Bushwhacked
accc decision on network sharing
Need To Know
- ACCC opposes TLS/TPG network sharing agreement
- TLS to appeal the decision
The ACCC has rejected Telstra and TPG Telecom’s (TPG) proposed mobile network and spectrum sharing arrangement in regional Australia. TLS and TPG had provided certain undertakings to appease the regulator, but these did not address concerns or improve the public benefits. TLS plans to appeal the decision.
Background. In February 2022, TLS and TPG announced an agreement to share network in regional and urban fringe areas. TPG agreed to shut down its network in these areas and give TLS access to its regional spectrum. The additional spectrum will significantly improve the experience for TLS’s customers. TPG’s customers will get access to a high quality regional network.
TLS will receive payments from TPG for access to its regional network, partly offset by payments made by TLS to TPG for use of its spectrum.
The leg up to TPG will make it more competitive against Optus. TLS will improve its network experience in regional areas due to the additional spectrum access and this will also make life harder for Optus.
ACCC decision. The regulator decided that the arrangement would lead to less infrastructure-based competition which would make consumers worse off over time. The ACCC considered the range of competitive factors including price, coverage, speed and other network quality dimensions. It said the arrangements between Telstra and TPG would represent a significant change to the structure of the market that would have long term consequences.
Investment view
The intention of the arrangement between TLS and TPG was to improve the coverage and service for TPG’s customers in regional Australia. The benefit to TLS and TPG was a more efficient use of the infrastructure involved so that both companies would benefit.
Simplistically, the ACCC has decided it will reduce competition for mobile services in the long run leading to higher prices and less investment in the network.
These conclusions will be vigorously contested by TLS in its appeal to the Australian Competition Tribunal. The ACT has a track record in overturning ACCC decisions, but this is of course no guarantee of success for TLS and TPG.
The agreement is unlikely to be financially material to TLS in the early years.
Stock overview
Share Price
Company overview
Domain Holdings is an online and print real estate advertising business. It has adjacent businesses in home loans, insurance and solutions for real estate agents.TLS is Australia’s largest telecommunications provider in both mobile and fixed line services.
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