TPG Telecom (ASX:TPG) appears to be benefiting from customer spin-down, with strong growth in its Digital First brands and mobile virtual network operator subscribers, according to a Tuesday Jefferies note.

Jefferies said that these segments are "crowded," and improvement in postpaid mobile services would be more meaningful, as this segment is significantly more profitable, while growth in the National Broadband Network business can also be better, as it contributes around 20% of earnings before interest, tax, depreciation, and amortization.

Jefferies kept a hold rating on TPG Telecom and reduced its price target to AU$3.90 from AU$4.10.

The company's shares fell 1% in recent Wednesday trade.