TPG Telecom has confirmed that the period of exclusivity granted to Vocus for a prospective fibre business acquisition has come to an end. Nonetheless, discussions between the two parties are not halted, and progress towards a deal continues. TPG’s transparency on this issue also implies they are open to propositions from other interested companies, if there exist any.
From a brief securities exchange assertion, it emerges that negotiations may have stumbled on the financial terms. TPG Telecom stated, “As noted in our 1 August 2023 announcement, the consideration of $6.3 billion and the highly provisional indicative EBITDA perimeter of approximately $550 million are subject to change.” While this information isn’t fresh, it underscores the insecurity surrounding the financial component of the agreement. The emphasis on potential price adjustments at this juncture might suggest its cruciality in the due diligence process.
Vocus appears to have fallen behind on the due diligence timeline. Initially, they had exclusive rights until 6th September, but TPG adjusted the timeline without shedding light on the reasoning. This time around, there is no further extension, indicating TPG might be losing patience.
For the past few years, TPG has been reorganizing its business model. In May 2022, they offloaded their remaining passive infrastructure assets, including around 1,200 mobile towers, and completed the restructuring of their broadband networks by September, resulting in the establishment of Vision Network. This functionally independent wholesale company combines fibre-to-the-premises (FTTP), fibre-to-the-building (FTTB), fibre-to-the-node (FTTN), and hybrid fibre coaxial (HFC) networks, primarily in metropolitan regions.
Immediately afterwards, TPG Telecom sought a purchaser for the Vision Network, or at least 70% to 80% of it, placing an estimated price tag of A$1 billion. Despite catching the interest of rival wholesaler Uniti Group and Vocus, no contract was finalized, hinting at a longer negotiation period with Vocus than announced.
The A$6.3 billion (US$4.2 billion) proposal from Vocus in August comprises not only the Vision Network but also other fixed infrastructure assets, plus particular enterprise, government, and wholesale assets. The conversation’s complexity is to be expected due to the scope of the deal, which might be why Vocus’s due diligence is taking longer than first anticipated.
The resolution may beam in the form of a modified purchase price from a continued deal with Vocus, an outside buyer stepping in, or TPG Telecom restarting the process.
