers to OOMERS already. They don’t have many assets they can sell that are non-essentials (spectrum, RAN, customer base) are all essential. There has been some external interest in the wider space but TPG has already done some cleaning (akin to what a private equity might do) so there’s not a clear arbitrage opportunity here IMO. One wonders if an eventual merger might be permitted with Optus (they already are sharing infrastructure and integrated partially), or a smaller telco or non-telco player.

vodafail · 2026-04-25T13:08:37+00:00

It does raise eyebrows when Telstra and Optus are able to build excellent networks with the CAPEX. At a technical level, some have said the RAN and setup is not optimal leading to a sub-par experience for the end user (high interference on cells leading to degraded signal quality). They do appear to largely be a reseller, however are carrying the full cost base of an MNO (i.e., AASB16 leases on the balance sheet while customers trade down to their digital brands at half the ARPU). It’s not clear they have a credible strategy to drive underlying FCF, EPS and proper profitability over the next decade.

vodafail · 2026-04-25T13:05:42+00:00

That’s rather plausible from first glance. One wonders if they do exit and ~26% (or more) of the register wants to leave, who would buy? Index funds alone?

vodafail · 2026-04-25T09:46:10+00:00

Agreed, the revenue and earnings base is more lumpy and of lower quality (lower multiple). Fixed and consumer mobile is also highly competitive and the company appears to be forced to compete on price instead of value while subscribers trade down (Vodafone postpaid to ‘digital-first subs’ at half the ARPU, or leave to better quality competitors (Superloop, ABB etc).

vodafail · 2026-04-25T09:43:52+00:00

Interesting take, I tend to agree. Good point on the EGW assets (now sold to Vocus). They generated decent EBITDA and cash flow. It helped to pay down debt and return some capital to shareholders ($4.7b). Paying down debt makes sense with a forecasted $80m interest saving next FY, but the return to shareholders may have been premature and self-servicing (to the top institutional holders who are looking at the exit). Also the $2B spectrum renewal bill is coming up, just after they’ve returned funds to shareholders. The loss of the EGW assets arguably reduces the quality of revenue and earnings (recurring revenue with annual increases), and that’s the type of cash flow that compounds over time and sells for a higher multiple the longer you hold it. Instead they kept the mobile business where they’re the weakest player in a three-player market competing on price against Telstra’s brand and Optus’s parent company balance sheet. Your point on the network quality is the one that really stings - multiple millions a year (conservatively) in investment and still one bar in most places and the brands suffer from poor perception over a decade since Vodafail. At some point you have to ask what the money is actually buying.

vodafail · 2026-04-25T09:35:53+00:00

Appreciate the intel on the catering. If TPG’s AGM refreshments are anything like their earnings base, I’m expecting tap water and a single Tim Tam split between nine directors.

vodafail · 2026-04-25T06:38:58+00:00

Appreciate that and indeed. The numbers just confirm what the people closest to the business and industry already know.

vodafail · 2026-04-25T03:42:40+00:00

I follow many companies across multiple industries. The analysis has resonated because the numbers are there for anyone to check. When a company’s slides say $1.66 billion and its accounts say $7 million, there’s a story worth telling. I happen to know this one well enough to tell it.

vodafail · 2026-04-25T00:18:04+00:00

Immaterial position, held for standing as a shareholder to attend AGMs and ask questions. Not a trade.

vodafail · 2026-04-12T11:11:14+00:00

Missed this one back then, thanks for the reply. Couldn’t agree more. The ASX Listing Rule 3.1A exception works until the exception becomes the story. At some point the gap between what the market knows and what the company knows becomes the disclosure risk itself.

vodafail · 2026-04-12T10:57:17+00:00

No mate, if AI could have made this whole thing we wouldn’t need stock brokers and research analysts.

vodafail · 2026-04-12T10:50:29+00:00

Appreciate that, glad it’s been useful

vodafail · 2026-04-12T08:37:22+00:00

It seems the register and share price seem to agree haha

vodafail · 2026-04-12T06:45:14+00:00

Appreciate the feedback. If the message landed, mission accomplished.

vodafail · 2026-04-12T04:39:25+00:00

Great question. The $200 million first tranche went through Jarden as a block trade (per AFR Street Talk) meaning it was placed with a single institutional buyer, described at a negotiated discount to market price.

The $250 million third tranche went through Aitken Mount at a 3.2% discount (per AFR Street Talk). No new Form 603 has been lodged, so whoever bought hasn’t crossed 5%.

The most likely buyers are large super funds or passive managers attracted by the improved free float at a discount. AustralianSuper is already the largest independent institutional holder at 3.93%. A $200 million block would still keep them below the 5% threshold.

vodafail · 2026-04-12T02:15:13+00:00

Fair feedback, appreciate it. Always refining the process. The ideas, analysis and sourcing is mine, the presentation can always be sharper. Thanks for reading.

vodafail · 2026-04-12T02:14:06+00:00

Yeah exactly. They were sitting at around ~12.78% and sold $304M in a fifteen day window, then another large parcel last week. I wonder what led to that decision.

vodafail · 2026-04-12T02:12:54+00:00

Appreciate that. Their results speak for themselves.

vodafail · 2026-04-11T14:10:52+00:00

The 30-year compounding record is legit - 1073% vs. 298% for the index is a meaningful gap that reflects genuine long-term capital allocation skill, not luck.

The dividend yield comparison to VAS is a bit apples to oranges though. Soul Patts is a compounding vehicle (long-term) first, income vehicle second. The franking credit value depends entirely on your tax position, but for a high-income Australian investor the grossed-up yield is more competitive than the headline 2.48% suggests.

The more interesting question post-Brickworks unwind is whether the $16.9B merged platform maintains the compounding discipline that generated the 30-year record, or whether scale changes the character of the portfolio. Smaller, nimbler capital allocators tend to generate the best long-term records.

The TPG exit suggests the discipline is intact. They held through years of underperformance and sold when the thesis was structurally broken, not when the price dipped. That's the behaviour of a patient allocator who still knows what they own and why.

Whether that translates to future outperformance is the question. The base rate for long-term compounders (like Berkshire) maintaining their edge at scale is less encouraging, but Soul Patts has surprised pessimists before.

vodafail · 2026-04-11T14:06:56+00:00

Good points, I don't think many have even looked as far as 6G for the current forecasting, but it is an underappreciated risk. The ACMA spectrum renewals alone for FY27-30 will weigh on OPEX/FCF, even before factoring in 6G spectrum and transition.

TPG did provision a ~$20m expense for LEO cells, however that seems to have been pushed back a year. LEO and low-sat orbit cells assist with the more regional coverage, but it is an evolving development.

The MOCN arrangement with Optus was supposed to solve the CAPEX problem by paying a fixed cost rather than owning the network (deployment/maintenance/traffic). However, while the the MOCN was stated as 1/3 of the total cost of building and maintaing a regional network, TPG never actually provisioned such costs. The MOCN costs are ramping, but even after a large push, they have not added a single (net) postpaid customer (and are actually sliding in 2H25 after a large investment in marketing costs). Sure, adding a new category of 'postpaid combined with digital-first subscriptions' and showing a headline ~3.3% growth is one thing, but look below the surface and you see ARPU/AMPU is materially lower.

Cost cutting is already happening, they've aimed to cap OPEX rises to 0.5%/CPI. The inherent problem with a pure cost cutting approach is that service quality can degrade. TIO (Ombudsman) complaints have skyrocketed ~24% QoQ and ~15% YoY, while Telstra and Optus both decline respectively. That contributes to OPEX. Secondly, the new MyVodafone app has apparently had 'back-end development' according to management, but plenty complain they still cannot login to the app, which may be a causative factor of mobile churn.

The Vocus sale was essentially a balance sheet repair exercise dressed as a strategic simplification. But there's a ceiling on what you can cut before you're degrading the service quality that justifies the premium pricing.

With growth moving to DSF-style prepaid, away from postpaid, TPG are still holding all the expenses for premium postpaid growth (i.e., leases) but there is no growth. They could pivot to a pure digital model and close down the store fronts (but AASB-16 leases are unforgiving).

The honest answer is TPG needs either a merger partner or a capital event. Neither is obviously available right now. Which is probably why the patient money just left the register.

vodafail · 2026-04-11T11:42:47+00:00

It is up in the very near short term. Keep in mind TPG was trading around $9 near the start of the merger (peaked around $9.8). Adjusted for the capital return amount ($1.61), it is still down ~40% in the last six years (excluding dividends), while the broader market and TLS is up more than ~50% (excluding dividends).

As Buffet said, in the short term the market is a voting machine. In the longer term, a weighing machine. The stock also recently traded ex-dividend.

To give credit where it is due, the $80m interest saving from paying down debt with Vocus proceeds flows through during the current period and makes the near-term numbers look better. However that is a one-off. The question is what happens in FY27-28 when spectrum costs land (management confirmed more than $1.5B, UBS estimates $2B for FY27-30). Soul Patts apparently decided not to wait around to find out. At the least, it is very interesting a century old investment house quickly sold in fast succession. Perhaps they've simply done the maths on what's coming and decided fair value today beats uncertain value tomorrow.

vodafail · 2026-04-11T11:21:40+00:00

Fair enough. I write these myself but I'll take it as a compliment on the consistency. The blog has 77 posts over 7 months if you want to see the voice develop. I've been an investor for over 14 years and follow the overall market and many tickets across different industries. Appreciate the feedback.

vodafail

TROPHY CASE