• Establishes innovative handset receivables financing structure
• Expects $600 million free cash flow benefit in FY25
• Material ongoing increase in Return on Invested Capital

TPG Telecom Limited has launched a new handset receivables financing structure that will support competitive mobile phone handset offers to customers, release additional cash flow to the business, and improve capital efficiency on an ongoing basis. The structure will involve TPG selling eligible handset receivables to an off-balance-sheet Trust, which is expected to deliver TPG a net benefit in free cash flow of approximately $600 million in the financial year ending 31 December 2025 (FY25), with further free cash flow benefits in later years, and a material ongoing increase in Return on Invested Capital (ROIC). The new financing structure has no impact on the way that TPG handles credit checks, collections or device sourcing and supply. TPG will recognise costs associated with the new structure as finance costs in its consolidated statement of income, which will include a material one-off timing impact in FY25 due to the size of the back-book sale, recognition of handset receivables financing costs upfront, and only two-and-a-half months' benefit from the reduction in bank borrowings. In future years, the NPAT impact will not be material as the benefit of reduced bank borrowings will occur for the full year, and the timing impact of the initial back-book sale will not recur.

TPG expects the new handset receivables financing structure to directly contribute an improvement in ROIC of approximately 40 basis points in FY25 and approximately 110 basis points in FY26, reflecting the first full year of capital efficiency benefits.