The Australian Communications and Media Authority (ACMA) said its auction of 700 MHz unsold lots, which started on 4 April and concluded on 10 April, generated revenues of more than AUD 1.5 billion, exceeding the reserve price of around AUD 857 million. TPG Internet secured 2 x 10 MHz for AUD 1.2 billion, opening the way for the launch of a fourth mobile operator, while Vodafone Hutchison Australia secured 2 x 5 MHz for AUD 285 million.
TPG announced that it will build a mobile network in Australia for AUD 1.9 billion, comprising AUD 600 million for network roll-out capital expenditure over a 3-year period to achieve 80 percent population coverage; and AUD 1.2 billion for the 700MHz spectrum, which will be payable in three annual instalments. TPG said its mobile network would provide broad coverage across densely populated areas of the country with 2,000-2,500 sites. TPG estimates that its mobile network would be EBITDA break-even with 500,000 subscribers.
TPG plans to fund the capex for the rollout and the spectrum payments over the next three years through a combination of operating cashflows and existing and new debt facilities. The operator also announced the launch of an accelerated non-renounceable pro-rata entitlement offer to raise AUD 400 million.
TPG has also reaffirmed the guidance for underlying EBITDA for the group for the FY17 to be in the range of AUD 820 – 830 million. TPG plans to implement a stock dividend starting with the FY17 final dividend. This is expected to remain in place for the next 2 to 3 years, as it conserves cash for the mobile roll-out in Australia as well as Singapore.
