TPG Telecom confirms $5.25b sale of fibre network infrastructure assets to Vocus Group
TPG Telecom (ASX: TPG) has secured the $5.25 billion sale of its fibre network infrastructure assets and enterprise, government and wholesale (EGW) fixed business to international telco Vocus Group.
The deal, expected to be completed in late 2025, includes the sale of wholesale broadband supplier Vision Network and a potential $250 million contingent value payment.
Subject to Foreign Investment Review Board approval, TPG will complete an internal restructure to transfer all transaction assets into a wholly-owned subsidiary, which will then be sold to Vocus.
Some assets retained
TPG will retain its mobile radio network infrastructure, consumer and EGW mobile businesses, along with its consumer and small office/home office fixed retail business, including fixed wireless.
Approximately 560 TPG employees are expected to transition to Vocus, with the telco providing fixed network services back to TPG for an annual fee of $130m, with the company forecasting total seller transaction costs of between $45m and $55m and net separation costs in the range of $80m to $120m, spread over the 2024, 2025 and 2026 financial years.
The company anticipates the deal will deliver net cash proceeds of up to $4.75b, which will be used to support planned future capital management and business investment initiatives.
The deal will not impact TPG’s FY24 EBITDA guidance of between $1.95b and $2.02b, excluding material one-offs and cash capital expenditure, as well as spectrum payments of approximately $1.02 billion.
Strategic review
TPG chief executive officer Iñaki Berroeta said the sale comes at the end of a strategic review of the company’s fibre network infrastructure assets.
“This transaction reflects a smaller asset perimeter compared with our original discussions with Vocus in 2023 and has resulted in a simpler operating model than was originally envisaged,” he said.
“The deal unlocks the value of our fixed infrastructure assets while strengthening our financial position and creating a more focused and streamlined business with significant optionality for the optimisation of our capital structure.”
‘Challenger of scale’
The sale is expected to be a positive outcome for large customers of fixed telecommunications services in Australia.
“This transaction will create a challenger of scale in the enterprise connectivity sector with strength in international, inter-capital, regional and metropolitan connectivity,” Mr Berroeta said.
“It will also extend Vocus’ premium connectivity and collaboration offerings to our EGW fixed customers.”