ACCC flags competition issues with Telstra, TPG’s regional telco deal

The ACCC has released a 52-page report detailing its preliminary findings into the proposed billion dollar regional telco sharing deal.

A proposed $1.8 billion network-sharing deal between Telstra and TPG is likely to immediately improve the telcos’ regional and rural services, but there are concerns it could lessen competition.

This is one of the preliminary views of the Australian Competition and Consumer Commission, outlined in a 52-page report on the contentious deal between the nation’s largest and third largest telecommunications companies vying for a bigger slice of regional Australia.

The competition watchdog’s preliminary assessment of the deal reveals it could lead to improved outcomes for regional network users in the short-term, but could act as a disincentive for investment in regional telecommunications infrastructure in the long term, and competition could be lessened.

“The ACCC’s preliminary view is that the Proposed Transaction is likely to result in immediate improvements in each of Telstra and TPG’s offerings. Principally, TPG will have greater network coverage or reach,” the ACCC said in a stamement.

“Similarly, Telstra will gain access to spectrum that will immediately improve its network quality … The ACCC considers this may increase choice for customers who need coverage in the Regional Coverage Zone. However, the ACCC considers these immediate or short-term public benefits need to be balanced against potential longer term impacts from any reduction in infrastructure-based competition between MNOs (mobile network operators).”

The two companies are seeking a merger authorisation from the ACCC that would see TPG share 3700 of Telstra’s 11,000 towers in regional and rural Australia and give Telstra access to its low-band mobile spectrum. TPG would pay Telstra between $1.6 billion and $1.8 billion for access over 10 years.

The National Farmers’ Federation has long advocated for increased competitive tension in regional telecommunications, as well as network-sharing infrastructure to improve efficiency.

NFF chief executive Tony Mahar said the ACCC was asking “the right questions” about what the deal would mean for important aspects of competition including affordability, product offering and future network investment. “We’ve been clear that the ACCC needs to consider the short and long-term implications of this deal on the regional telecommunications market, ” Mr Mahar said.

To give the green light, the ACCC must be satisfied the network-sharing deal would not lead to weakened competition and that the result in public benefit would outweigh the public detriment likely to result.

A decision is expected by December 2 after the ACCC reviews further submissions in response to its preliminary views.