The TPG Telecom Ltd (ASX: TPG) share price is in focus today on news of a potential demerger of its business.
There are several different parts of TPG's business. It operates many different telecommunication brands including Vodafone, TPG and Lebara.
It also owns and operates nationwide mobile and fixed networks that are used to connect Australians.
Potential TPG demerger?
It's the infrastructure side of the business that could be separated.
According to reporting by The Australian, TPG has chosen Bank of America to help it with the sale of its telco tower portfolio worth $1 billion.
But the newspaper also reported on speculation that a demerger could mean all of its infrastructure assets being divested which could also include the fibre network. Only the operating company might remain. If this option were to be pursued then it could mean those TPG assets being sold/divested for "billions of dollars".
Potential investors might be interested in TPG's assets because its fibre network is new and advanced after a period of recent construction.
If some sort of deal were to happen, The Australian suggested that TPG would still keep holding a stake in the demerged entity.
Is there any precedent for this sort of deal?
There has been a lot of merger and acquisition activity over the last year. Telco rival Telstra Corporation Ltd (ASX: TLS) has already done somewhat of a similar move.
At the end of June 2021, Telstra announced it was selling 49% of its towers business for $2.8 billion. The sale was to a consortium consisting of the Future Fund, Commonwealth Superannuation Corporation and Sunsuper.
Telstra's towers business is the largest mobile tower infrastructure provider in Australia with approximately 8,200 towers. That transaction valued the Telstra InfraCo Towers business at $5.9 billion.
It was also reported that AustralianSuper agreed last year to pay Singtel's Optus $1.9 billion to own 70% of the telecom towers business.
TPG share price snapshot
Over the last month the TPG share price has fallen over 8%. In the last 12 months it has declined by 17.6%.
