The competition watchdog has struck down a plan for Telstra and TPG to share mobile networks in regional parts of Australia, finding the arrangement would lessen competition in mobile telecommunications.
The deal would have resulted in TPG decommissioning about 700 Vodafone mobile sites in order to use 3,700 Telstra mobile sites in a network sharing agreement across 4G and 5G. It would have increased the reach of Vodafone’s mobile network in regional and remote parts of Australia – increasing coverage from 96% to 98.8% of the Australian population.
Telstra would have also gained access to 169 TPG sites.
However, the agreement was rejected by the Australian Competition and Consumer Commission (ACCC) on Wednesday, which said that although the deal might have initial benefits, it would leave consumers worse off in the long run.
“We examined the proposed arrangements in considerable detail,” ACCC commissioner Liza Carver said. “While there are some benefits, it is our view that the proposed arrangements will likely lead to less competition in the longer term and leave Australian mobile users worse off over time, in terms of price and regional coverage.
“The proposed arrangements would lead to some short-term benefits from an improvement in TPG’s network coverage, and some cost savings and efficiencies for TPG and Telstra. However, the enduring and more substantial impact of the proposed arrangements would be to lessen infrastructure-based competition which would make consumers, including those in regional areas, worse off over time.”
Carver argued the deal would entrench Telstra’s dominant market position, and would not encourage TPG and Optus to invest funding in infrastructure in regional and remote parts of Australia.
The announcement was welcomed by Optus, a rival of the two telcos, which had long opposed the deal.
“By knocking back this deal, the ACCC has helped ensure that our regional communities will continue to benefit from competition in a sector that is fundamental to our digital economy and future prospects,” the Optus chief executive, Kelly Bayer-Rosmarin, said.
“Optus reaffirms its commitment to providing Australia’s regional communities with a strong network and great service.”
But both Telstra and TPG have vowed to appeal the decision to the Australian Competition Tribunal.
The Telstra CEO, Vicki Brady, said the decision was “extremely disappointing” considering the support the proposed arrangement had from regional customers and community groups during the ACCC’s consultation process.
“This decision is a massive missed opportunity for the people, businesses and communities of regional Australia,” she said.
“Despite today’s disappointing news, I’d like to thank all the people who recognised the benefits this agreement could bring and spoke up in favour of it. We will keep pushing for the right outcome for you.”
The TPG CEO, Iñaki Berroeta, said it was a missed opportunity.
“We are disappointed the ACCC has chosen to ignore the overwhelming evidence submitted from leading economists, competition experts and regional communities outlining the benefits of the proposed arrangement to competition and consumer choice,” he said.
“If it had been authorised, the arrangement would have freed regional Australia from its current mobile duopoly, and the increased competition from TPG would have placed downward pressure on mobile pricing.”
The two telcos first announced the deal in February this year and sought authorisation from the ACCC in May.
TPG has already scored one win against an ACCC decision, after taking its refusal to allow the merger of TPG and Vodafone to court and winning in February 2020.
