This is TPG Telecom's strategy for its new $1.9 billion mobile phone network

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TPG Telecom believes it has the advantage over existing players when it comes to building its $1.9 billion mobile phone network announced today.

The challenge to Telstra and its 17.4 million mobile phone customers is based on TPG Telecom’s view that it already has most of the essential components of a mobile network operator already in place.

This includes Australia’s largest national dark fibre network and call centres and back-office systems supporting more than two million customers across the consumer, business, corporate, government and wholesale segments.

Billionaire David Teoh’s TPG Telecom says there are also numerous new entrant advantages, including being able to deploy current advanced technology, the rollout of fewer sites and not needing to support legacy equipment, such as for 2G/3G networks, like Telstra has to.

Here’s how TPG sees it.

“We are also delighted to now have the ability to maximise for our shareholders the value of the infrastructure that has been built with their investment over many years,” says chairman Teoh.

“That is because the same fibre network infrastructure that is today the core of our fixed retail telecommunications business, and which is used to deliver leading value services to our corporate and wholesale customers across the
country, will now also be the cornerstone of our national mobile network.”

TPG will roll out its mobile network over two to three years, with trials in selected areas being in 2018.

The company expects to install equipment at 2,000 to 2,500 sites plus small cell sites across Australia.

Capital expenditure in the first three years is expected to be $600 million to achieve 80% population coverage starting in 2018.

TPG sees the opportunity as significant. There are at least 32.6 million mobiles in Australia and growing at 2.6% a year.

The company says there is significant cross-selling potential from TPG’s 500,000 mobile subscribers and 1.9 million Australian fixed-line broadband subscriber base.

And TPG expects to reach break even EBITDA (earnings before interest, tax, depreciation and amortisation) from its Australian mobile network with only 500,000 subscribers, a market share of just 2%.

Here’s how TPG sees its current assets helping the new mobile network.


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