TPG, which operates brands including Vodafone, TPG, iiNet and Felix, has signed an 11-year agreement that will reshape Australia’s telecommunications landscape and effectively triple the company’s regional 4G and 5G coverage to 2444 network sites.
TPG chief executive Iñaki Berroeta says the deal with Optus is a win for rural Australia.Credit: SMH
The proposed deal would give 98.4 per cent of the Australian population access to TPG’s networks, and lift TPG’s 4G coverage area from around 400,000 square kilometres to 1 million, giving rural customers a viable alternative to Telstra.
Under then terms of the agreement, which would begin in early 2025, TPG would pay Optus about $1.6 billion in fees across the 11-year term while Optus would pay TPG about $400 million to use some of its unused network spectrum. The two companies would maintain control over their own core networks and continue to operate their own networks in metropolitan areas.
“This is going to more than double our national coverage overnight, as soon as this deal is implemented,” TPG chief executive Iñaki Berroeta said.
“Investing standalone was not something [that made sense] given the economics of such a low population density, so we managed to come up with a solution with Optus which we think is great.
“We will be a very viable alternative for a lot of customers that in the past did not have this choice, so I think this is great news for them.”
Optus is still focused on rebuilding its trust with customers, according to Venter, after last November’s outage, which lasted nearly 16 hours, affected some 10 million people and led to the resignation of then-CEO Kelly Bayer Rosmarin.Credit:
Berroeta said the talks with Optus had begun late last year and had progressed quickly. Optus’ interim CEO Michael Venter called the agreement a significant win for regional Australia.
“It shows the commitment that our parent company has to providing regional and rural customers with real choice, giving people what they deserve basically,” Venter said.
Optus is still focused on rebuilding its trust with customers, Venter said, after last November’s outage, which lasted nearly 16 hours, affected some 10 million customers and led to the resignation of then-CEO Kelly Bayer Rosmarin.
ACCC commissioner Liza Carver.
“We have a real focus now on restoring resiliency of the network and ensuring that it doesn’t happen again,” he said. ”So the teams have done an inordinate amount of work to reconfigure parts of the network and make sure that we’re able to restore quicker if a similar event occurs again in the future. So that’s where the main focus has been, and a number of green shoots are appearing. Our customer numbers are looking OK. I always want them to be higher, but they’re not too bad.“
Optus parent company Singtel is still searching for a replacement for Bayer Rosmarin and Venter, who previously served as Optus chief financial officer, would not comment on whether he has put his hand up to serve as chief executive on a more permanent basis.
“The group is doing a domestic and international search and when they are ready to make an announcement they will. So I think we just have to wait and see,” Venter said.
The Optus-TPG deal comes after Telstra and TPG walked away from a similar proposed $1.8 billion network sharing deal last year, which was blocked by the ACCC and then subsequently by the competition tribunal.
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In its decision, the tribunal said the proposed transaction was likely to limit TPG’s ability and incentives to compete strongly with Telstra, and that it would be likely to have had a negative impact on the likelihood of Optus further rolling out 5G across the nation, ultimately reducing competition.
After it blocked that deal, the competition watchdog encouraged TPG to enter negotiations with Optus. ACCC commissioner Liza Carver said previously that the bush could benefit from strengthened competition in 5G.
Telstra has long held market dominance in rural Australia, operating substantially more network towers than its rivals.
“We see strong economic incentives for TPG and Optus to collaborate in continuing to roll out a second 5G network into regional Australia,” Carver said in December 2022. Optus vice president of regulatory and public affairs Andrew Sheridan said in 2023 that collaboration between Optus and TPG would “make sense” and that “there’s every opportunity for some form of sharing arrangement to be negotiated in the future”.
TPG, for its part, had previously ruled out any network-sharing deal with Optus, but it backpedalled with the announcement made on Monday.
“I welcome any commercial agreements that may lead to greater coverage and more choice for customers in rural and regional Australia,” Communications Minister Michelle Rowland said on Monday.
“I look forward to the independent Australian Competition and Consumer Commission’s assessment of whether this new Optus-TPG Telecom agreement achieves just that.”
The ACCC was contacted for comment. A Telstra spokesman said the company welcomed Optus’ and TPG’s proposal to help improve connectivity across regional Australia.
“Telstra has invested significantly over many years to build the best mobile network in Australia,” the spokesman said.
“If this proposal goes ahead it is another reason for government, policymakers and regulators to look at how Australia uses the scarce resources of mobile spectrum to best support customers in regional, rural and remote areas.”
Opposition communications spokesman David Coleman also welcomed the announcement, saying it offered the promise of improved mobile coverage in rural and regional Australia.
“Moves to increase coverage and competition in regional areas can only be a good thing for customers,” he said.
“While we await further details, this appears to be a significant step in the right direction for regional telecommunications.”