LA Private

TPG Telecom to pay Optus for regional mobile infrastructure

TPG Telecom (ASX:TPG) will pay Optus about $1.17 billion to use its rival’s mobile infrastructure in regional Australia, turning to the Singapore Telecommunications-owned company after regulators blocked an earlier deal with Telstra.

Under the latest deal, TPG will increase its mobile network in regional Australia to 2,444 network sites, with Optus providing TPG Telecom access to its regional radio access network and sharing spectrum in regional Australia.

“The agreement will reduce combined 5G network rollout costs in regional Australia, which will enable the rollout of 5G infrastructure to be completed two years earlier than previously planned,” said Optus interim CEO Michael Venter.

The agreement is expected to be operational by early 2025 and has an initial term of 11 years with an option for TPG to extend it for five more years.

The TPG-Telstra deal was blocked by the Australian Competition Tribunal (ACT) 10 months ago.

In its decision last June, the ACT found that the proposed deal would give Telstra substantial benefits and increase its market strength on the retail and wholesale mobile markets, undermining Optus’ incentives to invest in 5G technology. Over time, this would weaken the competitive constraint on Telstra and lead to increased prices and margins.

There was no mention of the deal if the possible takeover of Optus by Canada’s Brookfield would change matters.

Earlier this month, Optus’ owner, Singtel of Singapore, was approached by Brookfield of Canada (a big infrastructure asset investor) to buy a 20% stake in Optus.