TPG Telecom Limited has announced [14/10/24] that it has entered into a binding Share Purchase Agreement (SPA) to sell its fibre network infrastructure assets and Enterprise, Government and Wholesale (EGW) fixed business, including Vision Network, to Vocus Group Limited (Vocus) for an enterprise value of $5,250 million [1] (the Transaction) including a potential $250 million Contingent Value Payment [2].
TPG will retain its mobile radio network infrastructure, Consumer and EGW mobile business and its Consumer and small office/home office fixed retail business, including fixed wireless. Vocus will provide fixed network services back to TPG as part of the Transaction terms.
The parties are targeting completion of the Transaction in the second half of 2025 subject to satisfaction of conditions precedent, including regulatory approvals, as set out in more detail below. At completion, TPG anticipates the Transaction will deliver net cash proceeds to the Company of $4,650 – $4,750 million [3].
TPG intends to use these proceeds to support future capital management and business investment initiatives. Details of such future initiatives have not yet been determined and remain subject to development. TPG anticipates providing more detail to the market around the time of Transaction completion.
TPG Telecom CEO Iñaki Berroeta said: “We are pleased to announce this transaction and the successful conclusion of the strategic review of our fibre network infrastructure assets. The transaction reflects a smaller asset perimeter compared with the original discussions with Vocus in 2023, resulting in a simpler operating model than was envisaged in the original discussions. 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.”
“This is also a great outcome for large customers for fixed telecommunications services in Australia. The transaction will create a challenger of scale in the enterprise connectivity sector with strength in international, inter-capital, regional and metropolitan connectivity. It will also extend Vocus’ premium connectivity and collaboration offerings to TPG Telecom’s Enterprise, Government and Wholesale fixed customers.”
“We look forward to a long-term partnership with Vocus that will support TPG Telecom’s ambition to be Australia’s best telco. We are committed to working as efficiently as possible with Vocus and regulators to bring the Transaction to completion and providing the smoothest possible transition for our Enterprise, Government and Wholesale fixed customers and the approximately 560 TPG people who will transition to Vocus.”
The Transaction includes TPG entering a Transmission and Wholesale Fibre Access Agreement (TAWFA) with Vocus under which Vocus will provide network services to TPG for a fee of $130 million4 per annum. The TAWFA has an initial 15-year term with two 10-year extensions at TPG’s election. The TAWFA has been designed to ensure TPG maintains “owner economics” of the fibre network, meaning pricing is non-volumetric and increased only in relation to indexed and capped inflation and network expansion requiring the deployment of new physical infrastructure.
For further details including the full ASX announcement, financial and transactional details go to: https://wcsecure.weblink.com.au/pdf/TPG/02865676.pdf
[1] Enterprise value includes $40 million contribution by Vocus to TPG Separation Costs and excludes TPG’s $100 million contribution to Buyer Transaction Costs.
[2] Contingent Value Payment subject to the meeting of certain subscriber targets for the Vision Network wholesale residential fixed access business between two and four years after completion.
[3] Net cash proceeds are calculated as enterprise value ($5,250 million) less Contingent Value Payment ($250 million), TPG’s contribution to Buyer Transaction Costs ($100 million), estimated Seller Transaction Costs including stamp duty and other cash tax impacts, but prior to the impact of any TPG Separation Costs.