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Telstra in $1.3bn wholesale deal with Australia’s TPG Telecom

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Australian group TPG Telecom, which merged with Vodafone Hutchison Australia (VHA) in 2020, has agreed a network-sharing deal with rival operator Telstra.

The deal, valued in Australian press as worth A$1.6 billion to A$1.8 billion (US$1.15 billion-$1.30 billion) to Telstra, will improve TPG Telecom’s rural and suburban coverage.

TPG Telecom, which is not related to the US-based private equity investor TPG, will get access to around 3,700 Telstra mobile towers, while Telstra will obtain access to up to 169 TPG Telecom sites.

Telstra will gain access to TPG Telecom’s 4G and 5G spectrum, “which will allow it to grow its network, increase capacity and continue to provide the country’s largest and fastest network”.

Telstra CEO Andrew Penn (pictured) said: “This additional spectrum will mean that all Telstra customers will continue to experience Australia’s best and fastest network across the country, in combined 4G and 5G speeds. In particular, the spectrum agreement will ensure that regional and rural customers will now experience faster speeds in more locations on their mobiles.”

TPG Telecom will improve its coverage from 96% to 98.8% of the Australian population, it said. It can request two contract extensions of five years each, taking the deal to a potential 20 years – the end of 2042.

In a statement to the Australian stock exchange, the companies described the deal as “a ground-breaking ten-year regional multi-operator core network (MOCN) commercial agreement which will provide significant value to Telstra’s wholesale mobile revenues”.

However, according to the Sydney Morning Herald, Rod Sims, chair of the Australian Competition and Consumer Commission until next month, has roundly condemned the deal.

Sims, who fiercely opposed TPG Telecom’s acquisition of VHA, said the deal might lead to less competitive prices. “Vodafone will now be much less differentiated to the other players and so it may be able to raise its prices,” he told the newspaper.

 

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