TPG’s $1bn Vodafone deal delivers slap in face to Optus

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TPG’s $1bn Vodafone deal delivers slap in face to Optus

TPG will invite more than 300,000 of its mobile phone users to takeup a new offer on Vodafone’s network which would switch them from the Optus network.

The network deal was one of two major agreements with Vodafone announced today with a combined value of more than $1 billion. The second is a 15-year agreement that will see TPG extend more than 4,000km of new fibre to Vodafone mobile sites.

The two companies are calling the mobile deal one of the industry’s “largest-ever” mobile virtual network operator (MVNO) arrangements. TPG will invite its existing mobile customer base to take up an offer on the Vodafone network. Each TPG customer will be given a bonus period to try the network without obligation, TPG chief operating officer Craig Levy told CRN. Each invitation will have a validity period, with Levy describing the plan as a soft approach.

While TPG previously offered 4G services via Optus network, Levy stated, adding that from today TPG consumer no longer offers Optus mobile services.

TPG chief executive David Teoh cited Vodafone’s reliability and 4G speeds as the biggest benefits, claiming TPG mobile users will get “substantially faster data speeds”.

An Optus spokesperson said the carrier is working with the TPG Group on revised wholesale arrangements but expects to be a continuing wholesale provider to the TPG Group in the future. He said Optus remains the leading wholesale service provider in the market.

While Optus was contractually unable to discuss its wholesale relationship with TPG, the spokesperson stated that the company respected TPG’s decision to work with other providers.

Existing TPG customers that preferred to stay on the Optus network were invited to contact the carrier.

Market activity

The deals are a further sign of TPG’s ambitions, which have seen it acquire iiNet in a $1.56 billion deal, as well as fight with Vocus over the buyout of Perth solutions provider Amcom.

TPG reported profits of $224.1 million for the financial year ending 3 July, an increase of 31 percent.

Its latest deal with Vodafone will see dark fibre and network services supplied to more than 3,000 Vodafone Australia sites. TPG also previously provided 900km of fibre to Vodafone sites between 2011 and 2013.

The fibre will mean a “step change” for the Vodafone network, with Vodafone chief executive officer Iñaki Berroeta predicting lower latency, an increase in capacity and better resilience.

Vodafone has been climbing back from customer losses several years ago, though recent  results have been mixed. It reported a 2.1 percent year-on-year increase in non-wholesale customers in July, but overall customers were down by 45,000 in the first half of 2015 compared to the second half of 2014. The carrier has also opened its first business centre and plans to open 20 business retail stores in Australia by 2017.

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