CANBERRA: Vodafone Hutchison Australia has announced a $1 billion deal with TPG Telecom to use the latter’s networks for carrying its mobile data across the country for the next 15 years. TPG in turn will resell Vodafone Australia’s mobile services, dropping Optus as its supplier in the process.
The deal is important because it affects about 320,000 TPG mobile customers and could dramatically change services experienced by Vodafone Australia’s 5.25 million users. The deal could be the first step towards an eventual merger between Vodafone and TPG Telecom. It will also help TPG fund a major increase in its fibre-optic cable footprint across the country.
“Dark fibre is about preparing Vodafone for the future,” Vodafone Australia chief executive Inaki Berroeta said in a statement. “It is the next step in our network evolution and builds on our multi-billion dollar network investment in recent years.”
Some 3000 mobile cell sites will be connected using TPG’s dark-fibre services, which represents two-thirds of the Vodafone Australia network. These were previously connected using a range of disparate providers. Dark fibre refers to unused high-capacity fibre optic cabling that can be leased to customers. Vodafone Australia will now be able to send and receive a lot more of its customers’ mobile data for a much lower cost.
This could lead to a mix of lower costs for Vodafone Australia customers and much higher data allowances if the company chooses to pass the savings and extra capacity onto its users. Vodafone Australia’s network will also be ready for a 5G rollout, which its chief financial officer James Marsh has previously flagged will take place around 2021 onwards.
The fibre services deal will be worth over $900 million over the next 15 years and will cost TPG around $300 million to $400 million to build over the next three years. TPG’s executive chair, David Teoh, said he was “very excited and very proud” about the contracts, but his team added that mobile users would be shifted off Optus and onto TPG in batches.
“This will help Vodafone enhance their superior network well into the future,” he said. “On the MVNO [mobile reseller] side we’re excited as well – they have invested $3 billion over the last few years … so they’re serious. “We’ll bring our mobile business and our customers to the Vodafone network on the 4G superfast network.”
The remaining one-third of Vodafone Australia sites could be connected using the national broadband network if its current trials are successful and result in the launch of wholesale backhaul services.
Both sides launched the partnership during a rare public appearance by Mr Teoh and his senior executive team. The agreements took a year and a half to tender and negotiate. The deal could be the first step towards an eventual merger between both companies because TPG and Vodafone Australia’s networks and systems are more intertwined than ever.
But Mr Teoh said recent media reports that he’d met with Vodafone Group executives, potentially to discuss a merger, were entirely false. When asked if he’d ever discussed a takeover or merger with Vodafone executives, he declined to comment.
A spokesman for Optus said the company respected TPG’s announcement and expected to continue working with the telco in the future. It also called on affected customers to contact Optus if they wanted to stay on its network and warned that they would need to get a new SIM card.
