TPG plans to build a national 4G wireless network that will reach 80 per cent of the Australian population by next year, the company has announced, at a cost of almost $1.9 billion.
The company told shareholders yesterday that it wants to spend $1.26 billion to pay for the mobile spectrum band it has just won in the government’s latest sell-off round.
A further $600 million will go on capital expenditure to “deploy equipment” at 2,500 sites, plus additional small cell sites, over three years, the company said.
“The opportunity is significant,” the company said in a presentation to investors yesterday. “TPG is confident and excited about the opportunity to enter the large and growing mobile market in Australia.”
The company will become the country's fourth mobile network operator and compete with Telstra, Optus and Vodafone.
Following TPG’s announcement yesterday, Telstra's share price fell by seven per cent, at one point reaching a five-year low and wiping more than $4 billion from the telco’s stock market value.
Vodafone Hutchison Australia was the winning bidder of the other available bands in the spectrum auction, spending $285 million.
TPG noted a number of ‘new entrant advantages’, including the ability to use more advanced technology, reduced complexity due to not having legacy 2G and 3G networks to support and integrate and the ability to “win market share through aggressively priced plans” since it had no existing mobile customer base to protect.
“We are uniquely positioned to leverage our success in the Australian fixed-line broadband market to drive the next phase of growth for TPG’s shareholders and bring new competition to the Australian market,” said TPG executive chairman and CEO, David Teoh.
“We are also delighted to now have the ability to maximise for our shareholders the value of the infrastructure that has been built with their investment over many years.”
The company said its fibre “already connected to thousands of metro buildings” and is eyeing those customers’ “rooftops that could serve as network sites”.
Teoh also noted that the growing mobile market and stagnating fixed-line adoption put TPG at a distinct advantage.
TPG’s mobile network efforts in Australia follow similar moves in the Singaporean market, where the company acquired all of the mobile spectrum available in an auction held by the country’s Infocomm Development Authority in December.
The Australian Government, which initially proposed to sell spectrum directly to Vodafone before the plan was opposed by Telstra, Optus and TPG, announced the spectrum auction win this morning.
"Spectrum is a key enabler for the digital economy, and the Government is pleased that the auction has enabled this spectrum to be released for use," a statement from the Department of Communications and the Arts said.
The auction generated total revenue of $1.55 billion for the government. The spectrum licences commence in April next year and expire in 2029.