The Australian Competition Tribunal (ACT) upheld a decision to block an asset transfer deal between mobile network operators Telstra Group and TPG Telecom, Reuters reported. Under the deal announced in February 2022, Telstra would have bought spectrum and towers from TPG, while TPG would have kept selling 4G and 5G coverage using Telstra infrastructure.
Telstra is the largest MNO in Australia and TPG Telecom is the fourth wireless carrier behind Optus and Vodafone, according to Inside Towers Intelligence. The combination would create the largest MNO in Australia with about 20 million subscribers, twice that of second place Optus and four times that of third place Vodafone which has 5 million subscribers.
The Australian Competition and Consumer Commission (ACCC) had ruled against the plan in December, much to the delight of Optus, which is owned by Singapore Telecommunications. The ACCC is the country’s competition regulator, while the ACT is a federal court body that typically reviews appeals of the regulator’s decisions.
ACT noted that the proposed arrangements would give Telstra substantial benefits, increase its market strength on the retail and wholesale mobile markets, and would undermine Optus’ incentives to invest in 5G technology, ACCC said in a statement. Over time, this arrangement would weaken the competitive constraint on Telstra, and likely lead to increased prices and margins, the regulator said.
TPG and Telstra expressed disappointment at the outcome. TPG said it would review the Tribunal’s decision before considering its options for further appeal, including a judicial review in the federal court. Both companies saw their share prices decline as the Australian investors reacted to the news, according to Reuters.
“At the moment, we’re limited in the amount of spectrum we can buy at auction and, as today’s result shows, limited in the type of commercial arrangements we can put in place to improve services for our customers,” Telstra CEO Vicki Brady said.
Optus, which had previously opposed the deal on the grounds it would build Telstra’s market dominance, said it welcomed the Tribunal’s decision. “We are delighted that the Tribunal has upheld the ACCC’s original decision to block this anti-competitive arrangement,” Optus CEO Kelly Bayer Rosmarin said.
Commpete, an advocacy group largely consisting of regional internet providers, said it was also pleased with the ruling. “The Tribunal’s decision was a decisive move for competition in the sector,” commented Commpete Chair Michelle Lim. “This deal would have handed a dominant provider control over mobile pricing, service availability and service standards in the middle of a cost-of-living crisis.”
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