TPG, Telstra to share mobile network and spectrum for decades

TPG Telecom has signed an initial 10-year network sharing deal with Telstra, extendable by a further decade, that could come into effect by the end of 2022 subject to regulatory approvals.

The multi-operator core network (MOCN) agreement will give TPG access to around 3700 Telstra cellular towers in regional Australia and on urban fringes.

TPG Telecom will decommission 725 mobile sites it currently operates in the zone covered by the Telstra agreement.

It will also grant Telstra access to its 4G and 5G spectrum holdings, which will enable the incumbent to expand the coverage of its network.

“Telstra will share its radio access network (RAN) for 4G and subsequently 5G services in the defined coverage zone, however both carriers will continue to operate their own core network where key differentiating functionality resides,” the telcos said in a statement.

“Telstra will also obtain access to and deploy infrastructure on up to 169 TPG Telecom existing mobile sites, improving coverage for TPG and Telstra customers in the zone.

“The non-exclusive agreement includes the option for TPG Telecom to request two contract extensions of five years each.”

TPG Telecom CEO Iñaki Berroeta said the “landmark” network sharing agreement “represents a material uplift in the capability of our network and will provide significant value for TPG Telecom shareholders over the medium and long term.”

“We will be open for business in regional and rural Australia like never before,” he said.

“The agreement demonstrates best-practice asset utilisation and a commitment to rationalising our operations to deliver a better customer experience, while increasing capital efficiency.”

Telstra CEO Andrew Penn said the deal would “realise more value from Telstra’s network infrastructure for shareholders while making a very significant contribution to Telstra’s wholesale mobile revenues.”

Penn said the agreement would deliver between $1.6 billion and $1.8 billion in revenues over the first 10 years.

“The access is similar to the way Telstra currently provides wholesale services to its MVNOs [mobile virtual network operators] and [to low-cost sub-brand] Belong in this zone,” Penn said.

“It allows Telstra to have an innovative way of monetising some of our active mobile infrastructure, in areas where the population coverage is much smaller and more challenging in terms of returns and further investment and where there are already a number of competitors.

“Additional scale from this agreement therefore supports return on invested capital in these areas and makes ongoing investment in the network and innovation more sustainable.”

All of TPG’s brands that offer mobile services - including Vodafone, TPG, iiNet, Lebara and felix - will benefit from access to the portion of Telstra’s network.

The deal needs regulatory approval from the Australian Competition and Consumer Commission (ACCC) to proceed.

More to come