In a major development, Australian telcos TPG Telecom and Optus Mobile have reached a A$1.6 billion network sharing agreement that will boost mobile phone connectivity in regional Australia.

Under the regional Multi-Operator Core Network (MOCN) agreement, Optus will provide TPG Telecom with access to its regional radio access network and they will share spectrum in regional Australia.

Once implemented, TPG Telcom’s retail and wholesale customers (including Vodafone, TPG, iiNet, Lebara and felix customers) will use Optus’ 4G and 5G regional network on an equivalent basis to Optus customers.

It’s worth noting here that in late 2022, the ACCC struck down a similar deal between Telstra and TPG on regional spectrum authorisation, citing that it was “not satisfied that the proposed arrangements were not likely to have the effect of a substantial lessening of competition or that the benefit to the public likely to result would outweigh the detriment.” It also added that the Telstra TPG deal “would give Telstra substantial benefits and increase its market strength on the retail and wholesale mobile markets, and would undermine Optus’ incentives to invest in 5G technology. Over time, this would weaken the competitive constraint on Telstra, and lead to increased prices and margins.”

The latest deal between TPG and Optus is now subject to scrutiny and regulatory approvals. If approved, the MOCN is expected to be available to TPG and Optus customers in early 2025. The latest non-exclusive MOCN agreement between TPG and Optus has an initial term of 11 years, with the option for TPG Telecom to extend the agreement for a further five years.

TPG Telecom will therefore gain access to 2,444 Optus mobile network sites in regional Australia, increasing its current national 4G coverage from around 400,000 square kilometres to around 1,000,000 square kilometres and 98.4 per cent of the population.

Optus will license some of TPG’s spectrum for use in the MOCN. Optus has committed to accelerate its 5G rollout in the regions, fast-tracking the number of 5G sites in the regional MOCN to 1500 by 2028 and 2,444 by the end of 2030.

Optus and TPG will operate their own core networks which will allow them to each maintain network control, enabling differentiation of service for customers, and independent control of security and resiliency. They will also continue to operate their own 4G and 5G radio access networks in metropolitan areas.

Optus Interim CEO Michael Venter, said, “The agreement will reduce combined 5G network rollout costs in regional Australia, which will enable the rollout of 5G infrastructure to be completed two years earlier than previously planned.”

TPG Telecom CEO Iñaki Berroeta added that by sharing regional network assets, TPG and Optus can bring coverage benefits to customers at a significantly lower cost than duplicating infrastructure. “This will allow us to reduce rollout and operating costs, make better use of network assets and deliver huge customer benefits,” noted Berroeta.