Reclusive David Teoh makes federal court appearance for ACCC battle
TPG battle forces reclusive billionaire David Teoh to make an ultra-rare public appearance.
TPG Telecom’s reclusive billionaire founder David Teoh has made a rare public foray as he readied to argue the case for the telco’s planned merger with Vodafone Hutchison Australia in the Federal Court.
That the extremely private Mr Teoh was forced to front the court highlighted the gravity of TPG and would-be partner Vodafone’s case against the Australian Competition and Consumer Commission.
With a personal fortune of $2.53 billion, Mr Teoh ranked at 25 on The Australian’s The List — Australia’s Richest 250 earlier this year.
Appearing before the court, Mr Teoh came under intense pressure to justify the reasons TPG had picked Huawei’s equipment for its planned mobile network.
Mr Teoh said the company’s aspirations to become an early mover in 5G were underpinned by the capabilities Huawei offered. “In July 2017, Huawei told us they could give us 4G equipment that could be upgraded to 5G. We specified them a few months later,” he said.
“Around that early stage, Huawei still didn’t have the 5G MIMO solution.”
MIMO (Multiple-Input Multiple-Output) is wireless technology that uses multiple transmitters and receivers to increase data transmission rates.
ACCC counsel Michael Hodge QC picked up on that point, contending that 5G was never part of TPG’s mobile plan. “The reason you selected Huawei in 2017 was not because Huawei provided you a 5G upgrade path,” he said.
The public grilling of the intensely private founder of the telco came as part of a case brought by TPG and Vodafone before Justice John Middleton to overturn the ACCC’s rejection of the $15 billion tie-up between the two telcos.
TPG cited the federal government’s decision to ban Huawei’s 5G equipment as the main reason for its decision to ditch its mobile plan. However, the ACCC has contested that point in court, with the regulator saying that TPG is more than capable of building a viable 4G mobile network.
Stopping its mobile rollout has taken a toll on TPG’s books, with the company posting a 56 per cent slump in net profit to $173.8 million for the 12 months to July 2019, with revenue for the period flat at $2.48 billion.
In arguments so far, the ACCC’s legal team has homed in on the financial position of both TPG and Vodafone, contending that both telcos had deliberately talked down their prospects to justify the merger.
Earlier on Wednesday, Vodafone Australia boss Inaki Berroeta delivered the majority of his testimony behind closed doors.
The initial focus of the ACCC’s arguments was on Vodafone Australia’s 5G rollout plans and its financial position, with the regulator’s legal team contesting Vodafone’s claim that it couldn’t compete with Telstra and Optus on its own.
Mr Berroeta told the court on Wednesday that without the merger, Vodafone Australia would have to get more funding from its two parents - Vodafone Group PLC and Hutchison Telecommunications.
“To increase my capex I would have to present a case that justifies that,” he said.
“I don’t think presenting a plan to my shareholders to increase the debt would be very wise.”
Under questioning, Mr Berroeta said that the ghosts of the “Vodafail” affair were still an issue for Vodafone, despite the progress made by the telco over the last few years.
“I believe it’s still an issue in the mind of customers,” he told the court.
TPG paid $1.2bn for mobile spectrum it cannot currently use, and the ban on Huawei’s 5G equipment has put a further spanner in the works of its mobile ambitions.
The eventual fate of TPG’s spectrum holdings hinges on the federal court’s ruling.
On Tuesday TPG told the court that it would have to restart its mobile network rollout from scratch if its appeal was unsuccessful.
In the telco’s opening statement to the court, TPG counsel Ruth Higgins SC said the ACCC was forcing TPG to commit to a network that it did not want to build, especially now that it could not use Huawei’s 5G equipment.
“The ACCC requires TPG to bring a complex nationwide infrastructure into operation,” she said.
“The ACCC’s case creates an impression that all that is required is for TPG to finish what it has started, but the partial network can’t be upgraded to 5G.
“It will have to roll out a brand new network … the market and TPG have moved on.”
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