Competition regulator blocks Telstra, TPG network sharing deal

Telco giants Telstra and TPG Telecom are planning to appeal a decision by the competition regulator to block a landmark infrastructure deal which it argued would lessen competition and leave Australian mobile users worse off.

The Australian Competition and Consumer Commission (ACCC) said on Wednesday it could not authorise the deal, first announced in February, because it would ultimately hurt consumers despite there being “some benefits”. TPG and Telstra have both said they will appeal the decision.

The deal between Telstra and TPG Telecom was strongly disputed by Optus.Credit: Pat Scala, Rob Homer

“Mobile networks are of critical importance to many aspects of our lives, including our livelihood, our wellbeing and our ability to keep in touch with friends and family,” ACCC commissioner Lisa Carver said. “Any reduction in competition will have very wide-ranging impacts on customers, including higher prices and reduced quality and coverage.”

Under the $1.8 billion deal, Telstra planned to give TPG access to around 3700 Telstra towers across the regions and on urban fringes in exchange for access to its 5G spectrum. While the proposal was backed by parts of the sector, the ACCC was under pressure to nix it because of claims made by Optus and Nationals leader David Littleproud.

Telstra chief executive Vicki Brady said the competition regulator’s decision was extremely disappointing.

TPG Telecom CEO Inaki Berroeta.Credit: Louie Douvis

“This innovative agreement will deliver real competition-driven benefits for regional Australia, something recognised by the ACCC in its determination,” Brady said. “It also delivers better use of the Government’s spectrum assets by unlocking unused spectrum that TPG holds in regional Australia but isn’t using.”

Meanwhile, TPG Telecom chief executive Iñaki Berroeta said the decision was a “missed opportunity”. The telco is preparing an application to the Australian Competition Tribunal for a review of the decision.

“We are disappointed the ACCC has chosen to ignore the overwhelming evidence submitted from leading economists, competition experts and regional communities outlining the benefits of the proposed arrangement to competition and consumer choice,” Berroeta said.

“If it had been authorised, the arrangement would have freed regional Australia from its current mobile duopoly, and the increased competition from TPG would have placed downward pressure on mobile pricing.”

TPG shares initially slipped over 3 per cent on the back of the news, but recovered some ground to close at $4.72 on Wednesday. Telstra shared finished the day 0.5 per cent weaker at $4.02.

Optus has told the ACCC that if the deal was opposed, it would engage with TPG Telecom about a similar arrangement and would continue to invest in the regions. However, TPG firmly shut the door on those plans in November.

The ACCC has long advocated for more mobile players and unsuccessfully tried to block the $15 billion merger between Vodafone and TPG in 2019. TPG and Telstra attempted to appease the regulator last month, proposing to reduce the length of the network sharing deal from 10 years to eight when it realised there were some concerns about the agreement.

Optus, which fiercely opposed the deal, said on Wednesday the ACCC’s decision would deliver lasting benefits from the regions.

“All Australians benefit from competitive investment in telecommunications services, and for more than 30 years Optus has invested to provide Australians with choice,” Optus chief executive Kelly Bayer Rosmarin said.

“By knocking back this deal, the ACCC has helped ensure that our regional communities will continue to benefit from competition in a sector that is fundamental to our digital economy and future prospects.”

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