Telstra and TPG’s long-fought deal to share infrastructure in regional Australia has officially been struck down.
This morning, the Australian Competition Tribunal upheld the ACCC’s decision to block the $1.8 billion deal, arguing such a network sharing deal would bolster Telstra’s dominance, and crush competitors, including Optus.
Chairman Justice Michael O’Bryan said the tribunal had considered “vast” evidence that the deal — which would have allowed TPG to use Telstra’s network of regional mobile towers in exchange for Telstra’s use of TPG’s spectrum — would have increased Telstra’s dominance, to the detriment of Optus.
The Tribunal found that “the Spectrum Authorisation Agreement provides Telstra with substantial commercial and competitive benefits and would further increase Telstra’s position of market strength in mobile telecommunications markets.”
According to the ACCC, the Tribunal noted that the proposed arrangements would “give Telstra substantial benefits and increase its market strength on the retail and wholesale mobile markets, and would undermine Optus’ incentives to invest in 5G technology. Over time, this would weaken the competitive constraint on Telstra, and lead to increased prices and margins.”
TPG’s shares plummeted 7 per cent on opening, while Telstra shares rose 0.5 per cent. TPG shares have since dropped 8.7 per cent, as of 11am.
Optus itself had argued that such a deal would stop it investing in infrastructure in regional Australia, given the insurmountable lead it would give Telstra. The ACCC agreed that such a merger would halt Optus’ own 5G rollout, to the detriment of the Australian consumer.
Telstra CEO Vicki Brady kicked against the ruling, arguing that simply investing in more towers isn’t always commercially viable.
“As 5G drives increased data use and with 6G on the horizon, as a country we need to be smarter about how we use our spectrum assets and there is a role for government to look at how we do that more efficiently,” Brady said in a statement.
“At the moment we’re limited in the amount of spectrum we can buy at auction and, as today’s result shows, limited in the type of commercial arrangements we can put in place to improve services for our customers.”
TPG chief Iñaki Berroeta said this determination “entrenches the status quo for mobile coverage in regional Australia,” and that TPG wouldn’t rule out a federal court appeal.
“We are not giving up on regional Australia and will consider our options as well as advocating for policy reform that will deliver greater competition and choice in the regions that need it most,” he said.
Optus, not suprisingly, welcomed the ruling, with CEO Kelly Bayer Rosmarin saying the telco was “delighted” in the Tribunal’s decision to block “this anti-competitive arrangement.”
“This reinforces the importance of infrastructure-based competition and investment in our communications sector that will have lasting benefits for regional Australia,” she said.
“This is a good outcome for our regional communities as it will mean they will continue to benefit from competition as Optus reaffirms its commitment to providing Australia’s regional communities with a strong network and great service.
“This will be achieved through our ongoing investment program and focus on innovation for customers through our Living Network and other value adding products and services.”
