The TPG Telecom trading update was in line with Macquarie’s expectations, with up-sellling opportunities in consumer and enterprise encouraging, albeit at an early stage.
While the company would not comment on the intentions of major shareholders, the broker believes JVCo (Vodafone/Hutchison), a holder of 28%, is unlikely to be a seller below $7.72, given the amount of debt inherited from the merger of Vodafone Australia and TPG Telecom.
Macquarie retains an Outperform rating and lowers the target to $7.50 from $8.00.
Target price is $7.50.Current Price is $5.86. Difference: $1.64 – (brackets indicate current price is over target). If TPG meets the Macquarie target it will return approximately 22% (excluding dividends, fees and charges – negative figures indicate an expected loss).