The TPG Telecom Ltd (ASX: TPG) share price is down 11% after the telco gave an update about its asset sale.
TPG is a telco business that owns a number of brands including Vodafone, TPG, iiNet, Internode, Lebara, AAPT and Felix.
Vocus discussions end
TPG told the market today that it has ceased discussions with Vocus Group with regard to Vocus’ non-binding offer to acquire certain TPG enterprise, government and wholesale assets, including Vision Network.
This proposed transaction involved “considerable complexity” and the two groups have been unable to reach “alignment” on the operating model and commercial terms for TPG to have sufficient confidence that a successful transaction can be agreed and executed.
TPG remains committed to exploring options to deliver value for shareholders. It pointed out that there is ongoing strong interest from potential strategic and financial investors in the company’s fixed infrastructure assets.
The ASX telco share said that it will continue to “assess value-optimising alternatives and continues to work with Bank of America on its strategic review.”
Is the TPG share price sell-off overdone?
TPG noted in early October 2023 that during its talks with Vocus Group, the consideration is $6.3 billion and the “highly provisional indicative EBITDA perimeter of approximately $550 million”.
The ASX telco share did warn that there was no certainty an agreed transaction would eventuate.
It’s not as though TPG has lost control of these assets, yet the market capitalisation is down $1 billion from last week.
Is the TPG share price an opportunity?
The company is now back close to a 52-week, so at this level it could be an opportunity.
There are certainly some drivers for revenue, and probably profit, like a return of international visitors, a larger population, expansion of its 5G network (and uptake) and growth in adjacent areas such as telecommunications infrastructure.
However, it’s not the sort of business that would shoot the lights out because of the nature of telco operations, plus it has to fight with Telstra Group Ltd (ASX: TLS) for each subscriber.
