The competition watchdog was right to block the $1.8 billion spectrum-sharing arrangement between Telstra and TPG, the Australian Competition Tribunal has ruled.
The three-member panel on Wednesday backed the Australian Competition and Consumer Commission, ruling that the arrangement would undermine Optus’ incentives to invest in 5G technology, lessen competitive constraints on Telstra, and lead to increased prices and margins.
“The Spectrum Authorisation Agreement provides Telstra with substantial commercial and competitive benefits and would further increase Telstra’s position of market strength in mobile telecommunications markets,” the tribunal wrote.
TPG and Telstra had appealed the ACCC’s December decision to block the network sharing deal, which would have seen TPG decommission or transfer up to 169 mobile sites in regional and urban fringe areas to Telstra, with TPG then acquiring mobile network services from Telstra.
TPG’s 4G coverage would have been able to reach a bit more of the population, but the ACCC said this wasn’t worth lessening the infrastructure-based competition the deal would entail.
The ruling is a victory for the ACCC, which has lost similar matters including TPG’s $15 billion merger with Vodafone Hutchison Australia.
ACCC Commissioner Liza Carver said Wednesday’s decision was the tribunal’s first review since a new authorisation regime came into effect in 2017, and its reasoning would assist the ACCC in considering further applications for merger authorisation.
Telstra CEO Vicki Brady said the decision was disappointing, and the telco was calling for a rethink of policy on spectrum access in light of ever-increasing demands for mobile data.
Investing in more capacity in regional Australia was not always commercially viable or an efficient use of capital or government funds, especially since there was a large amount of data spectrum not being used.
“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,” she said.
TPG chief executive Inaki Berroeta said the determination entrenched the status quo for mobile coverage in regional Australia and the company would look at advocating for policy reforms to deliver greater competition and choice.
But Optus CEO Kelly Bayer Rosmarin said the decision was a “win for Australians” that reinforced the importance of infrastructure-based competition.
“This is a good outcome for our regional communities as it will mean they will continue to benefit from competition as Optus reaffirms its commitment to providing Australia’s regional communities with a strong network and great service,” she said.
Both TPG and Telstra said they would review the tribunal’s decision in full before deciding on further action, which could include a further appeal to the Federal Court.
