By Zoe Samios
Outgoing competition boss Rod Sims has warned the landmark infrastructure deal between Telstra and TPG Telecom, aimed at expanding choice and coverage in regional areas, may cause mobile plan prices to rise.
Mr Sims, who fought Vodafone Hutchison Australia and TPG Telecom in Federal Court after opposing their proposed merger in 2019, said his team was yet to look over the detail of the deal, but he was concerned it could lead to less competitive prices.
Telstra and TPG Telecom signed a 10-year mobile infrastructure sharing deal on Monday. ACCC’s Rod Sims says pricing is the main concern.Credit: Quentin Jones
“You’ve got Telstra with way more coverage than Optus with way more coverage than Vodafone — Vodafone is pretty largely a city-based phone service,” Mr Sims said.
“That’s fine in Australia, which is the most urbanised country in the world — you can have a good business on that, but you do it by pricing at the low end. There are a lot of people who live in cities who get lower priced phones and phone service. What will happen to that is a key question.”
“Obviously, Vodafone will now be much less differentiated to the other players and so it may be able to raise its prices.”
“Vodafone, of course is paying money to Telstra, so it has to recover that. We really need to understand the impact on prices because at the moment, you’ve got a bit of a competitive dynamic. We’re concerned about whether that dynamic will disappear,” Mr Sims added.
The comments were made to this masthead two days after Telstra and TPG Telecom signed a 10-year mobile infrastructure sharing deal that seeks to boost Telstra’s revenue while helping TPG improve coverage in regional areas.
Optus’ vice president of regulatory and public affairs, Andrew Sheridan, welcomed close examination of the issue. “Optus is a major investor in regional Australia and that investment is more critical now to ensure regional consumers and businesses have choice and competitive services,” he said.
The agreement gives TPG access to around 3700 Telstra mobile towers in regional Australia and on urban fringes — areas where Telstra has traditionally been the dominant service provider. If approved, the deal will increase TPG’s coverage from 96 per cent to around 98.8 per cent of the population.
‘I think our concerns with TPG Vodafone merger were justified, and so we’ll be looking very closely at this.’
Outgoing ACCC boss Rod Sims
Under the terms of the arrangement with Telstra, TPG will decommission 725 mobile sites it currently operates in the areas covered by the agreement, and also give Telstra access to 169 of its existing mobile sites.
Telstra will also gain access to TPG’s 4G and 5G spectrum holdings, which will provide the incumbent telco cost-effective access to spectrum that will help expand its fixed wireless services.
The deal is expected to deliver between $1.6 billion and $1.8 billion of revenue to Telstra over the term of the agreement. TPG Telecom has not publicly disclosed how much it will receive in payments from Telstra for the use of its spectrum.
Mr Sims has raised concerns about price hikes before. The Australian Competition and Consumer Commission in 2019 rejected a push by Vodafone Hutchison Australia (which merged with TPG Telecom in July 2020) to get access to its network in regional and remote areas.
“[Price rises] were the issue with the merger,” he said.
ACCC chair Rod Sims at the National Press Club on Wednesday.Credit: Alex Ellinghausen
“Post merger — despite what the parties say — it is a fact that post merger prices have gone up. Prepaid and postpaid prices have gone up, so that is as a side effect. I think our concerns with TPG Vodafone merger were justified, and so we’ll be looking very closely at this.”
TPG Telecom, which has previously denied the merger has caused price hikes, said its own analysis showed prices had fallen since the merger.
“Our regional network sharing agreement with Telstra is in the best interests of competition, choice and consumers,” a TPG spokeswoman said. “It will allow us to bring our much-loved brands, including Vodafone, TPG, iiNet and felix, to millions more Australians. We’ll be offering choice of provider to many regional areas for the first time.”
“Our customers will receive seamless access to 4G and 5G coverage in regional Australia at no extra cost on our plans. A large part of the cost of the agreement with Telstra will be offset by savings from no longer operating our regional network and by payments we receive from Telstra for spectrum.”
Telstra chief executive Andrew Penn said on Monday that he hoped the process with the ACCC would be supportive and constructive.
“I would like to think that they would see this as net positive for the industry and therefore would hope that they would be supportive, but we have to go through that process, and they’ll obviously do their own reviews, and we’ll be guided by that,” he said.
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