The competition watchdog will not oppose Vocus Group Limited’s proposed acquisition of TPG Telecom Limited’s fixed business and fibre network assets in a deal worth billions.
The asset purchase means Vocus adds its second international subsea cable to its network, extending 7,000 kilometres from Sydney to Guam.
It’s Vocus’ first international subsea cable on the eastern seaboard, adding to its Australia Singapore Cable, which connects Perth, Darwin, Port Hedland, Indonesia and Singapore.
The asset acquisition means Vocus will soon operate a network spanning 51,000km of fibre across the country, and 14,700km of submarine cables connecting both Australia’s east and west coast to Asia.
Under the terms of agreement, Vocus and TPG will enter a long-term strategic partnership to provide TPG with ongoing access to Vocus’s fibre infrastructure.
That partnership will mean TPG pays $130 million annually to Vocus for access to network services over a 15-year period.
The acquisition was first announced in October last year, with Vocus at-the-time saying the $5.25 billion acquisition would position the company as a key digital infrastructure operator in Australia.
“Post acquisition, Vocus will operate a network of more than 50,000km of owned or leased fibre under long-term right of use agreements, nearly 15,000km of international submarine cables, and close to 20,000 connected buildings,” the statement said.
In a statement, ACCC commissioner Philip Williams said the review focused on how closely the two businesses compete for supply of data, network and connectivity services to large enterprise and government.
“Our investigation found that Vocus concentrates on supplying large enterprise and government customers, whereas TPG focuses on the small and medium enterprise segment of the market,” he said.
He said in reasoning for the decision, it was understood competition would not be compromised due to the introduction of NBN Co’s wholesale enterprise ethernet product in 2018, which enables providers with no or a small fibre footprint to compete for larger customers.
“After the acquisition, Vocus will continue to face strong competitors including Telstra, Optus, Aussie Broadband, Superloop and managed service providers in supplying government, large enterprise and SME customers,” Dr Williams said.
“Overall, we did not find that the acquisition would likely result in substantially lessening competition in any market.”
TPG’s mobile network, which includes the Vodafone brand in Australia, would not be included in the acquisition.
The acquisition comes after, in November, Vocus inked a deal with Google for Australia Connect, a 42,500km high-capacity submarine network linking Australia’s north, east and west coasts.
In January, the company deployed a 400G wavelength ethernet service from the east coast to Perth – one of the longest terrestrial routes in the world.
That service allows for data transfer speeds of up to 400 gigabits per second on a single optical wavelength, and connects major facilities from NextDC, Equinix and DCI.
The company also deployed a high-capacity data cable connecting the Pilbara and Perth last year.
Dubbed Project Horizon, the $150 million plan involved a 2000km fibre-optic cable from Perth to Port Hedland, where it then connects to existing subsea cables running to Darwin and south-east Asia.
It was the first such network in the Pilbara, with high-capacity fibre-optic networks becoming increasingly critical for industries focused on data and technology, such as advanced manufacturing and cloud-based computing services.
