Optus/TPG MOCN approval good for industry ROIC

The ACCC's decision to allow regional spectrum sharing strengthens infrastructure-based competition and improves telco returns.

David Kennedy · Venture Insights6 September 2024Period: September 20244 min read

Last updated 6 May 2026

2,444↑

Optus regional sites TPG will gain access to

2026→

Year TPG capital expenditure is forecast to peak

Locked

Companies covered:

Abstract

This report analyses the ACCC's approval of the regional mobile network and spectrum sharing agreement between Optus and TPG. The deal is expected to strengthen retail competition in regional Australia while addressing the critical industry issue of low return on invested capital (ROIC). By allowing TPG access to 2,444 Optus regional sites and Optus access to TPG spectrum, the agreement facilitates faster 5G deployment and more efficient infrastructure utilization, positioning both companies more competitively against Telstra.

Key Takeaways

The ACCC approved the Optus/TPG regional MOCN deal, reversing the competitive threat posed by the previously rejected Telstra/TPG agreement.
TPG gains access to 2,444 Optus regional sites, allowing for the decommissioning of redundant infrastructure and a capex peak in 2026.
Optus will utilize TPG spectrum to increase data bandwidth and speeds, using new wholesale revenue to accelerate regional 5G rollout.

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Frequently Asked Questions

The deal allows TPG to access 2,444 Optus regional sites, effectively ending the infrastructure deficit that previously limited regional competition. This creates a credible second regional network to challenge Telstra, bringing 5G mobile competition to these areas much earlier than the market anticipated.

The agreement is a primary driver for improving return on invested capital (ROIC) in a market where currently only 1 major operator fully covers its cost of capital. TPG will see a capital expenditure peak in 2026 as it decommissions redundant infrastructure and integrates into the Optus network.

Optus will utilize TPG’s spectrum to immediately increase data bandwidth and network speeds. The resulting wholesale revenue will be reinvested to accelerate the 5G rollout across the 2,444 shared regional sites, enhancing service quality for both retail and wholesale users.

Yes, the focus on infrastructure sustainability suggests that telco pricing must trend upwards toward CPI levels to support long-term investment. Improving ROIC through site sharing is the first step toward correcting the industry's historical inability to meet its cost of capital.

Abstract

Key Takeaways

The ACCC approved the Optus/TPG regional MOCN deal, reversing the competitive threat posed by the previously rejected Telstra/TPG agreement.

TPG gains access to 2,444 Optus regional sites, allowing for the decommissioning of redundant infrastructure and a capex peak in 2026.

Optus will utilize TPG spectrum to increase data bandwidth and speeds, using new wholesale revenue to accelerate regional 5G rollout.

Frequently Asked Questions

Abstract

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