TPG Telecom confirms the sale of fiber infrastructure assets worth $5.25 billion to Vocus Group

TPG Telecom (ASX: TPG) has secured the sale of its fiber network infrastructure assets and fixed corporate, government and wholesale (EGW) businesses to international telco Vocus Group valued at $5.25 billion.

The deal, expected to close in late 2025, includes the sale of wholesale broadband supplier Vision Network and a potential $250 million contingent payment.

Subject to approval by the Foreign Investment Review Board, TPG will complete an internal restructuring to transfer all transaction assets to a wholly owned subsidiary, which will then be sold to Vocus.

Retain some assets

TPG will maintain its mobile radio network infrastructure, consumer and EGW mobile businesses, along with its consumer fixed retail and small office/home office businesses, including fixed wireless networks.

About 560 TPG employees are expected to move to Vocus, with the telco providing fixed network services back to TPG for an annual fee of $130 million. The company expects total transaction costs for sellers to be between $45 million and $55 million and net separation costs in the coming years. range of $80 million to $120 million, spanning fiscal years 2024, 2025 and 2026.

The company expects the deal to generate net cash proceeds of up to $4.75 billion, which will be used to support planned future capital management and corporate investment initiatives.

The deal will not impact TPG’s FY24 EBITDA guidance of between $1.95 billion and $2.02 billion, excluding material one-time items and cash capital expenditures, as well as spectrum payments of approximately $1.02 billion.

Strategic evaluation

TPG CEO Iñaki Berroeta said the sale comes at the end of a strategic review of the company’s fiber network infrastructure.

“This transaction reflects a smaller asset perimeter compared to our original discussions with Vocus in 2023 and has resulted in a simpler business model than originally planned,” he said.

“The deal unlocks the value of our fixed infrastructure assets, while strengthening our financial position and creating a more focused and streamlined company with significant opportunities to optimize our capital structure.”

‘Challenger of scale’

The sale is expected to be a positive outcome for major fixed telecommunications customers in Australia.

“This transaction will create a challenger of scale in the enterprise connectivity sector, with strength in international, inter-capital, regional and metropolitan connectivity,” Berroeta said.

“It will also extend Vocus’ premium connectivity and collaboration offering to our core EGW customers.”