Teoh will bounce back, ACCC tells court

The ACCC has cited TPG boss David Teoh’s record as a disrupter to explain why it blocked its merger with Vodafone.

TPG CEO David Teoh. Picture: Getty Images

TPG Telecom boss David Teoh’s proven track record as a market disrupter has been put forward by the competition regulator as the reason why it blocked the telco’s $15bn merger with Vodafone Hutchison Australia.

In his closing submission to the Federal Court on Tuesday, the Australian Competition & Consumer Commission’s legal counsel, Michael Hodge QC, said the reclusive billionaire’s unconventional business style and the implicit support he enjoyed from TPG’s board also suggested he could overcome the rejection of his proposed tie-up with Vodafone.

While Mr Teoh said during the course of the three-week hearing that TPG could no longer build a mobile network, Mr Hodge told the court on Tuesday there was no reason why it couldn’t re-enter the mobile market, citing Mr Teoh’s propensity to make critical decisions on instinct.

“If Mr Teoh decides that there is a business case for doing this, then it is likely that that will lead to it being done,” he said.

With the legal teams of all three parties putting their cards on the table, the ACCC’s legal team pointed to Mr Teoh’s cavalier approach to TPG’s original mobile plan, which saw the telco spend $1.2bn on 4G spectrum without the benefit of a business model, as an example of how fluid TPG’s moves could be.

“The ACCC’s case is Mr Teoh is a very experienced businessman with an acute sense of what the opportunities for him are,” Mr Hodge said.

“He has believed for a long time that the future of his company was going to be in mobile.”

Mr Hodge also pointed to submissions made by TPG that alluded to an “ineffable” quality to Mr Teoh’s business instincts which allowed the telco to revive its mobile ambitions.

“I am not sure that word means what counsel for TPG thinks it means, but perhaps that means he truly has some unspeakable greatness about him that cannot be put into words, and that explains why it is that it is possible — that his board will have confidence in him and that he will be able to carry out a capital raising,” he said.

Mr Hodge also urged Justice John Middleton to look past the reasons presented by TPG that prevent it from now rolling out a network and instead focus on what the telco would need to do without the benefit of the merger.

“Your Honour has to assess how will TPG — and, really, as we all seem to accept, how will Mr Teoh — approach the issue of whether to roll out a mobile network if there comes a future point in time when there is no merger.

“Our submission is [Mr Teoh] is not going to close his eyes to what the possibilities are,” Mr Hodge said.

“There is at least a real chance that he would roll out a network.”  The ACCC’s closing pitch was in stark contrast to the submissions put forward by TPG and VHA’s legal team.

TPG’s legal counsel, Ruth Higgins SC, mounted a fierce rebuttal of the ACCC’s contention that Mr Teoh’s testimony, which painted a dire picture of TPG’s mobile capabilities, did not show that TPG would not have a change of heart.

Dr Higgins said Mr Teoh had made his position clear and his testimony was not just opinions on what TPG could and could not do.

“Because of the monthly depreciation, the (4G) spectrum will be sold, the mobile network operator opportunity will be gone and Mr Teoh will be doing what he said in his affidavit,” she told the court.

“And that’s not some bare suggestion; what your Honour sees there is a business plan.

“We say they’re also not just assertions — they are backed by cogent reasons that are supported by the evidence,” she added.

VHA counsel Peter Brereton reinforced the position, telling the court that Mr Teoh had already committed himself to what he would do if the merger is blocked, and there was no turning back from that.

“So he can’t really turn around and say, ‘the merger has been blocked so I’m going to change my mind, and that is an excuse I can provide to the market’.”

The non-availability of Huawei’s 5G equipment was cited by TPG as main reason for stopping its mobile network, but on the last day of the hearing the ACCC maintained that TPG had other technology options in the market.

However, Dr Higgins took the regulator to task over its assertions, telling the court that unlike Telstra and Optus, TPG had very specific needs for its small cell network.

“TPG always needed units that did a lot of work in a limited amount of space,” she said.