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UPDATE 3-Australia's TPG Telecom agrees network sharing deal with Singtel's Optus

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TPG shares mark best day since Feb.2

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Deal appears fo be the best method to fast-track network expansion ambitions - analyst

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TPG to pay $765 mln over 11-year term

(Adds CEO quote in paragraph 6; share movement in paragraph 3; and analyst reaction in paragraph 8)

By Rajasik Mukherjee and Rishav Chatterjee

April 29 (Reuters) - Australia's TPG Telecom and Optus, owned by Singapore Telecommunications, have signed network sharing agreements to increase TPG's coverage and cut capital spending, the companies said on Monday.

TPG will now be covering 2,444 mobile network sites in regional Australia, up from 755, and will gain access to Optus' regional 5G network as it is rolled out.

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Shares of TPG gained as much as 3.9% to A$4.3 and were set for their best session since Feb. 2.

TPG expects to pay a total of around A$1.17 billion ($765 million) over the 11-year agreement term.

The deal will help TPG avoid operating and capital expenditure for the operation, maintenance and expansion of its regional mobile network.

"This network sharing arrangement will reset the competitive landscape for mobile services in regional areas," TPG Telecom CEO Iñaki Berroeta said.

Optus will also licence some of TPG's spectrum for use in the newly created network. TPG said the estimated spectrum receipts from Optus would be around A$420 million, assuming a similar level of spectrum being licensed.

"From TPG's perspective, the deal appears to be the best method to fast-track their network expansion ambitions," said Tim Waterer, chief market analyst, KCM Trade.

TPG said it expected to avoid incurring cumulative gross cash costs of A$575 million-A$675 million.

The deal will likely reduce the firm's fiscal 2024 cash capital expenditure to A$1.02 billion from A$1.05 billion, with a further A$50 million reduction over 2025 and 2026.

The companies said the new facilities would be available to customers in early 2025, subject to regulatory approvals.

The Australian Competition Tribunal in June 2023 upheld a decision to block an asset transfer deal between TPG and Australia's largest telco, Telstra Group.

"The deal... seems likely to be more palatable to the regulators" compared to the Telstra-TPG deal, added Waterer.

($1 = 1.5305 Australian dollars) (Reporting by Rajasik Mukherjee and Rishav Chatterjee in Bengaluru; Editing by Lisa Shumaker, Lincoln Feast and Rashmi Aich)