No quick deals for TPG Telecom after Vocus asset sale collapses

afr.com:

The collapse of TPG Telecom’s $6.3 billion deal with Vocus Group shows the difficulty of spinning off telecommunications infrastructure from businesses that sell services to consumers, analysts say.

Vocus, which specialises in fibre networks, wanted to buy TPG’s Vision Network, which provides broadband services, as well as other fibre assets that TPG uses to provide telecommunications services to customers.

TPG Telecom CEO Inaki Berroeta couldn’t reach agreement with the Vocus Group on a sale of fibre assets. Louie Douvis

While Vocus, which is owned by Macquarie Asset Management and Aware Super, was keen to buy the TPG assets, the deal is understood to have broken down because the two parties had difficulty agreeing on the amount of ongoing investment needed for the infrastructure being sold.

TPG would have still needed to use the infrastructure being sold to provide services to retail customers, and was anxious to ensure those services were satisfactory.

Shares in the group, whose brands include Vodafone, TPG, iiNet, AAPT, Internode, Lebara and felix, have slid 11 per cent to trade at $4.81 per share – their lowest level since July – after TPG revealed on Monday talks over a possible asset sale had broken down.

TPG is understood to still be interested in selling some of the assets but any future asset sale is likely to be smaller than the proposed sale to Vocus, which was keen to keep pursuing a deal. TPG is understood to have been unable to get the certainty it needed on various agreements to formalise a transaction.

Jarden Group analyst Tom Beadle said TPG may need to structurally separate its enterprise, government and wholesale businesses, and also legally separate its infrastructure from its retail businesses if it