Credit Suisse re-initiates coverage of the new TPG Telecom with an Underperform rating.
The new telecom incorporates the operations of the merged TPG/Vodafone Australia Group and the broker thinks the economic substance of the new telecom is consistent with the way TPG was valued.
Although the telecom has not provided any guidance, it expects a decline in sales of mobile services (both prepaid and postpaid) and lower roaming services.
There will likely be a step down in the company’s FY20 operating income, believes the broker, along with an increase in capital expenditure requirement.
The target price is $7.35.
Target price is $7.35.Current Price is $8.19. Difference: ($0.84) – (brackets indicate current price is over target). If TPG meets the Credit Suisse target it will return approximately -11% (excluding dividends, fees and charges – negative figures indicate an expected loss).
