TPG to build Vodafone dark fibre network in $1bn deal

Vodafone and TPG have signed two deals worth more than $1 billion which will see TPG build a dark fibre network for Vodafone and migrate its own wholesale mobile customer base away from Optus to Vodafone.

TPG will extend its current fibre infrastructure by around 4000km nationally to provide dark fibre to 3000 Vodafone cell sites, the majority of the telco's sites. The deal will span 15 years from the point each site is connected.

The partnership had been more than a year and a half in the making, the pair said.

Vodafone CEO Inaki Berroeta said dark fibre would prepare Vodafone for the future.

"For customers it will mean a higher-performing, 5G-ready network which will enable exciting future opportunities such as virtual and augmented reality applications," he said in a statement.

"Network data traffic will continue to grow through customers' appetite for mobile content and the emergence of technologies such as the internet of things, and a dark fibre network will allow us to cater for future growth."

Dark fibre will also set Vodafone up for 5G technology, the telco said. It will allow it to expand its bandwidth requirements "as it sees fit". 

Vodafone currently buys managed transmission services on a bandwidth basis. Using dark fibre will mean transmission costs will no longer be tied to data growth, Vodafone said.

"This provides the potential for virtually unlimited bandwidth at the same operating costs, enabling Vodafone to deliver greater speeds, improved latency, performance and resilience without additional operating costs."

The telco said dark fibre represented the optimum solution to challenges with backhaul and legacy infrastructure, specifically the cost involved in backhaul to mobile towers.

TPG previously delivered 900km of fibre for Vodafone cell sites between fiscal years 2011 to 2013.

Vodafone said construction would start immediately, and it expects dark fibre will be deployed to most of the existing network during 2018.

TPG said it would incur up to $400 million in capital expenditure over the next three years as a result of the build work.

The minimum revenue expected over the 15 year term will likely exceed $900 million, it said.

TPG moves away from Optus

The telcos also today announced a new mobile virtual network operator partnership that will see TPG shift away from its MVNO deal with Optus and to the Vodafone network.

TPG will move its entire wholesale mobile customer base - 320,000 users - to Vodafone's 4G network.

TPG CEO David Teoh said Vodafone's $3 billion investment in its network over recent years had earned it TPG's trust.

"They're serious on the mobile business [so] we will bring our mobile business and our customers to the Vodafone superfast 4G network. We're very excited," Teoh said.

The agreement does not immediately include the recently acquired iiNet customer base, TPG said. It did not rule out migrating the iiNet wholesale mobile base away from Optus in the future. 

Update: Optus said it respected TPG's decision to work with other providers.

It said TPG customers who don't want to move to Vodafone can contact Optus to arrange a way to stay on its network.

"Optus is considering options at this stage. Affected customers will require a SIM replacement and this is likely to occur over the following months," a spokesperson said.