Optus has agreed to purchase Vividwireless from Seven Group Holdings for $230 million, giving the company more spectrum to put it in a better position for the launch of long-term evolution (LTE) "4G" services later this year.
Through the sale, Optus will pick up 98MHz of spectrum in the 2.3GHz spectrum band that Vividwireless currently uses for WiMax and time-division duplex LTE (TD-LTE) networks. The company said that this will be incorporated into its own 4G network, which will run on the 1800MHz spectrum band to be launched in April, even though this network has been built using frequency-division duplex (FDD) technology.
Vividwireless has used its spectrum to operate a WiMax network across Perth, Brisbane, Sydney, Melbourne, Canberra and Adelaide.
Optus CEO Paul O'Sullivan admitted that the acquisition is all about getting extra capacity.
"The acquisition of Vividwireless will give Optus a significant increase in network capacity to address the next wave of data growth that is just around the corner," he said in a statement. "By integrating it with our current 4G roll-out, we will be able to provide increased mobile speeds to our customers in metropolitan Australia."
Optus will acquire all of Vividwireless' operations, customers, spectrum licences and its network.
Vividwireless' WiMax network will be progressively upgraded to TDD-LTE, Optus told ZDNet Australia. Unlike LTE, WiMax is not backwards compatible with existing 3G networks, meaning that it would not be possible for customers to fall back to 3G outside of WiMax areas.
Vividwireless had looked to expand its LTE network, but was recently seeking more funds from investors.
The agreement will be subject to Vividwireless being reissued with licences for the 2.3GHz spectrum band, and approval from the competition regulator and the Foreign Investment Review Board. Optus will fund the purchase through internal funds and debt.
While much of the internet service provider (ISP) market has been consolidated as iiNet snapped up other providers over the last year, Optus had previously remained on the sidelines. However, in discussing market consolidation last week, O'Sullivan said that Optus would make acquisitions that it felt would benefit the Optus brand.
"We're not shy of getting involved in consolidation ourselves. We only acquire where we feel we can generate a synergy around value to it," he said. "[But] we back ourselves moving forward. We've built organically, not through [mergers and acquisitions]."