ASX listed telco TPG Telecom Ltd (ASX:TPM) and Vodafone Australia announced a strategic partnership with commercial agreements valued at more than $1bn.
The partnership consists of two agreements covering a Dark Fibre Network expansion and the migration of TPG’s mobile customer base to the Vodafone network.
TPG to Expand Dark Fibre Network to Vodafone Sites
TPG will provide Dark Fibre and network services to Vodafone Australia over the next 15 years as per the agreement. The services will be provided to more than 3,000 Vodafone Australia sites and TPG will upgrade its current infrastructure by adding more than 4,000km of new fibre.
The newly established agreement will extend the existing relationship between TPG and Vodafone. TPG has provided more than 900km of fibre to Vodafone sites.
TPG CEO David Theo believes that this is an exciting opportunity for both companies as it enables TPG to deliver its proven services to Vodafone which in return can continue to deliver premium services.
Vodafone CEO Inaki Berroeta is also positive about the agreement and believes it adds significant value to Vodafone’s core business by exponentially increasing capacity and enhancing resilience. He believes that network data traffic will “continue to grow through customer’ appetite for mobile content and the emergence of technologies such as the Internet of Things”
Mr Berroeta commented: “Dark Fibre is about preparing Vodafone for the future. It is the next step in our network evolution and builds on our multi-billion dollar network investment in recent years to further enhance the customer experience.”
Industry’s Largest Mobile Operator Arrangement
Besides the Dark Fibre agreement TPG will also migrate its mobile wholesale customer base to the Vodafone network in what the company calls “the industry’s largest ever Mobile Virtual Network Operator arrangement.”
Under the agreement TPG will be able to offer faster data speed by accessing Vodafone’s 4G network. Vodafone CEO Berroeta calls the partnership a “natural fit” as both companies will benefit from each other’s assets and services.
TPG’s share price has significantly outperformed both the sector and the market after reporting a seventh consecutive year of growth as well as a successful takeover bid for iiNet.
Author: Simon Herrmann
Sep 30, 2015
Simon is a financial analyst at independent research firm Wise-owl specialised in small-mid cap growth opportunities and ethical investment opportunities. Simon's aim is to disrupt the cliché approach to investment decision making as he believes that socially and environmentally responsible behaviour is a necessity to long-term wealth creation. Simon has a deep fundamental understanding of the global financial landscape and has compiled 300+ research reports, valuations and corporate appraisals. Simon is commonly featured in major media outlets and his research is published weekly in The Australian.