Author's Opinion

The views in this column are those of the author and do not necessarily reflect the views of iTWire.

Have your say and comment below.

Thursday, 13 April 2017 11:02

TPG shows it wants to play with the big boys


TPG is a contradiction in terms, especially when one considers other players in the Australian telco space: it is both low-key and also very ambitious.

That ambition was evident yesterday when the company announced that it was dipping its toes — nay, sinking both feet — in the Australian mobile market by purchasing 2x10MHz of mobile spectrum in the 700MHz band.

TPG forked out $1.2 billion for the spectrum and said it would spend a further $600 million to roll out a mobile network over the next three years.

With this, it signalled that it would be a player in the mobile market in years to come, a space which is presumed to be crowded and yet sees many players making enough to put much more than square meals on the table.

But at the same time, TPG has tried to retain its low profile — its chief executive David Teoh must be the least photographed head of a company of its size in the country — by stressing that it would not attempt to compete in the entire Australia market, just 80%.

And it expects its mobile business to be cash positive by the time it grabs 7% of the entire cake.

TPG has earned whatever market share it has in other niches by creating a reputation as a low-cost carrier, unmindful of the stigma of poor service that has accompanied it.

At the same time, it has acquired other properties like iiNet and PIPE Networks which it has run as independent business units allowing them to continue to cater to the same clientele as they did before being acquired.

The company listed some of the advantages it had already as under:

  • Backhaul capacity in Australia through its 21,000km fibre network;
  • Thousands of potential sites for deployment of mobile antennas already connected to that fibre network;
  • More than two million Australian retail and corporate subscribers to upsell mobile services to;
  • Significant owned international capacity connecting customers to the rest of the world;
  • Call centres and back-office systems already supporting more than two million retail customers;
  • A portfolio of strong brands appealing to a diverse range of demographics; and
  • Large-scale infrastructure construction and project management expertise with experience in large mobile network building projects such as the construction of 4000km of dark fibre to Vodafone network towers and the Singapore mobile project.

So should Telstra, Optus and Vodafone, the big three in the Australian mobile space, be afraid now that a fourth entity is bidding to partake of the profits in the mobile space?

Telstra charges the highest prices for mobile services but sells based on claims that it has the widest, and best coverage, of any telco. That is supposed to provide a balance to the appalling service for which it is known.

Telstra's mobile earnings are already under strain: a recent Deutsche Bank report pointed out that while mobile subscriber growth had grown 2% in the second half of 2016, it was Optus that continued to make gains. The second biggest telco added more subscribers than Telstra for the fifth six-month period running.

In the second half of 2016, Telstra added 79,000 net post-paid subscribers and Vodafone 47,000; Optus topped both with 201,000.

But with the bigger telcos having to constantly cut their margins to stay ahead of smaller entrants into the game, overall revenue in the mobile space has been falling for some time.

Service revenue fell 1% in the first six months of 2016 and 3% in the second six-month period. Overall industry EBITDA was down 7% and 8% during those periods.

The fall in mobile termination access rates hit the incumbents. And a decision that forces Telstra to share, with mobile competitors, that part of its regional network that is a monopoly at the moment, would be a further blow.

For mobile users, any competition that is meaningful would be welcome. That TPG is taken seriously by investors is evident from the drop in Telstra's share price overnight. The biggest telco in the country saw its shares fall nearly 8% equating to a loss of nearly $4 billion in its market cap.

TPG already has some of the experience needed to handle mobile users through its iiNet mobile service which resells Optus's mobile service to its Internet subscribers. It is thus not a total stranger to this class of customers.

More companies have crashed and burned in the telco industry in Australia than most other industries. Some have been high-profile — remember Warnie and One-Tel? — while countless smaller players have come and gone and been hardly noticed. TPG, though, has been a player, a quiet but influential one, in every space it has ventured into thus far.

There is always the possibility that the other big players can create some kind of Clayton's competition — as Australia's big four banks have often done — and keep sharing of profits to the minimum. Whether TPG will buy into this remains to be seen.


Australia is a cyber espionage hot spot.

As we automate, script and move to the cloud, more and more businesses are reliant on infrastructure that has high potential to be exposed to risk.

It only takes one awry email to expose an accounts payable process, and for cyber attackers to cost a business thousands of dollars.

In the free white paper ‘6 steps to improve your Business Cyber Security’ you will learn some simple steps you should be taking to prevent devastating malicious cyber attacks from destroying your business.

Cyber security can no longer be ignored, in this white paper you will learn:

· How does business security get breached?
· What can it cost to get it wrong?
· 6 actionable tips



iTWire can help you promote your company, services, and products.


Advertise on the iTWire News Site / Website

Advertise in the iTWire UPDATE / Newsletter

Promote your message via iTWire Sponsored Content/News

Guest Opinion for Home Page exposure

Contact Andrew on 0412 390 000 or email [email protected]


Sam Varghese

website statistics

Sam Varghese has been writing for iTWire since 2006, a year after the site came into existence. For nearly a decade thereafter, he wrote mostly about free and open source software, based on his own use of this genre of software. Since May 2016, he has been writing across many areas of technology. He has been a journalist for nearly 40 years in India (Indian Express and Deccan Herald), the UAE (Khaleej Times) and Australia (Daily Commercial News (now defunct) and The Age). His personal blog is titled Irregular Expression.



Recent Comments