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TPG Telecom to Offload Fibre and Fixed Network Assets for A$5.25 Billion

(Reuters) – In a significant shift within the Australian telecommunications sector, TPG Telecom is set to divest its fibre and fixed network infrastructure, including its broadband division Vision Network, to a partnership between Macquarie and Vocus, a telecommunications group backed by pension fund Aware Super, for A$5.25 billion (approximately $3.54 billion).

The acquisition will see Vocus gain TPG’s enterprise, government, and wholesale (EG&W) fixed business alongside its fibre network assets. Nevertheless, TPG has indicated that it will retain ownership of its radio network infrastructure, as well as mobile and retail fixed wireless operations.

As a part of this transaction, Vocus will continue to provide fixed network services to TPG, ensuring a seamless transition for service users.

This agreement comes after a previous attempt to negotiate the sale of TPG’s non-mobile fibre assets was stalled nearly one year ago, highlighting an evolving landscape in telecommunications as discussions between TPG and Vocus have resumed.

TPG anticipates that the deal will yield net cash proceeds ranging between A$4.65 billion and A$4.75 billion. These funds are earmarked for enhanced capital management and new investment opportunities.

The EGW segment represented approximately 18% of TPG’s total revenue of A$5.42 billion for fiscal year 2022. Additionally, Vision Network currently provides services to over 410,000 residences across six major Australian metropolitan areas and three regional centers in Victoria, as detailed on its official platform.

In August 2023, Vocus had previously expressed interest in acquiring some of TPG Telecom’s non-mobile fibre assets, valuing the proposed assets at approximately A$6.3 billion ($4.10 billion).

This latest transaction follows TPG’s aborted asset swap with its larger competitor, Telstra. The arrangement involved Telstra purchasing spectrum and transmission towers from TPG, while TPG would utilize Telstra’s infrastructure for its 4G and 5G offerings. However, this deal met with substantial regulatory resistance.

As of the close of business last Friday, TPG shares have declined by 1.7% this year.

(Exchange Rate: $1 = 1.4848 Australian dollars)

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