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The Australian Competition Tribunal (ACT) refused to overturn a ruling by the competition watchdog that argued the deal would ultimately harm rural competition
This week, the ACT has upheld the decision by the Australian Competition and Consumer Commission (ACCC) to block a network sharing deal struck by Australian mobile operators TPG Telecom and Telstra.
The ACT argued that though were substantial benefits to the sharing agreement, the improved market position gained by Telstra could lead to the company’s rival, Optus, being disincentivised to invest in rural areas and in 5G.
Over time, this would lead to a breakdown of competition and lead to an increase in prices for customers.
The ten-year network sharing deal was first announced back in February 2022, with Telstra and TPG Telecom saying that the move would allow them to accelerate their respective rollouts and provide better service to customers.
In theory, the mutually beneficial agreement would provide both operators with a missing piece of their connectivity puzzle: TPG would gain access to around 3,700 of Telstra’s mobile network assets, allowing it to expand its coverage to areas previously considered economically unviable, while Telstra would gain access to TPG’s 4G and 5G spectrum, helping to increase its capacity.
But while the operators hailed this deal as a win for Australian customers, the industry’s wider response was more mixed. The companies’ biggest rival, Optus, strongly argued that the deal was not really a sharing arrangement at all, but rather an excuse for TPG to withdraw its investment in rural Australia.
“It is an arrangement where TPG withdraws from rural Australia and gets access to a network owned and operated by Telstra, paying Telstra for every customer it onboards to Telstra’s network,” argued Optus CEO Kelly Bayer Rosmarin.
Later that year, Optus even suggested to the ACCC that they should be the preferred partner for the sharing arrangement with TPG, though this option was quickly quashed by TPG itself.
The deal, naturally, faced an investigation from the ACCC, who sought to explore whether the deal would reduce competition in the market and leave customers materially worse off.
This probe was concluded in December, with the ACCC deciding to block the deal, saying it would likely disincentivise the operators to invest in rural areas.
Now, with this decision upheld, TPG and Telstra say they will carefully examine the tribunal’s reasoning before considering further appeals.
“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,” lamented Telstra CEO Vicki Brady.
Optus, meanwhile, was “delighted” that the decision was upheld, saying it would help reaffirm the industry’s commitment to expanding connectivity in rural Australia.
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