A bid has been made for the non-mobile network assets of TPG, a deal that would benefit not only the buyer but TPG itself. Paul Budde reports.
IN THE PAST, we have explored the changing trends in the Australian digital infrastructure market, emphasising its growing significance in data centres, cloud computing and data analytics, while also addressing climate change and supporting various industries.
The recent restructuring of Telstra into three separate companies, with a focus on infrastructure, provided clear indicators of the market's direction.
Back in 2021, Macquarie Infrastructure and Real Assets (MIRA), the world's largest infrastructure manager, acquired Vocus, a company boasting extensive fibre optic infrastructure and data centres across Australia. MIRA recognised the opportunities presented by the surging data usage due to remote work, e-education, telehealth and online entertainment, amassing infrastructure assets worth over $600 billion.
I previously mentioned the potential role of large international infrastructure owners like MIRA in developments involving major digital companies (Google, Facebook, Amazon) as governments sought to curb monopolistic power. This suggested the possibility of asset divestment by these companies, which could open doors for infrastructure-focused companies like MIRA.
The Australian Financial Review recently reported that MIRA, through Vocus, has made an offer of just over $6 billion to acquire TPG's infrastructure assets, further expanding its infrastructure presence in Australia.
The proposed bid aims to secure TPG's non-mobile network assets, which include a vast fibre and fixed network infrastructure. This comprises over 28,000 kilometres of metropolitan and inter-capital fibre networks, thousands of on-net fibre buildings in metro and regional areas, as well as the PIPE Networks' cable connecting Sydney and Guam with rights to third-party capacity branching out to east Asia, Japan and North America.
The deal would also encompass Vision Network, featuring legacy TransACT HFC networks in Victoria and FTTN networks in Canberra, along with fibre-to-the-building networks in major Australian cities, serving a total of 400,000 premises.
Through this acquisition, Vocus seeks to strengthen its position in metro fibre markets and directly connect with government and enterprise customers, an area where NBN Co has been dominant. Additionally, Vocus could provide TPG with a fibre backbone, as TPG currently relies on Optus' fibre for inter-capital requirements.
For TPG, the sale presents an opportunity to monetise network assets and reduce over $4 billion of debt, freeing up capital to compete in the 5G mobile market.
TPG had previously been in discussions with Telstra to sell certain mobile infrastructure assets and in exchange would use the Telstra mobile network for its services. This plan was scuttled by the Australian Competition and Consumer Commission (ACCC) as being anti-competitive. While discussions between TPG and Vocus are ongoing, this deal also requires approval from the ACCC, given its potential impact on competition in specific long-haul routes and subsea connections to the U.S.
The transaction deadline for exclusive due diligence granted by TPG to Vocus Group is set for 6 September 2023. However, terms remain subject to negotiation.
Paul Budde is an Independent Australia columnist and managing director of Paul Budde Consulting, an independent telecommunications research and consultancy organisation. You can follow Paul on Twitter @PaulBudde.
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