Vodafone Exec Hits Back At Fears Over TPG Mobile
TPG’s decision last week to purchase mobile spectrum and make public their plans to become a fully-fledged mobile service provider has already had massive repercussions on both their own share price and that of their competition, particularly Telstra.
Now that the dust has settled, however, questions are beginning to be raise about whether the Australian market has room for a fourth major telco and whether or not TPG’s mobile ambitions could spell doom for Vodafone.
Speaking to Business Insider earlier this week, the CEO of independent telco Inabox, Damian Kay said that TPG’s entry would have “a serious impact” on Vodafone.
“Everyone’s looking at Telstra’s share price but I think the real story is how this will affect Vodafone,” said Kay.
“I wouldn’t be surprised if Vodafone ends up selling to TPG,” he told Business Insider.
According to him, “I’m not convinced that Australia is large enough for four players in the mobile market.”
TPG paid $1.26 billion for access to the 4G mobile spectrum at an ACMA auction last week, taking home 2x10MHz of mobile spectrum in the 700MHz band and promising to roll out their new mobile network to 80% of Australians over the next three years.
Previously, TPG’s mobile offerings ran on Vodafone’s network. Now, the company plans to sink $600 million into their own infrastructure is expected to make them more competitive in the mobile space and fuel new growth for the company.
TPG’s Executive Chairman and CEO, David Teoh, says that the company is “uniquely positioned to leverage our success in the Australian fixed-line broadband market to drive the next phase of growth for TPG’s shareholders and bring new competition to the Australian mobile market.”
In the wake of Kay’s comments, Vodafone chief strategy officer Dan Lloyd has insisted that a fourth major can only be a good thing for customers.
However, speaking again to Business Insider, Lloyd also expressed skepticism about whether or not TPG will be able to built the mobile network it’s promising for $600 million.
Lloyd argues that construction a mobile network in a country with the widespread level of low population density like Australia is a “courageous and challenging” feat.
“We are investing at a higher capital intensity than our two major competitors, and suffice to say, our investment just to maintain and enhance a world class network is well above $600 million capital expenditure over three years,” he said.