Teoh Responds To ACCC Arguments In Federal Court
Keeping up appearances, media-shy TPG Telecom founder David Teoh has given evidence in the Federal Court for the second day in a row, as TPG and Vodafone Australia locked horns with the Australian Competition and Consumer Commission over their stalled $15 billion merger plan.
Under questioning by ACCC’s legal counsel, Michael Hodge QC, pictured page 1, Teoh admitted that his company had rushed its mobile strategy in order to beat Vodafone Hutchison Australia to 4G spectrum and start building an independent mobile network.
TPG paid $1.2 billion for 700 megahertz spectrum in April 2017, the biggest such deal in recent history. But Teoh said he wasn’t phased about paying top dollar for the 4G spectrum, given its strategic importance. “It was important for the company to get into mobile,” he told the court.
The spectrum, crucial for 4G mobile services, had been left over from the original “digital dividend” auction in 2013.
Teoh said that, while TPG was committed to bidding for the 700MHz spectrum, it did not have a concrete strategy in place. “We didn’t have time to do that, we didn’t have the model,” he said.
Pressed further on whether he had decided to go ahead with the acquisition of spectrum, irrespective of its negative consequences, Teoh said he couldn’t recall the exact numbers. “I can’t remember what happened two years ago, sitting here,” he said.
Vodafone Australia, which decided against participating in the 2013 auction, had pitched a $594 million offer to the Federal Government in May 2016, but it was rejected.
The focus on how TPG operates is a crucial part of the ACCC’s strategy to show that the telco was heavily committed to entering the mobile market, despite the risks.
Michael Hodge suggested that TPG’s mobile aspiration was built almost entirely around offering a competitive 4G network – which would explain its decision to splurge on 4G spectrum.
“You knew it was a high price, you knew you were about to pay more than anybody else in the world and it was going to be a 4G network,” Hodge said.
Under cross-examination, Teoh stressed that “the future is mobile” as far as TPG is concerned.
The ACCC is seeking to establish that if Vodafone and TPG merge, that would kiss goodbye to the chance of a fourth player in the mobile market.