TPG shares climb on Optus deal
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More news: TPG gained on the ASX after the telco announced a regional network sharing agreement with rival Optus.
TPG shares lifted 3.4% to $1.16 by 12:50pm AEST.
TPG signs $1.2b network sharing deal with Optus
The news: Telecoms firm TPG has signed a regional network sharing agreement with bigger rival Optus to expand its 4G and 5G mobile network coverage.
The numbers: Under the deal to create a regional Multi-Operator Core Network (MOCN), TPG will pay Optus total service fees of $1.59 billion over 11 years in return for getting access to Optus’ regional mobile sites and for spectrum sharing in regional Australia.
It expects to receive $420 million in spectrum receipts from Optus over that period.
The context: TPG, Australia’s third-biggest telecoms firm, said its regional mobile sites will increase by more than three times to 2,444, more than doubling the geographic coverage of its mobile network as a result of the deal.
The agreement with Singtel-owned Optus will also help it avoid future operating and capital expenditure that would have been required to operate, maintain and expand its own regional mobile network. TPG estimated savings in cash costs of between $575 million and $675 million.
What they said: “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,” TPG Telecom CEO Iñaki Berroeta said.
“The transaction will also allow TPG to monetise its spectrum holdings in regional Australia in ways that were not otherwise possible.”
The source: ASX announcement
