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Australia's competition tribunal blocks Telstra-TPG Telecom network deal

Published Jun 20, 2023 08:15PM ET Updated Jun 20, 2023 10:40PM ET
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© Reuters. FILE PHOTO: A man looks at his phone as he walks past a Telstra logo adorning a phone booth in the central business district (CBD) of Sydney in Australia, February 13, 2018. REUTERS/David Gray
 
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By Harish Sridharan

(Reuters) -The Australian Competition Tribunal (ACT) upheld a decision to block an asset transfer deal between wireless internet firms Telstra (OTC:TLGPY) Group and TPG Telecom, the companies said on Wednesday, in a ruling that sent TPG shares down 11%.

Under the deal announced in February 2022, Telstra would have bought spectrum - airwaves which carry wireless internet - and transmission towers from TPG, while TPG would have kept selling 4G and 5G coverage using Telstra infrastructure.

The Australian Competition and Consumer Commission (ACCC) had ruled against the plan in December, much to the delight of Optus, the country's No. 2 wireless internet provider 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.

The Tribunal noted that the proposed arrangements would give Telstra substantial benefits and 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 would weaken the competitive constraint on Telstra, and lead to increased prices and margins, the regulator said.

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 TPG and Telstra expressed disappointment at the outcome. Telstra shares were up 0.7% in early trade, while TPG's shares fell as much as 10.8%, the biggest intraday decline since August 2022.

"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 (OTC:BAYRY) 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," Commpete Chair Michelle Lim said. "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."

Australia's competition tribunal blocks Telstra-TPG Telecom network deal
 

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