TPG Telecom and Optus sign network sharing agreement

TPG Telecom Limited (ASX: $TPG) has signed a network sharing agreement with Optus Mobile Pty Limited to create a regional Multi-Operator Core Network (MOCN) that will extend TPG Telecom's 4G and 5G mobile network to reach 98.4% of the Australian population. Under this arrangement, TPG Telecom will increase its mobile network from around 755 to 2,444 network sites in regional Australia, more than doubling its national coverage from around 400,000 to around 1,000,000 square kilometres.

Executive Commentary on Network Sharing Agreement

TPG Telecom CEO Iñaki Berroeta expressed that the agreement represents a major breakthrough in TPG's ambitions to deliver greater choice and value to more Australians and grow the scale of the business in an efficient manner. He highlighted that the network infrastructure sharing will avoid unnecessary capital investment and high operating costs, providing more value for shareholders and less cost to pass on to customers. Berroeta also emphasized that the transaction will allow TPG to monetize its spectrum holdings in regional Australia in ways that were not otherwise possible.

Summary of Network Sharing Agreement and Outlook

The network sharing agreement between TPG Telecom and Optus marks a significant milestone in extending TPG Telecom's mobile network to cover 98.4% of the Australian population. This strategic move is expected to create significant value for TPG Telecom, enabling it to avoid future operating and capital expenditure required to operate, maintain, and expand its own regional mobile network. The agreement is also anticipated to reduce TPG Telecom's expected cash capital expenditure and achieve break-even in cash terms from FY26 onwards. Furthermore, the company expects the significant increase in the size and performance of its mobile network to accelerate mobile subscriber growth over time, leading to reduced churn and an increased addressable market. The MOCN agreement is set to be operational from early 2025, subject to regulatory approvals, and is expected to bring improved service quality and speeds for all customers, including voice, data, SMS, fixed wireless, and loT for consumer and enterprise-grade customers. This collaboration is poised to reset the competitive landscape for mobile services in regional areas, providing Australians with more choice and better services than ever before.