TPG Telecom’s 320,000 mobile users will be switched over to the Vodafone network in a $1 billion tie-up between the two telcos.
TPG Telecom will drop Singtel-owned Optus as its mobile provider in favour of Vodafone Australia and, in turn, extend its so-called dark fibre network to carry its new partner’s mobile data.
David Teoh’s TPG will spend between $300 million and $400 million to add about 4,000km of new fibre and extend its NBN competitor network to Vodafone cell sites nationwide.
It anticipates more than $900 million in revenue over the sites’ 15-year contracts.
The deal, which had been 18 months in the works, further strengthens TPG following its $1.6 billion acquisition of iiNet and means Vodafone should be ready for the demands of data-heavy 5G when it is rolled out within a few years.
“This is a purely future-proofing. The reality is we are rolling out something we don’t really need today … it is something we must have in four years,” Vodafone Australia chief executive Inaki Berroeta told AAP.
Some customers will join Vodafone immediately, with TPG offering new SIM-only 4G plans on Wednesday at the same time the companies announced the link-up.
TPG general manager enterprise and wholesale Mark Rafferty said the transition should benefit customers, through the introduction of initiatives such as real-time billing, and that the company had no concerns about the reliability of the Vodafone network.
“We don’t take this very lightly,” Mr Rafferty told AAP.
“We’ve got a lot of confidence about how the services are going to work.”
Mr Berroeta said Vodafone had addressed consumers’ past concerns about coverage and reliability in Australia.
“It is 100 per cent a future investment more than something we do to fix the network. All that is done: the turnaround is over, we’ve upgraded our network, we invested,” Mr Berroeta said.
“What we need to do is continue to invest.”
Neither party would be drawn on whether the partnership represented a step toward an eventual merger but Mr Berroeta did praise TPG, which already provided 900km of fibre to Vodafone between 2011 and 2013.
“The way the teams have been working together has been extremely successful. We really trust them,” he said.
TPG’s shares soared 72 cents, or 7.1 per cent, to close at a record high of $10.86.
IG Markets analyst Angus Nicholson said investors were broadly supportive of the deal, which is just the latest by the billionaire Mr Teoh.
“He’s proven himself time and again just how ambitious he is with the dark fibre program going head to head with the national NBN roll out. This is just another move by him that shows he’s really out to win and happy to take on the Australian government,” Mr Nicholson said.