ACCC approval of TPG Telecom and Optus regional network sharing arrangement

TPG Telecom Limited (ASX:TPG) has received clearance from the Australian Competition and Consumer Commission (ACCC) for its regional network sharing arrangement with Optus, marking a significant development for mobile services competition and consumer choice in rural and regional Australia.

TPG Telecom Chief Executive, Iñaki Berroeta, on regional network sharing arrangement

The decision marks a new era for mobile services competition and consumer choice in rural and regional Australia. With this arrangement, for the first time the TPG Telecom mobile network will cover most towns in Australia. We are excited about the opportunity to extend the reach of our award-winning mobile services to even more people and businesses, and to deliver more competition and choice to all Australians. Our regional network sharing arrangement will deliver better service and coverage to our five and a half million mobile customers who will gain access to around 600,000 square kilometres of new coverage, more than doubling the size of TPG Telecom's national mobile network. The expansion of our regional mobile network will drive growth in our customer base in regional and metropolitan areas. It will allow us to win and retain customers in the cities who need reliable mobile service when they travel to the bush and customers in the regional areas looking for a different choice of provider. By sharing costs and network assets, we can bring coverage benefits to customers at a fraction of the cost of duplicating infrastructure. This will allow us to reduce rollout and operating costs, make better use of our network assets and deliver huge public benefits.

ACCC approval impact and outlook

The ACCC's approval of the regional network sharing arrangement between TPG Telecom and Optus signifies a significant milestone for mobile services competition and consumer choice in rural and regional Australia. The implementation of a multi-operator core network (MOCN) will enable TPG Telecom to extend its network coverage to 98.4% of the Australian population, delivering 4G and 5G services to thousands of new places and towns. This expansion is expected to drive growth in TPG Telecom's customer base in both regional and metropolitan areas. The estimated financial impact of the MOCN on TPG Telecom remains unchanged, with the company expecting to recognize non-cash charges in FY24 and a negative EBITDA impact in FY25. However, the company anticipates that the benefits of the regional network sharing arrangement will outweigh the costs, allowing for reduced rollout and operating expenses, improved service quality, and increased customer access to mobile coverage.