$1.17 billion Optus and TPG network deal to boost rural coverage

In a bid to expand regional mobile connectivity, Optus and TPG Telecom have teamed up to share network infrastructure across Australia.

Part of a new regional Multi-Operator Core Network (MOCN) agreement, Optus will share spectrum in regional Australia and access to its regional radio access network, with TPG Telecom set to gain access to 2,444 Optus mobile network sites. According to investor relations details, TPG Telecom will pay $1.17 billion for the access.

As a result, TPG’s 4G footprint is expected to grow to one million square kilometres, up from 400,000, expanding its coverage to 98.4% of Australia’s population.

TPG Telecom customers – including people signed up to Vodafone, TPG, iiNet, Lebara, and Felix – will also benefit from broader 5G connectivity. As part of the regional MOCN, 1,500 5G sites will be live by 2028, expanding to 2,444 by 2030.

By teaming up, the two telco companies expect to reduce costs and set up 5G infrastructure two years ahead of schedule. Both Optus and TPG Telecom see the MOCN as greatly benefitting regional Australians.

“This is a win for all Australians, especially our regional communities, businesses, and visitors,” said Michael Venter, Optus Interim CEO. “Optus and TPG Telecom will be positioned to provide consumers with more choice and better services as we accelerate our investment in the regions.”

Adding to the interim Optus CEO’s comments, Iñaki Berroeta, TPG Telecom CEO, labelled the agreement as a “sustainable approach we need to maximise established infrastructure” between the telcos.

“This network sharing arrangement will reset the competitive landscape for mobile services in regional areas and provide Australians with more choice than ever before,” said Berroeta. ” This will allow us to reduce rollout and operating costs, make better use of network assets and deliver huge customer benefits.”

Will the Optus and TPG MOCN actually go ahead?

Telstra and TPG Telecom unsuccessfully attempted a regional network-sharing arrangement in 2022. The ACCC blocked the deal, which was later upheld by the Australian Competition Tribunal in 2023, citing Telstra’s “competitive benefits”.

Aiming for an “early 2025” window, the TPG and Optus MOCN would be “non-exclusive” over the course of 11 years, with a five-year extension on the table. With the proposed arrangement now public, it’s due to go through regulatory processes before becoming a reality.

One thing working in favour of this arrangement is the reduced risk of monopolisation. Telstra’s network covers approximately 99.5% of the Australian population, while Optus sits in second place at 98.5%. If the original deal between Telstra and TPG went ahead, it would’ve bumped the latter’s coverage up to 98.8%, above Optus.

TPG regularly provides the cheapest SIM plans in Australia, using the Vodafone 4G network. If the regional MOCN goes ahead, it’ll service more Australians, particularly those not in metropolitan areas. For Optus, the faster and cheaper 5G rollout is the main benefit.

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