TPG raises AU$320m to fund Australian mobile network

TPG has announced raising AU$320 million to help fund its new Australian mobile network through an institutional entitlement offer following its procurement of 700MHz mobile broadband spectrum.

The funds were raised primarily by major shareholder and CEO David Teoh, who contributed AU$238 million alongside fellow major shareholder Washington H Soul Pattinson, with the remaining AU$81.5 million raised by subscriptions for new fully paid ordinary TPG shares at an offer price of AU$5.25 per share.

The entitlement offer's uptake was 93 percent among eligible institutional shareholders, TPG said.

TPG is hoping to raise an additional AU$80.5 million through a one for 11.13 retail entitlement offer, which will open on Friday and remain open until May 12.

In total, TPG wants to raise AU$400 million to help fund its AU$1.9 billion mobile network.

TPG last week announced that it would be building the Australian mobile network using its purchase of 2x 10MHz of mobile broadband spectrum in the 700MHz band, allowing it to become the fourth mobile operator in Australia.

TPG will pay for its spectrum through three instalments: AU$605 million (less a deposit of $10 million) in January 2018; AU$352 million in January 2019; and AU$352 million (inclusive of interest) in January 2020.

"TPG will build a mobile network in Australia using current advanced technology for AU$1.9 billion, comprising AU$600 million for network rollout capital expenditure over a three-year period to achieve 80 percent population coverage; and AU$1,260 million for the 700MHz spectrum, which will be payable in three annual instalments," TPG said last week.

"The network would provide broad coverage across densely populated areas of the country with approximately 2,000 to 2,500 sites. TPG estimates that its mobile network would be EBITDA break-even with 500,000 subscribers."

TPG will combine the 700MHz spectrum with its existing holdings in the 2.5GHz and 1800MHz bands.

Vodafone Australia won the other 2x 5MHz in the 700MHz spectrum band on offer, paying the government AU$1.25 per MHz per head of population for a total of AU$285.9 million.

The ACMA opened applications for its 700MHz spectrum auction in January, as well as confirming that it would be auctioned off in two lots: One lot of 2x 10MHz in the 738-748MHz frequency range paired with 793-803MHz; and one lot of 2x 5MHz in the 733-738MHz paired with 788-793MHz.

TPG earlier this month also announced spending SG$23.8 million on acquiring 2x 5MHz in the 2.5GHz band in the Singaporean mobile broadband market after procuring 2x 5MHz in the 900MHz spectrum band and 8x 5MHz in the 2.3GHz spectrum band for SG$105 million.

"We are very satisfied with the allocation obtained in the new entrant spectrum auction, and are now very pleased to have successfully taken the opportunity to add to our portfolio of spectrum assets in Singapore," Teoh said.

"The additional 10MHz of spectrum will enable us to further enhance the value of the services we plan to offer to Singapore consumers."

The spectrum buy will allow TPG to also become the fourth provider in the Singaporean mobile market alongside Singtel, StarHub, and M1.

TPG last month predicted a capital expenditure spend of between SG$200 million and SG$300 million for the rollout of its Singaporean mobile network.

TPG has previously denied reports that it is similarly considering entering the New Zealand mobile market via an acquisition of New Zealand's third-largest mobile telco, 2degrees.