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The Australian Competition and Consumer Commission (ACCC) has approved the proposed regional network and spectrum-sharing agreement between Optus, owned by Singtel, and TPG Telecom (ASX:TPG), marking a significant step toward enhancing mobile services in regional Australia. The decision, announced on September 5, allows TPG to access Optus' regional radio access network through a Multi-Operator Core Network (MOCN) agreement, which is expected to benefit both companies and their customers.
Details of the Network-Sharing Agreement
The agreement allows TPG to use Optus' MOCN services by sharing active mobile network infrastructure to deliver 4G and 5G services in select regional areas. Additionally, the two companies will share spectrum—a crucial element for wireless communications. The move enhances TPG's retail and wholesale offerings by allowing it to leverage Optus' infrastructure while focusing on its core network operations in metropolitan areas.
Importantly, TPG will transfer some of its existing mobile sites in regional areas to Optus, with the remaining sites set to be decommissioned. Despite this, the agreement will not affect metropolitan areas, where both companies will continue to operate their own independent networks.
Long-Term Implications for Regional 5G Rollout
The partnership between Optus and TPG is expected to accelerate the rollout of 5G infrastructure in regional areas. Optus' interim CEO, Michael Venter, emphasized the agreement’s potential to expand 5G services to underserved communities, providing both companies with enhanced coverage and customer satisfaction in the long term.
The agreement is non-exclusive and has an initial term of 11 years, with an option for TPG to extend the deal by five more years. The new network sharing services are expected to be available to customers by early 2025, pending regulatory approvals.
ACCC's Green Light: A Competitive Edge
The ACCC, which previously rejected a similar network-sharing deal between TPG and Telstra in 2022, found the Optus-TPG agreement unlikely to lessen competition. In fact, the watchdog believes the tie-up will help TPG narrow the competitive gap between itself and larger players like Telstra and Optus. The ACCC noted that TPG lags behind its competitors in key mobile services metrics, but this new network arrangement is expected to boost its offerings in regional areas.
Furthermore, the deal will improve Optus' competitive standing in rural Australia by giving the company access to TPG's spectrum, potentially increasing revenue and customer base. The arrangement could also level the playing field by offering customers in regional areas better access to 5G services, helping both companies challenge Telstra's dominant market share.
Market Reaction
Following the ACCC's announcement, shares of Singtel, which owns Optus, closed 0.3% lower at S$3.14 on Thursday. Despite this minor dip, the long-term benefits of the agreement are expected to outweigh short-term fluctuations, particularly as the companies roll out 5G services in previously underserved areas.
