Uniti Group agrees to acquire Telstra’s fibre networks in Sydney and Brisbane

16 Dec 2020

Australia-based Uniti Group has announced the signing of a binding agreement to acquire Telstra’s fibre-to-the-premises (FTTP) network assets in a deal valued at AUD140 million (USD106 million). As part of the deal, it was noted that Telstra will become a Retail Service Provider (RSP) of the Uniti FTTP business, which recently adopted the OptiComm branding following Uniti Group’s acquisition of OptiComm Ltd.

Telstra’s ‘Velocity’ network passes a total of 68,000 premises across Australia, with FTTP used to provide services in a total of 128 housing estates in cities including Adelaide, Brisbane, Darwin, Hobart, Perth and Sydney. The deal also includes the acquisition of Telstra’s FTTP access in South Brisbane Exchange regions. According to information published by Uniti Group detailing the deal, the fibre infrastructure is currently serving around 50,000 ‘active premises’, with 40,000 of those spread across the 128 Velocity housing estates, and the remaining 10,000 being in the South Brisbane Exchange region.

Uniti Group has said it intends to undertake a network ‘refresh’ concurrently with the migration of customers, to increase maximum broadband speeds available to Velocity estate premises, including through the intended deployment of the Uniti XGS-PON technology to ‘a large proportion of Velocity premises’. The transition planning and network and IT integration activities are expected to start from March 2021, and following the IT and network integration between Uniti and Telstra the customer transition nationally is anticipated to commence in July 2022, and take between twelve and 15 months to complete.

In terms of the rationale for the fibre network acquisition, Uniti Group has said it expects the deal to add ‘considerable additional scale and national reach’ to its ‘Wholesale & Infrastructure’ (‘W&I’) FTTP network, increasing active premises by approximately 40% to over 170,000. It has claimed the development will further strengthen its position as ‘the definitive challenger in the FTTP greenfield housing markets, encompassing broad-acre estates and multi-dwelling unit (MDU) developments’.

With regards to the cost of the acquisition, Uniti Group will initially pay AUD85 million on completion of the transaction, while a further AUD20 million will then be payable over a three-year period, with a AUD35 million becoming payable on completion of migration of the assets and services. Uniti Group has, however, noted that it has ‘an ability to adjust the total purchase price subject to the size of the customer base at the time of migration’. Upon completion, meanwhile, Telstra will pay Uniti a licence fee of AUD21.6 million for the continued use of the Velocity assets.