Home Business Telecommunications TPG raises $320m, joins cashed-up Telstra competitors

TPG raises $320m, joins cashed-up Telstra competitors

Australia's fourth largest telecommunications player TPG has achieved its targeted fund-raising announced a month ago, raising $320.2 million to help fund its planned new mobile network.

The company's achievement is unlikely to be ignored by its larger rivals, especially Telstra, whose shares were hammered after TPG's announcement of a planned mobile network in April.

Telstra will also have to look backwards at another rival, Vodafone, which has indicated its intention to enter the NBN fixed-line space.

TPG raised the money through an institutional entitlement, with most coming from major shareholder David Teoh who is the chief executive of the company, and contributed $238 million.

Last month TPG paid over the top for two lots of 10MHz in the 700MHz spectrum auction, forking out $1.2 billion, and said it planned to roll out a $600 million mobile network.

Telstra was barred from competing in the auction.

TPG said at the time that it would fund the capital expenditure for the network and spectrum payments over the next three years through operating cashflows, existing and new debt facilities.

Teoh said in a statement at the time of the spectrum purchase: "We are uniquely positioned to leverage our success in the Australian fixed-line broadband market to drive the next phase of growth for TPG's shareholders and bring new competition to the Australian mobile market.

"We believe that our mobile strategy will be complementary to our ongoing fixed line business with the ability to bundle mobile and fixed services expected to have a beneficial effect on our already low fixed services customer churn."

Soon after the fund-raising was announced, TPG's shares were savaged, falling by close to 16%.

But the company appears to have ridden out that period, and its bigger rivals would now have to look at it as a serious competitor.

This holds good especially for Telstra, which has seen its share price go south ever since David Thodey left, on 20 February 2015.

In the six-odd years of Thodey's stewardship, the share price rose from $3.09 to $6.61. The share price has reached a high of $8.99 in December 1999 and stands at about half that level today.

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Sam Varghese

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A professional journalist with decades of experience, Sam for nine years used DOS and then Windows, which led him to start experimenting with GNU/Linux in 1998. Since then he has written widely about the use of both free and open source software, and the people behind the code. His personal blog is titled Irregular Expression.