Vocus back in talks for TPG’s non-mobile fibre assets

TPG’s enterprise, government and wholesale revenue was $1.1bn last year.

Revived talks between Vocus Group and TPG Telecom for a sale of the latter’s non-mobile fibre assets is understood to be well progressed, but there’s big questions over the price.

DataRoom reported in February reported that the $8bn Australian telecommunications company was preparing to bring the assets back to market.

It’s understood that TPG has again knocked on the door of Vocus but a key point of focus will be whether TPG has since then lost home and corporate customers.

Vocus already carried out most of the due diligence on the business last year, so the negotiations will no doubt centre on price.

TPG halted talks with Macquarie-backed rival telecommunications company Vocus Group in November over a sale and leaseback of its non-mobile fibre assets in a deal expected to be worth about $6.3bn.

That proposed sale came after a strategic review was taking place which included a sale process for its Vision Network business, which connects homes to the internet.

Vocus was originally weighing an acquisition of Vision, but then became more keen on a broader deal.

The transaction stalled in November after both groups could not agree on operation and commercial terms.

TPG Telecom refinanced $2.5bn of debt last year and has further debt to refinance.

At December, its bank debt was $4bn and net debt at 3.2 times earnings.

Working closely with the company is Bank of America.

TPG Telecom, Australia’s third biggest telco, is due to report its half-year results on August 30.

Vocus made an unsolicited bid for TPG’s “mini NBN” fixed infrastructure assets – including Vision Network, which services about 400,000 customers.

But once the pair engaged in talks, the deal increased dramatically in scale to include TPG’s broadband assets, which would have effectively doubled Vocus’ market share in the business and government space, rivalling beleaguered Optus.

Part of the Vocus negotiations would involve long-term supply contracts.

TPG’s enterprise, government and wholesale (EGW) revenue was $1.1bn last year.

It has about a 10 per cent share of the enterprise, government and wholesale market – the same as Vocus – while Optus has 20 per cent and Telstra controls the rest.