Optus has announced a $1.6bn network sharing agreement with its rival TPG after lobbying against a similar deal between TPG and Telstra, which was kiboshed by the competition tribunal last year.
The Singtel-owned company and Vodafone’s parent company said on Monday the agreement will see TPG more than double its 4G coverage to 1,000,000 sq km and reach 98.4% of the population.
The multi-operator core network agreement, which will need the approval of the Australian Competition and Consumer Commission, will also give Optus access to some of TPG’s spectrum.
Over the course of the 11-year agreement, TPG is expected to pay Optus close to $1.6bn, with Optus paying TPG $420m for the spectrum access.
The two companies will continue to operate their own core networks for security and resiliency independence, and maintain their own networks in metro areas.
Optus said it will fast-track the number of 5G-enabled sites to reach 1,500 by 2028 and 2,444 by the end of 2030.
Optus had opposed Telstra and TPG teaming up two years ago on a network sharing agreement, which was ultimately struck down by the competition tribunal almost a year ago. In that ruling, the tribunal left the door open for alternative network sharing agreements.
Optus’s interim CEO, Michael Venter, told Guardian Australia that Optus and TPG had designed an agreement that was different to that of the TPG and Telstra deal.
“There are some similarities between the transaction but there are some differences as well. And we believe that these differences are significant enough that the ACCC will not have a problem with this,” he said.
He said the biggest difference is that under the previous agreement Telstra, as the dominant player, would have gained access to even more spectrum than it already held.
“We are confident that although we get access to the same level of spectrum, the starting position is very different in that Optus is not the dominant player in that region yet.”
He said Optus expects regulatory approvals to be finalised by the beginning of 2025, and for the agreement to commence then. It is a non-exclusive deal meaning both companies could make further network sharing deals.
TPG Telecom’s CEO, Iñaki Berroeta, said in a statement the network sharing agreement would improve competition in regional areas while also reducing the cost of duplicating infrastructure between the two companies.
“This will allow us to reduce rollout and operating costs, make better use of network assets and deliver huge customer benefits,” Berroeta said.
“In a country as large as Australia, this is the sustainable approach we need to maximise established infrastructure, and expand the reach of telecommunications services, competition and choice for consumers.”
The agreement comes as Optus prepares to shut down its 3G network in September after Telstra in June and following TPG in December last year.
Optus’s vice-president of regulator and government affairs, Andrew Sheridan, said Optus’s 4G network footprint is already 20% larger than its 3G footprint, and did not expect the shutdown to reduce coverage in regional and remote parts of Australia.
“4G has been a long rollout, to every single town we test coverage. We’re pretty confident our coverage will be as good or better.”
The main task facing the company as well as its rivals is shifting hundreds of thousands of customers on older mobile devices to 4G- and 5G-compatible devices.
