Good morning, everyone. This is Paul Hutton from the TPG Telecom Investor Relations team. Thank you for joining us for the presentation of our 2026 half year results. We acknowledge the traditional custodians of country throughout Australia, and the lands on which we and our communities live, work, and connect. We pay our respects to their elders, past and present. This morning, Iñaki will present our results, highlights, and business update. John will then present a detailed review of our financial performance. Iñaki will then discuss our outlook before we open for Q&A.
Thanks, Paul, and good morning, everyone. We have made a good start to 2026 and expect to build on this foundation. This reflects the work we have done to sharpen our customer's proposition, expand our network reach, and simplify the business, giving us confidence in both near-term momentum and longer term value creation. Our enhanced network is driving market share growth in mobile at a strong ARPU, with record levels of customer consideration and satisfaction. We are using data and AI-enabled insights to better understand network experience and customer needs, prioritize the areas where improvements can have the greatest impact for our customers. Our strong growth in wholesale MVNO is proof that the market is recognizing the strength of our network offering. We delivered a strong mobile trading performance, again outperforming the market in total mobile subscriber growth.
This was driven mostly by momentum in our digital- first and MVNO brands, while also achieving the strongest postpaid subscriber performance in the market. Combined with solid ARPU growth, this drove a 4.2% increase in mobile gross margin in the half. We expect ARPU growth to accelerate in the second half, following recent plan refreshes. Cash flow continues to improve due to higher earnings, lower CapEx, and the changes we made last year to reduce borrowings. These benefits both ROIC and dividends. We have increased our interim dividend by AUD 0.01 per share to AUD 0.10 per share. The first half positions TPG Telecom to deliver further shareholder value through the remainder of 2026 and the years ahead. Consistent operational and commercial execution is leading to the consistent delivery of financial results. Our strong performance in the first half was again led by our mobile business and disciplined cost management.
Mobile service revenue increased 3.1% in the half. We expect a stronger ARPU performance to support further growth in the second half following recent plan refreshes. EBITDA rose 4.5% on the first half 2025 pro forma results. We expect second half EBITDA to be higher than the first half in absolute terms, consistent with our normal business seasonality. ROIC and underlying EPS both increased materially, reflecting our operating performance and improved capital structure. Mobile delivered a strong result as we continue to provide products that customers want across a differentiated multi-brand portfolio. Total subscriber growth was 64,000 in the half, with postpaid and total subscriber growth outperforming our competitors. With more new subscriber additions than the other MVNOs together, proof that our digital-first subscription brands are positioned where customer demand is growing, and that our MVNO strategy is delivering real, tangible results.
This momentum is contributing further market share growth, building on an increase of close to 1% since the start of the MOCN. During the half, we entered partnership with three new MVNOs. Zip Mobile is now fully operational, while the migrations of Spacetalk and Swoop, operator of the Moose Mobile brand, are taking place in the second half. ARPU is growing across all products and is expected to accelerate through the second half following our recent plan refreshes, which included both front book and back book plans. Turning to home broadband, the NBN market remains challenging, but the targeted initiatives we have made in recent months to address churn are beginning to pay off. We are seeing evidence of a stronger retention and improved customer experience. Subscriber numbers in NBN were down in the half, but the rate of decline slowed compared with both halves in 2025.
We expect a further improvement in the trend in the second half, having recorded a stronger performance in July and the beginning of August. AI and advanced analytics are part of the solution, helping us identify customers at risk of churn earlier, personalized retention offers, and improved service outcomes before issues escalate. In fixed wireless, we have seen a return to subscriber growth in the second quarter since the launch of the 5G standalone services, which has increased our addressable market by 15%. We are also seeing an increase of the portion of the NBN base on the lower churn, higher speed tiers. Since December 2025, we have seen an increase of 24 percentage points in NBN customers on NBN 100 or faster plans, growing to 56%. We have also seen a shift of fixed wireless customers from 4G to 5G.
We expect these trends and growing fixed wireless subscriber numbers in the second half to drive a stronger ARPU over time. The next slide shows service revenue and gross margin for both mobile and home broadband. The trend in mobile remains strong, with growth more than offsetting higher regional sharing costs from a full six months of operation and rollout of more 5G sites. Home broadband continues to reflect more challenging conditions amid a declining total NBN market. Gross margin growth was greater than service revenue growth in aggregate, and we expect that to remain the case over time. To reiterate, we expect continued subscriber growth and accelerating second half ARPU growth to drive mobile gross margin, and we expect subscriber numbers in NBN on a return to growth in the higher margin fixed wireless business to drive home broadband.
As we noted at the Investor Day, our strategy framework now has five pillars, with the addition of embody customer first, people always. We continue to deliver against all five pillars of the strategy, and we are optimistic about the coming months and years. Network sharing is delivering better experience for our customers and efficiency for shareholders. The mobile market will benefit from further network sharing, especially as we look ahead to the 6G rollout. Recent outages highlight the essential nature of the services telco provide and the importance of a framework that enables resilience and redundancy. Greater network sharing could be part of the solution, while also delivering lower industry costs and increased network performance that would benefit customers. Another opportunity is the emergence of LEOsat. This is a complementary technology to terrestrial networks that can support existing mobile coverage in remote areas and further reduce coverage gaps.
The recent ACCC announcement of an inquiry into mobile services and issues such as domestic roaming and network access is an opportunity for improved industry settings. We will bring our challenger spirit and customer first culture to this process. I will now hand over to John to take you through the financials in detail.
Thank you, Iñaki, and good morning, everyone. It was a strong first half performance. I was particularly pleased with EBITDA growth, supported by strong mobile performance and effective cost control, and our stronger cash generation. My first slide shows the positive trends across our key financial metrics. For 2026, we compare our result with the 2025 pro forma result from the prior corresponding period. This shows 2025 as if the new commercial agreements with Vocus had been in place for the full period, providing the most relevant baseline for comparison with 2026. This highlights the benefits coming through from the structural changes we have made, resulting in improving earnings quality, stronger margins, and better cash conversion. Service revenue increased 0.5% in the half, led by mobile, which increased 3.1% and has been sustainably strong for several years now.
As I said at Investor Day, we expect gross margin growth to continue to exceed service revenue growth. We delivered gross margin growth of 2.9% in the first half, resulting from continued strong mobile performance and the non-volumetric nature of our infrastructure sharing arrangements with both Optus and Vocus with indirect costs. This is despite an extra month of the regional MOCN with Optus in the period compared with the first half of 2025, and the growth as expected in those costs due to the 5G rollout. As flagged at the Investor Day, EBITDA growth was greater than gross margin growth due to disciplined operating cost control. As we look across other operating metrics, the trend in underlying NPATA, EPS, dividends, and ROIC were all positive.
This reflects work we have undertaken specifically through a combination of running our network smarter, including through infrastructure sharing, growing mobile service revenue through distinctive brands, operating cost efficiency from business simplification, and significantly improving our balance sheet settings. Finally, cash flow outcomes in the year were again strong. I will touch more on these shortly. My next slide is a profit summary. There are a few points to highlight that I did not cover in the previous slide. Hardware margin improved as we delivered operational efficiency despite lower industry volumes. Operating costs around halfway down the table were basically flat at AUD 508 million. This is a very strong outcome against inflation of 3.6%. Turning to depreciation amortization, the modest benefit against the prior year pro forma results largely reflects a one-time non-cash adjustment to amortization of intangibles.
We now expect the FY 2026 total depreciation amortization to be relatively flat to FY 2025 on a pro forma basis. Net financing costs have reduced substantially from FY 2025 because bank borrowings are now materially lower. For the full year, we anticipate total net financing costs, pro forma for the new leases for fiber access, to be more than AUD 100 million lower than FY 2025. We are now a net taxpayer, having utilized historic revenue losses against the gain on last year's Vocus transaction. I expect a go-forward tax rate of approximately 30%. Now turning to cash flow, where momentum is very positive. Cash flow from operating activities was broadly neutral as the initiation of tax payments offset the increase in EBITDA, and our positive working capital movement was a touch lower.
Operating free cash flow was up more than 16%, reflecting the benefit of lower CapEx as our investment cycle mediates, offset marginally by minor increases in lease costs. Free cash flow to equity was AUD 93 million, an increase of AUD 108 million, reflecting the substantial repayment of bank borrowings last year. At the 2025 result, I said we expected that on a reported basis in FY 2026, EBITDA growth and lower bank borrowing costs would offset the absence of seven months of cash flow from discontinued operations and the impact of a full year of the new Vocus arrangements. This was, of course, excluding the material non-recurring cash benefits in FY 2025 of the Vocus sale proceeds and the initiation of the handset receivables financing program and excluding separation costs. We are very confident of achieving this outcome for the full year.
The business is now generating materially higher recurring cash flow, and we expect this trajectory to continue due to the growth in mobile service revenue, cost control, lower CapEx, and much lower borrowing costs. I will now cover operating costs. Delivering a real reduction in cost is not easy in a high-inflation environment, but the simplification of our business is creating sustainable efficiencies. Looking at where the savings were created in the first half, technology costs increased by around AUD 11 million, mainly due to higher costs from software licenses, electricity, and network rental. Employee costs increased around AUD 1 million as business simplification benefits largely offset wage increases. Other costs reduced AUD 8 million. This is another strong performance against our objective to deliver AUD 100 million of operating cost efficiencies before inflation by FY 2029.
At AUD 46 million achieved to date since the start of FY 2025, we have already delivered almost 50% the target. We expect FY 2026 to be broadly flat on FY 2025 in nominal terms. I am very pleased with our track record on operating costs. We are targeting and delivering structural cost reductions, not just short-term restraint, and supporting operating leverage as the business grows. AI is a practical enabler of further productivity in areas such as customer care, network operations, software development, and internal process automation. Our focus is on using AI responsibly to improve speed, quality, capacity, and efficiency while maintaining strong governance and human oversight. Now turning to CapEx and depreciation and amortization. We issue CapEx guidance on an additions basis. The top chart on this page shows the difference between this and cash CapEx with the 2025 figures on the comparable pro forma basis.
Half-year additions was AUD 277 million, which we expect to increase to about AUD 750 million for the full year. From FY 2027 onwards, our targeted CapEx range remains AUD 550 million - AUD 650 million. As we have previously mentioned, we expect to be at the upper end of that range in FY 2027 itself. This reduction reflects the lowering capital intensity of the business now we have passed the peak of the 5G upgrade and IT modernization. First half D&A charges were all broadly as expected, except for the one-time benefit in intangibles of AUD 10 million. FY 2026 D&A is now expected to be in line with the FY 2025 pro forma of AUD 1.28 billion, slightly lower than I said at the FY 2025 result. My final slide covers dividends and borrowings. The declaration of an increase in the interim dividend to AUD 0.10 per share reflects the strengthening of our financial position.
Debt servicing costs are lower, so there is more cash available to shareholders. We have pulled franking back slightly to 25% to ensure we have a sustainable level of franking on this increased dividend. In the first half of 2026, we also made progress in deleveraging, reducing debt to EBITDA to about 2.9 x on the basis that S&P measures, down from about 3.0 x at the end of 2025. We expect to make further improvements to this ratio, reducing it much closer to our target of below 2.75 x by the end of the year. Last month, we kicked off the refinancing process for our bank debt maturing in July 2028. Through this refinancing, we intend to de-risk our position further, extending the duration of our debt and reduce the concentration of maturities.
We continue to expect to reduce leverage further in coming years and to pay higher dividends as profit and cash flow grow. Thank you. I will now hand back to Iñaki.
Thanks, John. This slide sets out our drivers of shareholder value and shows how we are tracking against our key commitments. Progress was strong in the first half of 2026, and we are confident of delivering further progress both for the remainder of this year and beyond. Our enhanced customer propositions are driving continued mobile service revenue growth, and we are getting continued operating leverage with higher margins and return of capital as we deliver cost discipline and capital efficiency. This makes the outlook for cash flow and dividends very positive. Our formal guidance for the year is unchanged. We continue to expect EBITDA to be between AUD 1.665 billion and AUD 1.735 billion, representing growth of just under 4% on a pro forma basis at the midpoint of AUD 1.7 billion. This implies an improved second half, which I'm confident we can deliver.
We'll continue to guide for CapEx on an additions basis of AUD 750 million. Thank you, and we will now take questions.
The exact amount of dividends, but what I will say is this. One, we updated our dividend policy in August of last year, and that was to our progressive dividend. To be really clear on that is to grow our dividends over time in line with earnings and cash flow growth. That earnings and cash flow growth is absolutely coming through, and I think that's very apparent in our results. Hence, the confidence and the outlook for an interim dividend of AUD 0.10 per share. The second point I would make is given your point on FY 2026, firstly, cash.
If you take the midpoint of guidance and you note that we've said cash CapEx is going to be broadly in line in 2026 versus 2025, then we're already at AUD 400 million-AUD 500 million of free cash flow in FY 2026. You add to that, I'm going to talk on a CapEx additions basis. CapEx drops from, on an additions basis to AUD 750 million to AUD 650 million, and that will have a cash CapEx benefit. Combined with whatever you are assuming earnings growth in 2027, then the cash outlook looks quite strong. Hence our confidence on that progressive dividend policy and hence our confidence on our intentions to grow dividends over time in line with earnings and cash growth.
Awesome. Can I do one final one, maybe for Iñaki, more longer term? Iñaki, if I make an observation, you've been doing this a long time, even before TPG and back in the Vodafone days, when there were mobile pricing wars going on. I'd make the observation you stayed very rational and sensible with pricing. The reason why I bring that up is people are now questioning in the longer term, if satellite players come in, does that bring irrationality into the mobile market? I'm just wondering, Iñaki, can you just talk to a scenario? If Vodafone were to partner with or MVNO with a satellite player, do you think this is a positive or negative outcome for Vodafone ARPU, or do you think about it more in terms of delta to your mobile service revenues?
Thanks, Eric. Look, in principle, we are positive about this technology. The way we see the technology is pretty simple. This is the potential to cover geographical areas that in the past were not able to be covered with a terrestrial network. We think that this is a change in terms of that coverage as a differentiator, and also we think that this is a change that is for the good for us. In terms of the rational, we are rational regardless of the technology. This has nothing to do with whether there are shifts in the technology available to us. We do think that this is a critical service, is a very valuable service, is also very affordable. But also we need to make sure that we're able to maintain the sustainability of TPG and the service that we provide to our customers.
Regardless of the arrangements that we will look for with the different options that we will have in the future around this, I think that at the core, we remain, like you said, a rational company.
Excellent. Thanks, Iñaki.
Thanks, Eric. The next question comes from Entcho Raykovski from Evans and Partners.
Thanks, Paul. Morning, everyone. My first question is mobile- related. You've clearly outperformed the market from a subscriber perspective in the first half, so it's a very good performance. I'm just conscious that mobile service revenue growth of 3.1% tracks slightly below Telstra. I had them at 4.1%, and Optus was sort of in the mid- 3%. Any concern that your mobile service revenue growth is lagging slightly? Or is there perhaps a further pricing opportunity, and how do you think about balancing ARPU versus subs growth? That probably goes towards some of your comments around ARPU growth accelerating into the second half. Maybe as part of that answer, you can talk through how you see the subscriber trajectory flowing through into the December half.
Yeah, thanks, Entcho. Look, I think that before I give to James Gully to talk a little bit about what we have done in the brand refreshes, I think that the first thing to consider is we've been consistently, for many, many reports, been increasing our ARPU and our customer numbers. I think that I always say that the balance of those two are not always the same, but also there are cycles around the timing of those brand refreshes. I think that this is something that needs to be taken into consideration, and it's not the same for everyone in the same way that it's not the same, the mixes of customers. I think that you need to look this more in a longer timeframe, and look a bit at the trajectory.
What we mentioned around the timing of our brand refreshes has quite a lot to do with that comparative of the last six months. James, you want to add something about what have we done?
Yeah, just to build on what Iñaki said, we have the timing of our plan refresh activity probably influenced some of those numbers. In the second half, we are seeing, forecasting anyway, an acceleration of our ARPU growth and service revenue growth on the back of that. If you look at the timing of the plan refreshes that we have undertaken, our post-paid front book and a significant portion of our back book changed in July and into August of this year. So that benefit will flow through in the second half. We did our Vodafone prepaid plan refresh of AUD 5 in the middle of the half, in the first half. We'll have the full half benefit of that in the second half. We've also recently, as of Wednesday, updated our front book and back book for felix. So the low and medium plans are moving up by AUD 5.
Then on top of that, we started communicating to our TPG Mobile customers about some price changes on the low-end plans on TPG as well. So the combination of all of those, we would see an acceleration of ARPU in the second half. Still maintaining some momentum in net adds, but certainly, the balance biasing a little bit more to ARPU, as Iñaki said; it kind of moves a little bit between those two. But that's the way we see the outlook for the second half. Entcho.
That's good color. Thank you. My second question is around home broadband. Can you talk a little bit more about the dynamic which is driving the better July-August performance? I guess apart from fixed wireless, you've been pretty clear on what you're doing there. Is it partly because you've kept pricing flat on some of the NBN products, the NBN 100 and NBN 500 products? How does that impact margin? Having said that, you've obviously guided to AMPU improvement in 2H.
Thank you. I think I'm going to let James talk a little bit about that and everything that we've been doing around churn management through AI and other things that we've been doing around all our broadband propositions. James?
Yeah, sure. We have been working very hard on our churn across our NBN customer base. As the number two provider in the country, managing that pretty competitive market is our top priority, and we feel like we're making very big inroads in that space. While the market dynamic, in July, you get a lot of NBN price rises being passed through. That stimulates a lot of churn in the market. We certainly navigated this year with a far better outcome than we have in other years. You're correct that we didn't increase the prices of some of our propositions, such as NBN 500, but actually that was pretty common across the market, so we weren't alone on that. Just the nature of the NBN pricing pressures really allowed some of us just to absorb that.
The underlying benefit is coming from churn, which, as Iñaki mentioned earlier on, is really by identifying proactively customers and their experience on our network and being able to manage that customer proactively instead of reactively, and lowering our churn volume. We're really happy with the progress that we're making there, and expect it to continue, having navigated what is a tricky period as those price changes go through the customer base.
Okay, great. My last one, you touched on this in the presentation, but I do not know if you are able to provide a broader view on the ACCC's mobile services inquiry. Specifically, do you see regional roaming as essential, particularly in the context of the MOCN deal you have in place with Optus?
Thanks, Entcho. Look, I think the first thing is that we have welcomed this inquiry. We have been public on that. We do think that it is an opportunity to look at how the sector can deliver more coverage, stronger competition, and also resilience. From that perspective, we think it is a right thing to do. Probably the key policy question is how the current market settings are going to continue to deliver the best in all these areas to consumers, especially in those areas where infrastructure competition might be limited or a monopoly. I think that this is really the context of where we see the inquiry. Whether it asks or not, we are in a very different market from the first inquiry, which was done back in 2016, I believe, or 2017. Things are changing; LEOsat are coming.
That is why we do think that it is the right time to look at it. Probably, this inquiry, not only looking at the domestic roaming implementation itself, but looking at the whole telco market and the current policy and also the way that the policy that is being set around satellites, what is the impact that that is going to have? I think it is positive.
Okay, great. Thanks, Iñaki.
Thanks, Entcho. The next question is from Liam Robertson at Jarden.
Oh, thanks, Paul. Morning, guys. My first question is just on OpEx. Obviously, a really good outcome in the half. I think you've now delivered almost AUD 50 million of the AUD 100 million operating cost efficiencies that you're expecting to deliver by FY 2029. So I guess my question is, are you ahead of your own expectations on the FY 2029 timeline? Could we potentially see some upside risk to that?
Yeah, look, I think it's fair to say we are ahead, as we look back on the last 18 months. However, in many respects, it is part of the DNA of this organization in terms of doing more with less, which really is part of the DNA. How we look at our cost outlook, how we always are looking at further productivity. We are now a dramatically simpler business. So whilst I say we are ahead maybe of where we thought we'd be 18 months ago on our costs. We're pleased with it, and we'll continue to do the heavy lifting on that. And we'll continue to manage our costs very tightly. So I guess, in short, we are a little bit ahead of maybe when we first made that commitment of AUD 100 million out. We're pleased with that, and we'll continue to manage our costs very tightly.
Perfect. Thanks, John. And then just secondly on CapEx. I'm conscious the comments around the AUD 100 million step down into FY 2027. I know you're suggesting the 5G upgrade is complete. But if I compare that commentary to some of your competitors, I guess they're talking about incremental investment over the next 12 months around 5G standalone. So can you just help us contextualize those comments, please?
Yes. Look, Liam, I think the best for that is the different players in the market are on different cycle. I think I am going to ask Giovanni to give you a view of where we are on our core network, but also on the RAN network investment for CapEx. Yeah, Giovanni?
Thank you, Iñaki. In terms of our cycle, we were early investors on the 5G standalone. We have been the first network in country and one of the first in the world to have 5G standalone deployed. It was in 2021. That was much earlier than competitors here in the market. We have already passed that mark. Our 5G modernization is concluding in the next three years in terms of radio and transmission, which is the Huawei swap out in favor of Nokia technology. This is the remaining part. In that sense, we are already beyond the peak of the investments in 5G, and that is the main reason why we see the step down in the next year's CapEx, together with the fact that most of the investments in the IT and digital transformations are also behind us by now.
Perfect. Thanks, guys. Appreciate it.
Thanks, Liam.
The next question comes from Lucy Huang at UBS.
Thanks, all, and thanks, team. I've got three questions as well. Firstly, if I can unpick some trends in enterprise mobile, given that's an area of strategic focus at the Investor Day. How much growth did we see in the first half from enterprise contributing to the postpaid stats number? In the context of the backhaul mobile pricing refresh, are we seeing price rises as well in enterprise, or what proportion will be exempt from the price increase?
Thanks, Lucy. I think that Jonathan will be able to answer that one better.
Yes. Thanks, Lucy. Let me start with your second question first. It will help give context to your overall question, which is, do enterprise customers get backhaul price rises? Look, there's different segments in enterprise. Some customers are contracted, some sit on month to month, some sit on long-term contracts. Clearly, we have a rational approach to pricing in enterprise, very similar to consumer. So some of the base will be receiving price rises, and others will go through a natural contract refresh. In terms of growth in H1, I think we had a good H1. We are very pleased. You will remember at the Investor Day, we talked about growing in government and growing in enterprise segments. We have done what we said we would do, and I think we are very pleased with the overall growth trajectory. We do not split the numbers out into enterprise consumer postpaid. But we're on plan, and we're very happy.
Wonderful. Just on the MVNO side, I guess we came in a little bit softer relative to your guidance on net adds in June. Just wondering if it's a timing issue, and with the three partners announced, should we expect them to all come through into the second half?
Yeah. Great question, Lucy. Yes, it's timing, and yes, we'll expect the partners to be on in the second half, and I think strong progress so far post July.
Wonderful. Just my last one, which is on the debt profile in the business. I think, John, you mentioned you're starting off the refinancing activity for FY 2028 maturities. Just wondering how should we be thinking about the potential interest expense benefit. Are you expecting spreads to decrease off the back of the refinance?
Yeah, look, we're expecting a lower margin through that given our current balance sheet settings and just the breadth markets overall. What I'll also note just on that, we do have a very mature and disciplined interest rate hedging program as well. So for this year, we're 62% hedged. So that's probably another pertinent point to raise as well.
Great. Thank you.
Thanks, Lucy. Our next question comes from Andrew Gillies at Macquarie.
Morning, all. My first one is on hardware. Obviously, we're seeing a fair bit of hardware softness in the market and in the results as well. Can you maybe talk to your plans for hardware if it's just a market issue, what you might be doing? And if, in particular, the handset receivables financing deal provides scope to go slightly harder on handsets? Thanks.
Thank you, Andrew. I think this is a combination of James, and also I am going to ask James to talk a little bit about hardware receivable. But it is. You see that there has been some supply chain issues in the market overall. I think that the handset market is not like it used to be in that sense. But we are doing things around that. I think that maybe James, you can start with a bit where we are with handsets issue.
Yeah, Andrew, I mean, half one was certainly supply constrained, particularly in Apple, but also in some of the low-end devices. What we did was really, w hat that drove was an environment where suppliers and ourselves really were not investing to stimulate demand because we had limited supply. So we really went to manage our margins in the first half with our goal on devices. As we move into half two, we have seen an improving position on device supply, certainly from Apple, and some support for activity, which is now in market. Obviously we head into the Apple launch in this half as well.
We see a slightly improving position from half one. We are also launching next week an upgrade and protect product that really gives customers options to upgrade devices pretty much at any point through their contract, but also support them in a world where they might lose or damage their device as well. So we are looking at a number of ways that we can support customers, as we move to a world where there is some supply constraint, but also higher prices on devices moving forward. I might flip to you, JB.
Yeah, just on interest in financing. As we announced when the program was launched last year, it is all about managing our balance sheet, and it does avoid the working capital volatility. Andrew, the cost of that program, including the bad debt risk that is avoided, is very, very strong, and hence why we did that deal.
What I would also say is it is not a substitute for commercial discipline. A great example of that would be, despite our hardware revenue dropping, our hardware margin improved. This is a great work across the business on managing our logistics, stock obsolescence, and stock write-offs. Just one example of the commercial discipline.
Perfect. Then just one second one on MVNOs. Obviously, we have seen some new deal wins there. There have been a few questions asked on enterprise as a strategic opportunity. Can you maybe talk to the pipeline for MVNOs and how we should be thinking about that opportunity over the next 12 weeks, 24 months?
Jonathan.
Yeah. Thanks, Andrew. I think if you remember at the Investor Day, we talked about different kinds of partners, all of which sit in the wholesale segment. Things like connected cars, wearables, and then the more traditional MVNOs. We look to develop in all three of those areas, and we have got a good pipeline across three areas. It may be more skewed to other kinds of partners rather than traditional MVNOs in the next 12 months. But a good pipeline, really committed to rolling out the ones that we have got and getting them on board in H2 and open for business.
Perfect. Thanks very much, guys.
Thanks, Andrew. Our final question at this stage is from Fraser McLeish at MST. Just a reminder, if you have any final questions, please press star one to join the queue. Go ahead, Fraser.
Great. Thanks. I just wanted to focus back a little on the postpaid ARPU, just because it is probably still your single biggest revenue driver. Just understanding maybe some of the puts and takes. Obviously, you put your, what, price rise up, price rise of AUD 4 through in the middle of last year that I think pretty much impacted the majority of the base. But then, what was that? AUD 3.60 after GST, but we have only seen sort of AUD 0.25 of that come through to ARPU. Just what are the things that diluted that? When we look forward, what are the things that could dilute your pricing? Could you just put through? Thanks.
Yeah. Thank you, Fraser. Yeah. James, you want to take that one?
Yeah. Happy to. Thanks, Fraser. Yeah. I mean, the drivers of some of that dilution, if you like, of the AUD 4 front foot being diluted, there is a number of factors there. One is we have seen a slowdown in roaming, in the half based on the Middle East conflict. So that has certainly had a dampening effect on ARPU versus the same period prior. As we have talked about, we do have a mix of enterprise customers and good growth in that section as well that comes through at a slightly lower ARPU than the base. So that, to some extent, has somewhat of a damping effect on the overall blended ARPU and probably distorts what we can navigate in the consumer space in terms of passing through a price rise.
Then there is obviously the BAU kind of either save activity or promotional activity that kind of goes along with it. So we would see this year we have done a last year with a AUD 4 increase. This year, we put through a AUD 5 plan refresh, that we expect to kind of give us the benefits in the second half but also into next year. We remain optimistic on a few fronts. Some of the items we have talked about, like upgrade and protect, we see as providing some ARPU upside, as also along the lines of other value-added services, such as wearables and things like that, to add value into the postpaid product and continue to drive ARPU. So, yeah, that is the summary there.
Thanks. I mean, I'm guessing that the promotional activity is probably one of the bigger impacts on diluting that ARPU. I mean, is it fair to say that if you're expecting ARPU to grow better, we'll maybe see that? I don't want to guide on your promotional activity, but it sounds like that might be a bit lower going forward, getting you through the, I guess, the big promotions for the MOCN network, and we should see more of the price dropping through to ARPU than we saw certainly in this half. Thanks.
Really, it's a matter of just balancing that subscriber growth and ARPU moving forward, and that's what we'll continue to do. Part of it will depend on how we see the market and where the opportunities are as well, Fraser. I wouldn't provide any kind of guidance on that. We'll continue to just balance those two into the second half.
Fraser, our focus is on mobile service revenue and mobile margin growth. At any point in time, that balance on subscriber and ARPU could be slightly different quarter across bands or even across the product set. What I would say is that margin growth is the most important thing we look at. It was 4.2% in the half. Given what we said about ARPU, we expect an improved performance in half two relative to half one on margin growth.
I think that's probably the really important point to take from the numbers in our outlook.
Great. Thank you.
Thanks, Fraser. Our next question is from Wei Hsu at Bank of America.
Morning. Thanks, team. Just one question from me. Just on the fixed wireless business, you guys have talked to improving momentum expected in the second half. Could you just talk to maybe some of the capacity service quality differences versus NBN fixed product? How does that change with standalone 5G? Maybe just elaborate on some of the new customer addressable market that may have been previously difficult to serve for fixed wireless. Thanks.
Thanks. Look, on the fixed wireless, I think that the important thing is that a lot of the work that the team has been doing around churn management for fixed program products has been also applied on fixed wireless. On top of that, we have the initiative on using the standalone 5G core. We have now, I believe, it's 70% of the base on fixed wireless is already on 5G. That's also something that is helping us. Looking at the performance that we had in the last month and the beginning of August, we see that strongly. That's why we are optimistic about the product. The product still presents an affordable option for many customers, which are in the geographical area where we commercialize that product. It continues to be the most margin- accretive product that we have on fixed.
For that reason, it's a product that we will continue to be on.
Great. Thank you.
Thanks, Wei. Our final question is from Ben Jones with JP Morgan.
Morning, guys. Thanks for taking that question. Just the first one on the digital-first brands. Obviously, net adds came in better late in the half versus the comments you initially gave at the Investor Day. Can you just comment on what changed in June post the Investor Day and how that's tracking, particularly in that digital-first portfolio into 2H?
Yeah. I wouldn't say anything changed too dramatically. It's just continued momentum in those brands. Customers are really wanting that kind of digital-first product with a really simple, transparent product, really well priced and providing great value. So we just see really continued momentum in that space rather than something materially shifting. I think Investor Day was early May.
You provide an outlook over two months.
Yeah. So I think that's why momentum continued, and we're very pleased how customers have responded.
Okay. Got it. Thanks for that. Just more medium term, I mean, obviously, if you are thinking about how you are outperforming the market on the postpaid side, I appreciate your ARPU is probably locked in for this year. I mean, going forward, if you have got the better churn characteristics and you are closing the coverage gap, does that give you more scope to accelerate that pricing or ARPU argument going forward?
I think that that gives us a scope for many things. We never talk about what we are going to do in pricing in the future, obviously. But I think that what is clear is that whether it is on postpaid or whether it is on digital-first brands, since the introduction of the MOCN and the traction that we are getting in the market is strong, and we will continue to leverage on that and the benefits of our network.
Great. Thanks very much for the call, guys.
Thanks, Ben. We have no further questions at the moment, so we will conclude the call for today. Thank you very much for joining. Speak to you soon.