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TPG had initially agreed a similar deal with Telstra, but this was quashed by the competition regulator
This week, Australian telcos TPG Telecom and Optus have announced a new agreement that will see them create a regional Multi-Operator Core Network (MOCN), extending TPG’s 4G and 5G networks.
The network sharing agreement will see TPG make use of Optus’ mobile sites across the country, increasing the company’s total number of available sites from 755 to 2,444. This, according to TPG, will more than double the company’s existing 4G network coverage.
TPG will also gain access to additional 5G sites deployed by Optus in future.
Optus, meanwhile, will gain access to some additional spectrum from TPG, bolstering their wireless network’s performance.
The deal is valid for 11 years, with an option to increase this by a further five years if desired. TPG says it expects to pay Optus roughly AUD $1.17 billion (USD $770 million) during this 11-year period.
“TPG Telecom expects this significant increase in the size and performance of its mobile network will enable it to accelerate mobile subscriber growth over time as a result of reduced churn and increased addressable market,” said the operator in a financial filing.
TPG initially agreed to a similar network sharing deal with Telstra back in 2022, with the move set to see TPG gain access to around 3,700 of Telstra’s mobile sites, while Telstra would gain access to TPG’s 4G and 5G spectrum.
However, the Australian Competition and Consumer Commission (ACCC) ultimately blocked the deal a year later, arguing that the move would harm competition. In particular, the regulator said the deal would disincentivise the companies’ rival Optus from investing in rural areas.
At the time, Optus had argued that they were the better potential network sharing partner for TPG, saying this pairing would better maintain market competition.
TPG, however, were indignant at the proposal, saying that “Optus wishes to use the authorisation process to remove Telstra as a competitor in relation to network sharing and leave it free to impose a less attractive, alternative transaction”.
Now, with the Telstra deal firmly off the table, it seems that TPG has gradually mellowed to the idea of a partnership with Optus.
Optus themselves say that the deal has been constructed specifically to address the concerns of regulators.
“There are some similarities between the transaction but there are some differences as well. And we believe that these differences are significant enough that the ACCC will not have a problem with this,” Optus’s interim CEO, Michael Venter told Guardian Australia.
He noted that giving Optus access to additional spectrum from TPG would not be as impactful to competition as giving it to existing market leader Telstra.
“We are confident that although we get access to the same level of spectrum, the starting position is very different in that Optus is not the dominant player in that region yet,” explained Venter.
The sharing agreement will come into effect in early 2025, assuming regulatory approval.
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