TPG has rejected the idea it could strike a commercially agreeable network sharing deal with Optus in the event that its deal with Telstra was rejected.
TPG disagrees with the ACCC’s preliminary view that such a deal with Optus is a viable ‘plan B’ for the smaller telco.
“The ACCC should not assume that, merely because TPG has an incentive to expand its mobile coverage and Optus has an incentive to maximise its revenue, the two parties will strike a deal,” TPG wrote.
“Instead, the ACCC should critically assess the likelihood that Optus will actually offer an arrangement that is commercially beneficial to its competitor, TPG.”
TPG argues that Optus would have the upper hand in any such deal, especially if the proposed Telstra tie-up is rejected.
“Optus will know that TPG has no alternative sharing or roaming provider,” TPG wrote.
“Therefore, Optus will have every reason to insist on pricing that will be unsustainable for TPG or will undermine TPG’s ability to compete with Optus.”
Optus backed the ACCC’s view when it was floated, writing earlier this month: that Optus and TPG “are likely to have commercial incentives to enter into such an arrangement, and has provided evidence concerning each party’s commercial incentives.
“Based on Optus’ evidence, the ACCC should conclude that there is at least a real commercial likelihood of Optus and TPG reaching agreement on such an arrangement in the counterfactual.
Further to this, Optus said it “does not consider there to be any technical issues that would prevent an active network sharing arrangement being entered into with TPG”.
Optus did concede that “any arrangement it would negotiate with TPG is likely to be of less benefit to TPG than TPG’s arrangement with Telstra”, a point it says is “in a sense obvious, given that TPG has preferred a transaction with Telstra”.
“Optus and TPG will continue to face the incentive to compete strongly with Telstra through regional 5G network investments, to the extent it is profitable to make those investments,” Optus said.
Optus has urged the ACCC to ignore the “relative benefit to TPG” and focus on the “competitive outcome” of the decision to allow Telstra to team with TPG.
A decision is due to be made on the Telstra-TPG deal by the end of the year.
In any case, whatever the ACCC decide is likely to be appealed, meaning we are still months away from any real decision.
