Telstra and TPG network-sharing rejected by ACCC

Telstra TPG ACCC
Image by polack | Bigstockphoto

(Reuters) -The Australian Competition & Consumer Commission (ACCC) on Wednesday rejected TPG Telecom’s regional network-sharing agreement with Telstra Group and said the deal would significantly weaken overall competition in the country.

TPG’s shares tanked nearly 6% to a record low following the news, while Telstra slipped 0.1%. The broader market, meanwhile, was up more than 1%.

In February, the telecom giants signed a regional multi-operator core network agreement under which Telstra — the country’s largest telecoms operator — would gain access to TPG’s 4G and 5G spectrums.

ACC says consumers worse off

ACCC said it has looked beyond the short-term benefits and cost savings for TPG and Telstra from the deal and concluded that the deal would leave Australian mobile users “worse off over time, in terms of price and regional coverage”.

Telstra and TPG express disappointment

TPG and Telstra expressed disappointment with the competition regulator’s decision, which the latter said it would appeal against, while rival telecoms firm Optus — owned by Singapore Telecommunications — welcomed it.

TPG — the country’s No. 2 internet services provider — said it was preparing an application for a review of the decision.

ACCC noted the network-sharing arrangement is proposed at a time when all the companies — TPG, Telstra and Optus — are competing in the roll-out of 5G infrastructure, including in regional areas.

“We consider that there is a real risk that TPG and Optus will invest less in critical infrastructure than they would if the proposed arrangements do not proceed.”

ACCC’s move also comes at a time when Telstra, TPG and Optus have suffered data breaches this year, endangering the sensitive information of millions of people.

TPG said it would no longer recognise any financial impacts of the agreement in its fiscal 2022 results.

(Reporting by Navya Mittal and Savyata Mishra in Bengaluru; Editing by Anil D’Silva, Shinjini Ganguli, and Uttaresh.V)

Related article: Optus has asked ACCC to block Telstra/TPG network sharing deal

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