Vodafone Australia and TPG enter AU$1billion deal

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Branding for Vodafone is seen on the exterior of a shop in London, Britain, September 10, 2015.
Branding for Vodafone is seen on the exterior of a shop in London, Britain, September 10, 2015. Italy has raised 462 million euros ($518 million) from the sale of spectrum to Telecom Italia and Vodafone that will be used for 4G mobile phone services. Reuters/Toby Melville

Vodafone Australia and TPG Telecom have entered a AU$1 billion deal that will enable Vodafone to carry across its mobile data throughout the country by using TPG’s network for the next 15 years. TPG will also put its own customers on Vodafone’s network and resell its services while dropping out Optus in the process.

The deal has gained significance because of its capability to affect 320,000 TPG customers and influence the 5.25 million users of Vodafone Australia. TPG, incurring about AU$300-400 million in capital expenditure, will also fund 4,000 kilometres of fiber for the cell towers of Vodafone. The fibre services deal will be worth around AU$900 million.

"Dark fibre is about preparing Vodafone for the future," Vodafone Australia chief executive Inaki Berroeta said in a statement. "It is the next step in our network evolution and builds on our multibillion dollar network investment in recent years.”

Dark fibre is unused high capacity fibre-optic cable that can be leased out to customers. The dark fibre services of the TPG will connect around 3,000 mobile cell sites, which make up about two-thirds of the Vodafone Australia Network. These sites were previously connected by different providers. This will enable Vodafone Australia to transfer more mobile data of its customers at much lower costs.

"The way the market currently works when it comes to transmission agreements that we lease from third parties, it's a volume based approach, so the more you transmit, the more you pay," the ZDnet quoted Benoit Hanssen, Vodafone Australia's chief technology officer, as saying. "What we are able to do with dark fibre is TPG will then provide the physical glass, we will ourselves, light up that fibre with our own equipment -- that actually decouples the relationship of more data for more cost. Fibre, in terms of capability, is nearly unlimited."

Vodafone Australia network is also considering a 5G rollout. Berroeta also said that it will allow customers to enjoy a higher performing 5G-ready, which will make way for other exciting future opportunities.  

David Teoh, TPG’s chief executive, said that he is very excited and proud about the deal. TPG added that users will be shifted from the Optus to TPG in batches.  

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