ASX-listed TPG Telecom (AU:TPG) announced that it has resumed its discussions with Australia-based Vocus Group for a potential sale of non-mobile fibre assets valued at $4.1 billion (AU$6.3 billion). The company renewed its talks nine months after the previous discussions were terminated as both parties failed to agree on commercial terms. TPG shares fell by 1.74% as of writing.
TPG (formerly Vodafone Hutchison Australia) offers fixed and mobile network services in Australia. Meanwhile, Vocus Group is a fibre and network solutions company owned by Australian investors Macquarie and Aware Super.
More on TPG’s Potential Asset Sale
Earlier in August 2023, Vocus Group made a bid for TPG Telecom’s Enterprise, Government, and Wholesale (EGW) assets, including the wholesale infrastructure arm, Vision Network.
In 2023, EGW recorded a revenue of AU$1.12 billion, marking an increase of 11.8% over the previous year. This segment contributed around 20% of the company’s total revenue of AU$5.53 billion in FY23. In FY22, EGW accounted for 18% of the total revenues. Meanwhile, Vision Network currently serves over 410,000 homes across six major Australian capitals and three regional cities in Victoria.
The renewed discussions further highlight TPG’s strategy to maximise its potential for customers and shareholders. According to TPG’s strategic update, the company aims to simplify its brands, streamline products, and modernize IT systems to enhance its resilience.
In June 2023, the ACT (Australian Competition Tribunal) rejected TPG’s asset swap deal with Telstra Corporation (AU:TLS). This deal included the sale of TPG’s spectrum and transmission towers. The company hopes for a better regulatory outcome this time. However, it cautioned that there is no guarantee that the current discussions will result in a transaction.
Is TPG a Good Stock to Buy?
According to TipRanks consensus, TPG Telecom has received a Moderate Buy rating based on three Buy and three Hold recommendations. The TPG Telecom share price forecast is AU$5.23, which implies a growth of 14.03% at the current trading level.
