TPG Telecom Agrees A$1.17 Billion Regional Network Sharing With Optus — Update
By Stuart Condie
SYDNEY--TPG Telecom will pay Optus about 1.17 billion Australian dollars (US$653.2 million) to use its rival's mobile infrastructure in regional Australia, turning to the Singapore Telecommunications-owned company after regulators blocked an earlier plan to share with Telstra.
TPG on Monday said that it would pay service fees of about A$1.59 billion to access Optus sites over the agreement's 11-year term, recouping about A$420 million in mobile spectrum receipts. The net outlay is about a third of the cost of building and maintaining its own regional network, TPG said.
TPG, which operates services under brands including Vodafone Australia, expects the arrangement to come into force in early 2025, subject to regulatory approval. TPG is Australia's third-largest mobile network operator behind Telstra and No. 2 Optus.
Australian competition regulators previously blocked TPG's plan to share regional mobile assets with Telstra, the country's largest communications provider. The country's consumer watchdog said that proposal would have probably lessened competition and lowered service standards.
TPG Chief Executive Inaki Berroeta said that the arrangement with Optus would ultimately benefit its customers.
"Network infrastructure sharing of this kind avoids unnecessary capital investment and high operating costs, meaning there is more value for shareholders and less cost to pass on to customers," Berroeta said.
TPG expects the arrangement to reduce its cash capital expenditure by about A$30 million in 2024 to about A$1.02 billion, and by about A$50 million in 2025 and 2026. This will help offset a A$55 million-A$65 million hit to its 2025 earnings before interest, tax, depreciation and amortization, it added.
TPG maintained its guidance for 2024 Ebitda of A$1.95 billion to A$2.025 billion, excluding one-off items. Those items will include A$230 million-A$250 million of non-cash charges related to 755 network sites within the sharing area.
Write to Stuart Condie at stuart.condie@wsj.com
(END) Dow Jones Newswires
April 28, 2024 19:47 ET (23:47 GMT)
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