TPG offloads fixed network assets in AUS$5.25bn deal

• Australia’s TPG Telecom has been trying to sell its fixed network assets for some time
• It abandoned a deal with fibre network operator Vocus at the end of 2023
• But the two parties returned to the negotiating table and have now struck a deal valued at up to AUS$5.25bn (US$3.53bn)

Second time lucky? Having been unable to get a previous deal over the line, Australian fibre network operator Vocus Group, which focuses on the needs of enterprise customers, has finally struck a deal to acquire TPG Telecom’s fixed network assets in a deal valued at up to AUS$5.25bn (US$3.53bn). 

The two operators had been in discussions last year for a deal valued at AUS$6bn, but those talks broke down in November 2023, with the pair “unable to reach alignment on the operating model and commercial terms.” 

But they gave it another go and have now struck an agreement that will see Vocus, which currently operates a network of 27,000km of fibre that reaches 6,000 enterprise buildings across Australia, as well as 7,700km of subsea cable, acquire TPG’s Enterprise, Government and Wholesale (EG&W) fixed business and fibre network assets.

Vocus, which is being backed in the deal by its investors Macquarie Asset Management and pension fund Aware Super, said the acquisition would position it as a “key digital infrastructure operator in Australia, with an extensive integrated network of high-quality subsea, metropolitan, intercapital and regional fibre with significant breadth and scale. The complementary assets will allow Vocus to deliver highly valued services to a diversified base of customers and drive competition in the sector.” Once the deal is completed, Vocus will operate a network of 51,000km of owned or leased fibre, nearly 14,700km of international submarine cables, and will connect almost 20,000 buildings. The agreement includes TPG’s fibre network infrastructure, the EG&W fixed customer base, IT assets, international submarine cables, and a wholesale residential broadband business (Vision Network).

Under the terms of the deal, Vocus will provide fixed network services to TPG, which is retaining its radio access network infrastructure, consumer and EG&W mobile services business, and its consumer and small office/home office commercial fixed services business. TPG is Australia’s third-largest mobile operator (after Telstra and Optus) with 5.5 million customers: It generated mobile service revenues of AUS$1.12bn (US$751m) during the first six months of this year. 

According to Vocus, the pair’s fibre network assets “serve largely complementary segments of Australia’s EG&W sector. Vocus’s extensive intercapital and regional fibre infrastructure will be integrated with TPG’s broad metropolitan fibre footprint, creating a highly competitive fibre network.”

In the subsea sector, Vocus will bring on board TPG’s PPC-1 submarine cable that runs from Sydney to Guam, adding to Vocus’s existing Australia Singapore Cable, North-West Cable system, Darwin-Jakarta-Singapore Cable system, and the Pacific Connect cable system that is currently being built. “This will establish the company as an owner and operator of diverse and resilient international cable landings in Sydney, Melbourne, Perth, Darwin, and Port Hedland, along with capacity on numerous third-party cable systems,” noted Vocus. 

Jarrod Nink, interim CEO at Vocus, stated: “This agreement is transformative for Vocus and is an important step towards creating a more competitive landscape for the Australian telecommunications industry. Digital infrastructure is the foundation of the modern economy, driving growth and innovation, and opening new markets and opportunities. Investment and competition in our industry is critical for Australia’s future, and the combined strengths and resources of Vocus and TPG in the EG&W sector will create immediate and lasting benefits for our customers, employees and shareholders,” he added.

TPG expects the deal to close during the second half of 2025. TPG Telecom CEO Iñaki Berroeta noted: “We are pleased to announce this transaction and the successful conclusion of the strategic review of our fibre network infrastructure assets. The transaction reflects a smaller asset perimeter compared with the original discussions with Vocus in 2023, resulting in a simpler operating model than was envisaged in the original discussions. The deal unlocks the value of our fixed infrastructure assets while strengthening our financial position and creating a more focused and streamlined business with significant optionality for the optimisation of our capital structure.”

- Ray Le Maistre, Editorial Director, TelecomTV