TPG chief slaps down Optus criticism

Iñaki Berroeta is defending his telco’s controversial agreement with Telstra, a deal Optus says will give the companies a monopoly across rural regions.

TPG CEO Iñaki Berroeta. Photographer: Adam Yip

TPG chief executive Iñaki Berroeta will issue a strident defence of his telco’s controversial network sharing agreement with Telstra in a speech on Wednesday, after rival Optus called foul on the deal it says will give the companies a 5G monopoly across rural regions.

The 10-year network sharing deal, which is yet to be approved by the competition and consumer watchdog, will give TPG access to around 3700 network towers and “resets the competitive environment for mobile services in Australia”, according to Mr Berroeta. Optus has called on the ACCC to block the move, calling it anti-competitive.

“There has been a very small number of industry voices who don’t share our optimism or enthusiasm for the future benefits that network sharing will bring to Australian mobile. And while this is disappointing, it is not unexpected,” Mr Berroeta will say in a speech to the CommsDay Summit in Sydney, seen by The Australian.

“To suggest the entry of TPG Telecom’s family of brands, our wholesale customers and our MVNO partners into new regional markets, is somehow going to ‘distort markets and hurt competition’, is inaccurate and inappropriate.”

More companies competing to gain customers is the definition of pro-competition, according to Mr Berroeta, and to make the regional sharing arrangement work TPG will need to offer better value to the more than 4m consumers and businesses in regional Australia, and the millions of others in urban areas expected to join once the regional network is built.

“In a country as large as Australia, this is the sustainable approach we need to improve infrastructure, service and reach, in an economically sensible, and speedy way.”

TPG on Tuesday held its AGM, reporting service revenue for 2021 down 4 per cent to $4.39bn, which Mr Berroeta said was impacted by Covid restrictions and lockdowns. Those market headwinds will continue to reduce in size, he said. TPG shares fell 2.4 per cent to $5.68 on Tuesday.

The executive, who has led the combined TPG-Vodafone company since it merged in 2020, will also on Wednesday call for telco regulatory reform, declaring that the current policy agenda “remains anchored in the past.”

While the price of petrol, food, gas, water and beer has continued to rise over the past year, the cost of telco equipment and services fell 1.1 per cent. Australia’s biggest telco Telstra has flagged mobile plan price rises but not yet enacted them.

“On the eve of an election, our industry must take the opportunity to reset the telco policy framework,” Mr Berroeta will say.

“If we are to create the right environment for continued investment and innovation, we should be stepping forward and making our voices heard. But while our investment and regulatory costs increase year-on-year, growth in industry revenue has not kept pace.”

Australia’s telco industry is subjected to a level of scrutiny that ultimately slows it down and increases costs, according to Mr Berroeta, which ultimately impacts the level of service it can deliver to customers.

“In an economic environment where inflation and the cost of living is on the rise, we remain one of the most competitive industries I can think of. Where customers get more from their service while prices stay relatively the same.

“Without exaggeration, in many cases it is cheaper to use your mobile phone for one month, than to park for one hour in the Sydney CBD.”

In comments that are sure to stoke debate ahead of the federal election, Mr Berroeta describes the NBN as “the mammoth in the room” and says that over the last decade the project has deviated from its lane of initial intent, because it has not managed to create a feasible pricing model.

Federal Minister for Communications, Urban Infrastructure, Cities and the Arts, Paul Fletcher. Picture: NCA NewsWire / Emma Brasier

“We have seen it stray into competitive markets beyond its original remit. It has been protected from infrastructure-based competition, and failed to provide the cost certainty industry needs to create a sustainable and thriving broadband market,” he will say.

“While some of these changes have made sense and helped competition, the privileged protection NBN enjoys as the nation’s monopoly wholesaler and its quest to recover the costs of its rollout, are detrimentally impacting industry sustainability.

“Of course, we all appreciate NBN’s need to make a return so it can continue to reinvest in its infrastructure. But the need to generate returns must be achieved in collaboration with industry, not at its expense.”

He will also criticise the ongoing Special Access Undertaking process – the framework that governs NBN pricing – which he says has lacked transparency and certainty.

“NBN Co’s commercial strategy and recovery of operating costs, should not rely upon arbitrary price increases for the same base product, year-on-year without any improvement,” he will say. “Doing so will only add to the cost-of-living pressures so many are already facing, and the convenience of withholding the SAU submission from public release until the day after the election result should also not go unnoticed.

“It is time we started asking better questions of the NBN, the government and our industry, and demanding more robust answers.”

In his own speech on Wednesday, Communications Minister Paul Fletcher will say that the NBN is on track to deliver speed upgrades to 8 million premises by 2023.