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Is TPG Telstra Network Sharing A Security Risk In The Making As Optus Object

Optus has finally lodged their submission with the Australian Competition and Consumer outlining why the proposed network sharing deal between TPG and Telstra in rural Australia will overturn 30 years of regulatory and policy settings that successive governments and the ACCC have championed to promote competition and investment in the telecommunications sector.

The deal, if it goes ahead, will give TPG, who has foreign linked shareholders, access to key mobile infrastructure and spectrum.

It will also boost TPG’s mobile coverage to 98.8 per cent of the population and give Telstra extra spectrum than it would have under competitive limits imposed on spectrum auctions.

Some observers are claiming that, as part of the ACCC investigation, questions should be raised by the Federal Government as to whether there are security risks – as CK Hutchinson Holdings Limited own 87.87% of Hutchinson Telecommunications Australia who in turn have an 11.1% of TPG Telecom Limited shares.

Hutchinson Telecommunications Australia also own 50% of Vodafone, who in turn owns 27.82% of TPG Telecom.

CK Hutchinson Holdings Limited is based in the Hong Kong Special Administrative Region (SAR) which for official purposes, is today part of China.

ChannelNews understands that some Federal Government departments are questioning whether there are any security risks in giving TPG access to the Telstra wholesale network because of their links with China based Companies.

Optus claims that a network sharing deal between Telstra and TPG in regional and rural areas will cost the economy $55 billion over the next decade and put emergency-prone communities at risk by ruining mobile service resilience.

The No. 2 telco claims that there is a real danger that if the deal is approved, they will no longer be able to sustain investment in regional infrastructure.

This claim analysts will hand Telstra and TPG a monopoly in rural Australia.

One source has claimed to ChannelNews that there is a real risk that pressure by overseas entities could be placed on organisations involved in the ownership of TPG in Australia in the future, and that links between TPG and Asian-linked organisations should be investigated by the Foreign Investment Review board as part of investigation into the proposed network sharing deal.

TPG Telecom and Telstra want what is being described as a landmark deal to be approved by the competition regulator.

Optus is trying to stop it, with several observers claiming that a merger will create a monopoly that the ACCC should prevent happening.

“Given Telstra’s vastly increased regional dominance and scale no rational competitor will have any realistic prospect of recovering future network investments, so there is no commercial rationale for ongoing investment in regional areas,” the Optus submission says.

“This means that Optus will be weakened as a competitive force to Telstra, enabling Telstra to operate in the regions unconstrained by competitive pressure.“

Optus said the deal would mean “material adverse impacts to the Australian economy” if approved. It cited a PwC report that said less competition in 5G services may limit “economic productivity” by $55 billion in the next decade.

Optus added that TPG “would almost certainly have to raise prices to cover the costs of additional coverage” because of the pricing structure imposed by Telstra, which expects the deal to supply $1.8 billion of revenue over 10 years.


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