Australia watchdog blocks Telstra, TPG network-sharing deal

The deal would have an ‘immediate and enduring’ impact on infrastructure competition, says the ACCC

The Australian Competition and Consumer Commission (ACCC) blocked an asset sharing deal between Telstra and TPG, the country’s two largest providers. In a statement, ACCC Commissioner Liza Carver said the deal, which involves the sharing of mobile infrastructure and spectrum in selected areas, would have an “immediate impact on infrastructure competition in Australia and that impact would endure.”

“Competition between separate mobile networks drives companies to improve coverage for mobile users and to offer new technologies to more areas. For example, when Optus improves its regional network, Telstra responds by improving its network to maintain its market position,” Carver added.

The agency further stated that this reduction in market competition would have significant impact on customers by leading to higher prices and reduced coverage and service quality.

“The proposed arrangements would lead to some short-term benefits from an improvement in TPG’s network coverage, and some cost savings and efficiencies for TPG and Telstra,” said Carver. “However, the enduring and more substantial impact of the proposed arrangements would be to lessen infrastructure-based competition which would make consumers, including those in regional areas, worse off over time.”

The deal also stipulated that Telstra would obtain access to and deploy infrastructure on up to 169 TPG’s existing mobile sites, improving coverage for TPG and Telstra customers in the zone. Additionally, TPG Telecom was slated to secure access to around 3,700 of Telstra’s mobile network assets, increasing TPG Telecom’s current 4G coverage from around 96% to 98.8% of the population.

In February, TPG Telecom CEO Iñaki Berroeta said the network sharing agreement would significantly expand TPG Telecom’s mobile network footprint in regional Australia and enable growth of its customer base in regional and metropolitan areas.

“It represents a material uplift in the capability of our network and will provide significant value for TPG Telecom shareholders over the medium and long term,” Berroeta claimed.

Only about two years ago, the ACCC attempted to block the TPG’s merger with Vodafone Hutchison Australia, citing similar reasons. Ultimately, the Federal Court stepped in and allowed the deal to go through.

When it comes to this latest ruling, Telstra and TPG have already revealed their intentions to appeal. The pair said the decision is bad news for the 17% of Australia’s 25 million population who would gotten new coverage as a result of the agreement.