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TPG Shares Fall 18% As Investors Sour On Mobile Expansion

Telecommunications titan TPG has seen its shares dive 18% in a $1 billion sell-off following the company’s announcement it plans to make a play for the mobile market.

The company paid $1.26 billion for access to the 4G mobile spectrum at an ACMA auction this week, saying they plan to spend $600 million over a three year period to roll out their mobile network to 80% of the Australian population.

At the time, TPG’s Executive Chairman and CEO, David Teoh, said that “this acquisition of 700MHz spectrum in Australia is a tremendous development for the long-term future of TPG. We are uniquely positioned to leverage our success in the Australian fixed-line broadband market to drive the next phase of growth for TPG’s shareholders and bring new competition to the Australian mobile market.”

“We believe that our mobile strategy will be complementary to our ongoing fixed line business, with the ability to bundle mobile and fixed services expected to have a beneficial effect on our already low fixed services customer churn.”

Prior to the move, TPG entered a trading halt and detailed a $400 million share entitlement offer to fund construction of  the new network to investors.

However, upon returning to the ASX this morning, TPG shares fell hard and fast from $6.54 per share to $5.42. All told, the damage to TPG’s market cap totals over a billion dollars, bringing them from $5.54 billion to $4.42 billion.

The sudden reaction by the market towards the company’s ambitions to move into the mobile space could be seen to suggest that while TPG have the cash to buy that spectrum, investors might not be sold on their ability to put it to good use.

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