Telcos Brace For ‘Amazon-Effect’ Of TPG Mobile Network
Australia’s largest telco companies – Telstra, Optus and Vodafone – are bracing themselves for the launch of TPG’s mobile network – an occasion some commentators are likening to the impact of Amazon Australia on the retail industry.
TPG Founder and Executive Chairman, David Teoh, is set to enter the $20 billion mobile marketplace in October this year.
Teoh is reportedly spending $600 million on TPG’s mobile network, which he claims will cover 80% of the Australian population.
As reported by The Australian Financial Review commentators predict the new TPG mobile network will have an ‘Amazon-effect’, and significantly ramp up pricing pressure.
Consensus is TPG’s mobile network will debut entry-level mobile plans 30% – 60% less than current prices.
To combat this, rival telcos are amping up their offerings, with the introduction of increased call, text and data inclusions at no extra cost.
Notable financial commentator, Tony Boyd, claims Telstra is most vulnerable to the threat of TPG’s mobile network.
The news comes as Telstra CEO, Andy Penn, continues to ramp up investments in its network, and pursue the rollout of 5G for next year.
In its recent earnings report, Telstra posted a decline in a mobile earnings, which analysts speculate will only further drop. At current Telstra’s mobile division represents 45% of its annual earnings.
By contrast, Telstra’s subscriber growth notched its strongest result in five years, with 130,000 new post-paid users.
Commentators tip TPG’s mobile network will be the industry’s most disruptive force since the Australian government opened Telstra’s copper wires to rivals, nearly a decade ago.
Having ownership of its national fibre network, TPG is not reliant on others to backhaul fibre from mobile cells to its exchanges.
Analysts speculate the ‘low cost’ building of TPG’s mobile network will achieve break-even with only $70 million – $80 million in revenue. This may be complimented by additional revenue from a fixed wireless offering, to rival the NBN.