TPG’s efforts to become a major mobile player in the Australian market are close to paying off, with the company set to pump almost $2 billion into the development of a national wireless network.
TPG told shareholders on 12 April that it plans to spend around $1.9 billion on building out a mobile network in the Australian market, in a move that will see it become the country's fourth mobile network operator.
This investment consists $600 million for network rollout capital expenditure over a three-year period, with the aim of reaching 80 per cent of the Australian population, and $1.26 billion it is set to pay for the fresh mobile spectrum it has just won in the government’s latest mobile spectrum sell-off round.
The company secured 2 x 10 MHz from the government for $1,260,161,000, in the Australian Communications and Media Authority’s (ACMA) auction of unsold 700 MHz spectrum bandwidth lots, while Vodafone Hutchison Australia, secured 2 x 5 MHz for $285,907,000.
For TPG executive chairman and CEO, David Teoh, the acquisition of the 700MHz spectrum in Australia is a “tremendous development” for the long-term future of the company, which claims a predominantly fixed-line telecommunications services history.
“We are uniquely positioned to leverage our success in the Australian fixed-line broadband market to drive the next phase of growth for TPG’s shareholders and bring new competition to the Australian market,” Teoh told shareholders on 12 April.
“We believe that our mobile strategy will be complementary to our ongoing fixed-line business, with the ability to bundle mobile and fixed services expected to have a beneficial effect on our already low fixed services customer churn,” he said.
In an investor presentation published on 12 April, TPG told shareholders that it is planning to raise $400 million via a share entitlement offer to support its $1.9 billion mobile strategy in Australia.
“Through its existing business and infrastructure, TPG has most of the essential components of a mobile network operator already in place, including Australia’s largest national dark fibre network, call centres and back-office systems supporting over two million customers across the consumer, business, corporate, government and wholesale segments,” the company said.
“There are also numerous ‘new entrant advantages’ that TPG will be able to enjoy, including being able to deploy current advanced technology, the rollout of fewer sites, and not needing to support legacy equipment (for 2G/3G networks),” it said.
TPG’s efforts to build out a mobile network in Australia follows similar moves it is making in the Singapore market, where it acquired all of the mobile spectrum available in a ‘New Entrant Spectrum Auction’ carried out by the country’s Infocomm Development Authority (IDA) in December.
In early April, the company subsequently announced it had paid SGD$23.8 million ($22.5 million) for an additional for two lots of 5MHz of spectrum in Singapore, in its push for mobile network presence in the country.