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TPG likely to join forces with Optus if Telstra deal fails: ACCC

TPG likely to join forces with Optus if Telstra deal fails: ACCC

Watchdog suggests a “real commercial likelihood” that TPG will network-share with Optus if Telstra bid falls through.

L-R: Vicki Brady (Telstra CEO), Iñaki Berroeta (TPG Telecom CEO), Kelly Bayer Rosmarin (Optus CEO)

L-R: Vicki Brady (Telstra CEO), Iñaki Berroeta (TPG Telecom CEO), Kelly Bayer Rosmarin (Optus CEO)

Credit: Supplied

Optus and TPG Telecom could be set to team up for their own network-sharing deal if the latter’s with Telstra is unsuccessful, the competition watchdog has said. 

Ahead of its decision on TPG’s move to enter a 10-year network sharing deal with Telstra, the Australian Competition and Consumer Commission said there is a “real commercial likelihood” that TPG would join forces with Optus if Telstra deal fails.  

Either a network sharing or roaming agreement between TPG and Optus would allow the former to expand its coverage and monetise its spectrum while enabling the latter to earn wholesale revenue from its network infrastructure. 

The ACCC has until 2 December to decide on the deal, which was first revealed in February and would give TPG access to 3,700 of Telstra’s mobile network assets.

As a result of the multi-operator core network (MCON), which could be extended by a further decade, TPG will decommission around 725 mobile sites it currently operates within Telstra's coverage area.  

Meanwhile, Telstra will obtain access to and deploy infrastructure on up to 169 of TPG Telecom’s existing mobile sites as well as some of its existing 4G and 5G spectrum in regional areas. 

In its Statement of Preliminary Views, the ACCC also accepted Optus’ key argument against the proposal, namely that the telco would be disincentivised to invest in regional Australia.

The ACCC said concerns had also been raised that this, in turn, would curtail investment by Telstra in regional areas. 

However, the governing body said it needed consider the extent to which the proposal is likely to incentivise Optus to accelerate its infrastructure investments in response to “the stronger service offering Telstra and TPG”. 

This would likely see Optus investing in mobile sites in the Telstra-TPG ‘regional coverage zone’, in where roughly 17 per cent of the Australian population resides. This would be to mitigate the speed advantage Telstra obtains from having access to contiguous mid band spectrum, the ACCC said. 

On the other hand, Optus may decelerate its infrastructure investments due to a worsening of the business case for future investments, the ACCC said. Optus itself is expecting a negative impact on its revenue if the network-sharing deal is successful. 

The ACCC added that it was “concerned that [the deal] may lessen future competitive constraints on Telstra”. 

In its response to shareholders, TPG noted that the ACCC said the telecommunications provider “will likely be able to immediately offer an improved product to customers who value better regional network coverage, therefore enabling it to better compete for customers it does not currently serve”. 

“If approved, the arrangement will be a win for regional Australia, drive significant growth in our customer base in regional and metropolitan areas, and provide significant value for TPG Telecom shareholders,” TPG’s statement added.  

The ACCC is now calling for further submissions before a decision is made.

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Tags TelstraoptusacccTPG Telecom

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