TPG to keep building rival infrastructure to the nbn

Australia's second largest internet service provider TPG Telecom plans to continue building its own infrastructure to compete with the nbn despite strict new regulations and continuing opposition from nbn.

The requirement to functionally separate TPG's wholesale and retail divisions won't deter the company from its strategy of competing with the nbn with fibre-to-the-basement infrastructure for selected apartment buildings, TPG Executive Chair David Teoh told Fairfax Media.

TPG will continue expanding its fibre infrastructure service across the nation and is investigating ways to allow its retail brands — including TPG and iiNet — to sell the service to end users, the reclusive billionaire said.

Any attempt to have its retail brands sell fibre-to-the-basement services to customers would require them to launch separate entities with separate reporting structures, he added.

The new regulations were implemented at the behest of nbn, which regards TPG's plans as an existential threat to its operations. The nbn business model relies on income from lucrative urban dwellings to subsidise the cost of deploying services to less profitable rural areas.

With TPG in a position to cherrypick profitable customers in apartment dwellings, this model could be compromised.

TPG has experienced rapid growth in the past few years through acquisitions and disciplined operational spending. The company's market capitalisation has grown from $1 billion in 2012 to around $8 billion today.

In July, TPG completed the acquisition of rival iiNet, becoming Australia's second largest retail ISP after Telstra. The company announced a 31% increase in net profit for the last financial year.

Image courtesy of CeBIT Australia under CC