Australia’s TPG yearns for the simple life

• TPG Telecom is one of Australia’s largest telcos
• It has a sprawling portfolio as a result of its 2020 merger with Vodafone Hutchison Australia
• Now the agreement to sell its fibre network and associated operations to Vocus Group has been approved and TPG is ready to focus on a simplified, converged services operating model

With approval from Australia’s Competition and Consumer Commission (ACCC) for the AUS$5.25bn (US$3.28bn) sale of its fibre network infrastructure and EGW (Enterprise, Government and Wholesale) Fixed business to Vocus Group, TPG Telecom can now look ahead to a more focused approach to its services strategy. 

TPG Telecom, which offers its services under a broad range of brands (Vodafone, TPG, iiNet, AAPT, Internode and Lebara), is one of Australia’s largest telcos, as a result of the 2020 merger of TPG and Vodafone Hutchison Australia. In 2024, it reported service revenues of AUS$4.7bn, up 1.5%, including mobile service revenues of AUS$2.27bn, up 5.4%, and ended the year with 5.51 million mobile customers.  

In the not too distant future, it will be able to focus even more on its mobile services strategy as the ACCC’s clearance of the fixed and wholesale operations was a hurdle that the M&A deal had to overcome: Now the asset sale to Vocus is expected to be completed later this year, with approval from the Foreign Investment Review Board and US regulators still to be gained in the meantime.

Once that is all done and dusted, TPG will have completed the re-engineering of its business model, designed to double down on mobile and converged mobile/fixed services to generate sustainable and profitable growth from its existing coverage.

“This structure will enable us to grow our share of the mobile and home internet market with higher customer numbers or data volumes without incurring higher costs for accessing the fixed network,” explained TPG Telecom CEO Iñaki Berroeta in the company’s full year earnings statement.

“We are well positioned to compete as a lean, mobile-led integrated telco with a capital-efficient operating model. It simplifies TPG Telecom’s operations while putting in place an attractive long-term cost structure,” he added. The CEO also noted that the Vocus deal will mean TPG no longer needs to invest in additional fixed network transmission services, enabling it to reduce its annual capital expenditure (capex) budget by between AUS$550m and AUS$650m and reduce annual operating costs by about AUS$100m, all of which will help boost the operator’s margins and free cash flow.

TPG’s mobile growth strategy will also be helped by its regional mobile network sharing agreement with Optus, a collaboration that has more than doubled TPG’s cellular service coverage to 98.4% of Australia’s population (with 89.7% 5G coverage) across 1 million square kilometres of the country’s terrain. 

That network sharing arrangement will see TPG and Optus use each other’s 4G and 5G radio access network and spectrum in regional areas, though both carriers will continue to operate their own core networks, so each has full control over its own network.

Vocus, meanwhile, is pursuing the flip side of the TPG business model. By acquiring TPG’s fixed business and fibre network assets, it wins TPG as an anchor tenant to which it will provide long-term network planning and access certainty, while strengthening its existing digital infrastructure operator role in Australia, serving the enterprise government and wholesale sectors. 

Following the acquisition, Vocus will have 50,000km of owned or leased fibre under long-term ‘right-of-use’ arrangements, along with nearly 15,000km of submarine cable and 20,000 connected buildings.

– Ian Scales, Contributing Editor, TelecomTV