Vocus in $5.25 billion deal for TPG Telecom fibre networks

TPG Telecom has struck a $5.25 billion deal to sell its fibre network to the Macquarie and Aware Super-backed Vocus Group, pocketing a cash pile to beef up its consumer business.

The agreement, amended from a sale and lease-back proposal discussed and then scrapped last year, will give Vocus control over more than 50,000km of fibre connecting 20,000 buildings in cities and regional areas, as well as 15,000km of international submarine cables.

It also includes the purchase of TPG’s enterprise, government and wholesale fixed business.

TPG, which operates mobile and internet brands including iiNet, Vodafone, AAPT and Internode, will retain its radio network infrastructure, mobile and fixed retail and wireless businesses.

The deal comes amid a growing investor focus on data as demand for data centres and fibre networks expands to meet the take-up of artificial intelligence.

Vocus said the purchase, if finalised, would position it “as a key digital infrastructure operator in Australia, with an extensive integrated network of high-quality subsea, metropolitan, intercapital and regional fibre with significant breadth and scale”.

“This agreement is transformative for Vocus and is an important step towards creating a more competitive landscape for the Australian telecommunications industry,” interim chief executive Jarrod Nink said.

The sale price reflects the enterprise value of the TPG assets, with the company set to pocket between $4.65b and $4.75b in cash if the deal is finalised as expected in the second half of 2025.

TPG, which will pay $130m a year over at least 15 years to access the divested fibre infrastructure, said the amended deal was was a simpler one than envisaged by last year’s scrapped proposal and would foster competition.

“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,” TPG chief executive Iñaki Berroeta said.

“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 the international, inter-capital, regional and metropolitan connectivity.”

Vocus, which is jointly owned by Macquarie Asset Management and Aware Super, will pick up TPG’s PPC-1 submarine cable, which runs from Sydney to Guam, adding it to an existing portfolio that includes cables to Singapore and the in-progress Pacific Connect system.

“This will establish the company as an owner and operator of diverse and resilient international cable landings in Sydney, Melbourne, Perth, Darwin, and Port Hedland, along with capacity on numerous third-party cable systems,” Vocus said.

The deal also includes TPG’s Vision Network wholesale residential broadband assets, which will support Vocus’ consumer and NBN wholesale business.

The joint head of infrastructure in the Asia Pacific for Macquarie Asset Management, Ani Satchcroft, said Vocus’ owners “had continued to identify and actively pursue opportunities for Vocus presented by the increasing importance of digital infrastructure assets in the Asia Pacific”.

“Today’s agreement builds on our 2022 merger of Vocus’ New Zealand’s operations with 2degrees, which successfully created New Zealand’s third-largest integrated telecommunications company and has driven competition in that market,” Ms Scatchcroft said.

“Combining TPG’s highly complementary assets with Vocus’ existing footprint will create a key digital infrastructure operator in Australia, providing significant scale to drive new opportunities to compete and better serve customers across the region.”

The assets covered by the sale will be transferred into a new subsidiary, which then be sold to Vocus.

However, the agreement is subject to a lengthy regulatory approvals process, having to be endorsed by the Foreign Investment Review Board, the Australian Competition and Consumer Commission, the Committee on Foreign Investment in the US, and the US Federal Communications Commission.