• TPG Telecom Ltd. assigned 'BBB' rating with negative outlook
• TPG to undertake capital management initiatives after A$4.7 billion asset sale to Vocus
• Expect TPG's debt-to-EBITDA ratio to be around 2.5x in fiscal 2026 and 2027

S&P Global Ratings has assigned a 'BBB' long-term issuer credit rating to TPG Telecom Ltd. with a negative outlook. The rating is underpinned by TPG's solid market share, stable earnings, and supportive financial policies. Following the A$4.7 billion sale of assets to Vocus Group, TPG is expected to repay debt and maintain a steady state debt-to-EBITDA ratio of around 2.5x in fiscal 2026 and 2027. However, the negative outlook reflects near-term execution risks associated with TPG's various balance sheet management initiatives, including a planned capital reduction and capital reinvestment plan. Downward pressure on the rating could emerge if TPG's debt-to-EBITDA ratio exceeds 2.75x on a sustained basis, or if the company's competitive position and earnings deteriorate significantly. The outlook could be revised to stable if TPG completes its capital reinvestment plan and maintains its market shares and margins in the mobile and fixed-line services.

TPG Telecom Ltd. is expected to have an EBITDA margin of about 30%-33% over the next two years, supported by its capital-light business model, an end to the 5G investment cycle, and transformation initiatives. The company's S&P Global Ratings-adjusted debt-to-EBITDA ratio is projected to be around 3x in 2025, improving to about 2.5x in fiscal 2026 and 2027.

The negative outlook reflects near-term execution risks associated with TPG's various balance sheet management initiatives, including completion of a planned capital reduction and its proposed capital reinvestment plan. Completion of these transactions as anticipated will be important to the company maintaining its debt-to-EBITDA ratio below 2.75x. Following completion of these capital management initiatives, TPG's financial policies are expected to support maintenance of credit metrics at levels commensurate with the 'BBB' rating.